Summarization of the incentive investment policies by the government and the province extended to investment projects in Vinh Phuc province
I. The general incentive policies
1. The Enterprise Income Tax: The new rules will take effect from 1st January 2014 (Pursuant to the Amended Law on the Enterprise Income Tax No 32/2013/QH13 dated 19 June 2013, the followings will be effective from 1st January 2014):
– For new investment projects invest in the areas with especially difficult socio-economic condition, economic zones, and high technology zones: the corporate income tax rate shall be 10% for 15 years, then the 20% for the following years. Such projects shall be entitled to tax exemption within 4 years counting from payable income tax generating, and a 50% reduction of payable tax amount for 9 consequent years.
– For the enterprises having a total annual turnovers but not exceeding VND 20 billion shall enjoy the income tax rate of 20 %
– For the new investment projects, including: scientific research and technological development, hi-tech application named in the hi-tech list to be given prority as specified in the Law on High Technology, building and operation of incubation establishments, high-tech business incubators, high tech venture capital for high-tech development in the list of high-tech investment and development priorities in accordance with the Law on high-tech investment and construction – business incubators tech business incubators high-tech investment and development infrastructure is particularly important under the provisions of State law, production of software products, production of materials composites, the lightweight building materials, rare materials, production of renewable energy, clean energy, energy from waste disposal, development of biotechnology, environmental protection: tariffs corporate income tax rate is 10% for 15 years, then 20% for the next year;
– For new investment projects in the manufacturing sector (excluding projects producing goods subject to excise tax, the mining project) meet one of the two following criteria: project has an investment capitalization of a minimum of six trillion VND, disbursement shall be implemented not beyond three years from the date of issuance of the investment certificate and have a minimum revenue, at least after three years since year earning revenue, of ten trillion VND/year, or project has an investment capitalization of a minimum of six trillion VND, disbursement shall be implemented not exceeding three years from the date of issuance of the investment certificate and using over three thousand employees: the corporate income tax rate is 10% for 15 years, then 20% for the following years;
– For the projects implement the socialization activities in the field of education – training, vocational training, health, culture, sports and environmental, social housing investment for sale or rent and lease purchase applied to the objects defined in Article 53 of the Law on Housing …: the corporate income tax rate is 10%, the project is exempt from income tax within 4 years since the taxable income and reducing 50 % of payable tax amount within the next 9 years.
– For the large-scale projects and hi- tech or particularly need to attract investment, the time limit applied the preferential tax rate can be extended but the total of extension time not exceeding 15 years
– For new projects invested in the area having socio-economic difficult conditions, new investment projects, including high-grade steel production, the production of energy saving products, production of machinery, equipment for agriculture, forestry, fisheries, salt production, irrigation equipment manufacturing, production and refining feed for poultry, cattle, aquaculture; development of traditional industries: the income tax rate is 20% in 10 years period, the project is exempt from income tax in the 2 years since the taxable income and reducing 50% in the next 4 years. (From 1st January 2016, such tax rate shall be 17%)
– For the investment projects for expansion: The enterprise invests in the operating project in the sector and/or area enjoying the preferential enterprise income tax under the provisions of this Law when investing to expand its production scale and/or to increase its production capacity, or production technological innovation , if it meets one of three criteria specified below shall be chosen the following tax incentives: either enjoying the tax incentive applied to the remain duration of the project (if any) or to be exempted or reduced income tax for the value added income resulted from the expansion investment. The time limit of the income tax exemption or reduction due to expansion as stated in this paragraph shall be equal to the time limit applied to the same project located in this area or the same tax preferential sector.
The expansion investment projects to be given the preferential as the above-mentioned shall have to satisfy the following criteria:
+ For the expanded project that is enjoying tax preferential as stated in this paragraph, when the project completed and comes into operation, the original price of fixed assets should be increased from at least twenty billion VND upward, for the expanded project located in the area having difficult socio-economic conditions or in the area having specially difficult socio-economic conditions, the original price of fixed assets should be increased from ten billion VND upward as the Law regulation;
+The proportion of the original fixed assets price have to increase from 20% compared to total original fixed asset prose before implementation of investment;
+ The design capacity has to increase at least 20% compared to that before implementation of investment.
In case the enterprise is operating when the expansion is made in the domain and in the area to be given tax incentive, as stipulated in this Law, but the project can not satisfy one of the forgoing three criteria, the tax incentive shall be applied to the remain duration of the project (if any),
– For the project are not listed in the incentives field: corporation income tax rate is 22 % applied from 1st January 2014 to 31st December 2015 and after that shall be 20 % applied from 1st January 2016 to the expired date of the project and the project shall not be exempted or reduced income tax.
* Note: For preferential rate and time for: enterprise obtaining a total turnover not more than twenty billion VND, and projects invest in the social housing for sale, for rent, for lease- purchase extended to the objects specified in Article 53 of the Law on Housing as above shall be made applicable from the 1st July 2013 in accordance with this Law.
1.2. Exemption or reduction of land rent, water surface rent: (Decree No. 142/2005/ND-CP dated 14/11/2005 of the Government on land rent, water surface rent; Decree No. 121/2010/ND- dated 30 December 2010 of the Government amending of and supplementing to a number of articles of Decree 142/2005/ND-CP dated 14st November 2005 of the Government on land and water surface rent), as follows:
1.2.1. Exemption of land rent and water surface rent in the following case:
– Investment projects in the field of especially encouraged investment located in the area having especially difficult socio-economic condition.
– Project uses land that approved by the competent authority, including the selling price or rental price and such prices the land rental are excluded, to build apartment for industrial park worker; projects to build dormitory for student using the state budget, management unit of such dormitory shall be permitted to only calculate and charge enough to cover the management cost on services, water supply, electricity supply and other reasonable costs, the land rental and house value depreciation are also excluded; project uses land to build public facilities for commercial purposes (socialization) in the fields of education, health, culture, education, sports, science – technology.
During construction period of the approved project: if a project consists of various independent component and/or construction stages, the land rental shall be exempted according to each component or each construction stage, and if each component or each stage cannot be separately calculated, the construction time of the component having biggest invested capital shall be prevail.
– The following are the time limits for a project construction and put it into operation:
+ Three (3) years for projects in the list of encouraged investment, and for the project to be moved to a new location as required by a planning and/or environment pollution.
+ Seven years for the projects invest in the areas with difficult socio-economic conditions
+ Eleven years for the projects invest in the areas with the particularly difficult socio-economic conditions; The investment projects in the list of the particularly encouraged investment; the projects in the list of encouraged investment located in the difficult socio-economic conditions sectors are invested in the area of difficulties socio economic conditions.
Fifteen (15) years for projects in the list of encouraged investment located in the area with especially difficulties socio economic conditions; projects in the list of particularly encouraged investment located in the areas with the difficult socio economic conditions.
The list of encouraged investment sectors, and the special encouraged investment sectors, the areas having the difficult socio economic conditions, and the areas having the particularly difficult socio economic conditions as defined by the Government.
– The project is using the assigned land when changing to land lease, if such project is enjoying exemption of land lease, water surface lease as stipulated in Item 1, Item 3, Item 4 of the Article 14 (Decree 142/2005 / ND-CP dated 14/11/2005), the project shall be exempted from land lease for the remaining period of the exemption of the original land lease.
– For a project which the construction and/or its operation is temporarily suspended, such suspended time shall be exempted from land and water lease in compliance with the verification of the investment certificate issuance agency or business certificate registration agency.
– Project to construct office of the diplomatic agency and foreign consulate and international organizations in Vietnam shall follow the international treaties to which Vietnam is a member or by the principle of reciprocity.
– Other cases shall be decided by Prime Minister at the proposal of the Minister, the heads of ministerial-level agencies, government-attached agencies, chairman of Province People’s Committees and centrally-run cities.
1.2.2.. Reducing the fee of land lease and water surface lease in the following cases.
– Land lease to use as ground for business production for the cooperative shall be reduced by 50% of original land rental,
– Land and water lease to be used for the purpose of agricultural production, forestry, aquaculture, salt production but they are under the natural disaster, fire damaged under 40% of productivity the rent to be reduced correlatively, and if the loss is from 40% or more, it is free of land rental during such damaged time.
– Land and water lease to be used for business purposes but not an agricultural production, forestry, aquaculture or salt production when such projects meet natural disasters, fires, or force majeure shall be reduced by 50% of the rentals for time of suspending production.
– Land rental of construction project of the diplomatic offices, consular offices and representative offices of international organizations in Vietnam shall follow the international treaties to which Vietnam is a member or on the principle of reciprocity.
– Other cases shall be decided by Prime Minister at the proposal of the Minister, the heads of ministerial-level agencies, government-attached agencies, Chairman of Province People’s Committees and the cities directly under the central Government.
1.3. Preferential Import tax:
The Enterprise is entitled to import and/or export tax preferential when importing goods under the list of preferential import tax (under the Law on Export and Import Duties No.45/2005/QH11 June 14, 2005 and Decree No. 87 / 2010/ND-CP dated August 13, 2010 of the Government detailing the implementation of some articles of the Law on Export and Import Duties).
1.4. Other preferential for the enterprise:
– The Investor having the investment project can be mortgaged land use right and assets attached on the land at the credit institutions allowed to operate in Vietnam in order to borrow loan under the provisions of the Law (the Investment Law)
– Where the law and/or the new policies is issued in which promulgating interest and incentives higher than those previously given to the investor, the investor shall be entitled to enjoy the new regulation since the new policy takes effect (Investment law);
– Where the international treaties to which Vietnam is a member has different regulation, the regulation of the treaty shall prevail (Investment Law);
– For the socialization projects invested in the fields of education, vocational training, health, culture, sports, environment, the State is responsible for land allocation, land lease completed land clearance for investors suitable with planning, land use planning, with funding policies for compensation, site clearance for investment projects in the field of self-socialization has made compensation, ground clearance (Decree No. 69/2008/ND-CP dated 30/5/2008 of the Government).
– The development of the small and medium enterprise:
+ Supporting the small and medium enterprise to develop (according to Decree No 56/2009/ND-Cp dated 30 June 2009)
+ Supporting small and medium enterprises who has projects, feasible plans for production and business in the preferential or ancouraged sector and in accordance with the purpose of Fund shall be granted an amount of VND 2,000 billion by the State Bank of Vietnam to improve core competitiveness, promote job and increase workers’ income etc… (Decision No 601/QD-TTg dated 17 April 2013 Development Fund established small and medium enterprises (SMEs)
– The policy on development of some supporting industry.(Decision No 12/2011/QĐ-TTg dated 24 February 2011 of Prime Minister).
– To encourage the enterprises to invest in the agriculture and rural (as the Decree No 61/2010/ND-CP dated 4 June 2010):
+ Object to enjoy the preferences: The investors have project invest in the agriculture sector either a special incentive or incentive or encouraged agricultural project, they all enjoy investment incentives, investment support (as listed in the Appendix to this Decree).
+ Land preferential specified in Articles 5, 6, 7, and 8 of Decree 61/2010/ND-CP, including: exemption or reduction of land use; exemption or reduction from land lease, water surface lease; land or surfacr water lease support if the owner is a household or an individual, and free of charge when change the putrpose of land use.
+ The investment supports are specified in the Article 9,10,11,12 and 13 of Decree 61/2010/ND-CP including: support to human resources training; support to develop the market; support to consultancy services; support to the application of scientist technology; support to transformation charge.
The others incentives issued by the Government at a time moment shall be applied immediately.
II. The policies to support investment by Vinh Phuc province
Beside the general incentives policies by the Government, Vinh Phuc Province has its own policies to support the investors;
1. Administrative procedure is simple: The investor can visit the address: http://motcua.ipavinhphuc.vn would know all the process, procedure, investment documents are required, forms and all shall be solved under the manner of “One Stop Service”. The investor only contact with Vinh Phuc Investment and Promotion Agency (IPA Vinh Phuc) where the only place to submit the investment document or receive the result with a time limit reduced by 1/3 or a half as compared with the general regulation of the Government. Details are as follows:
+ Time for verification procedures for granting investment certificates: 15 working days. It is reduced by 25-30 days (i.e. investors receive results within 15 days from the date of lawful file submission).
+ For the procedures for granting certificate of investment: 10 working days. It is reduced by15 days (i.e investors receive the investment certificate within 10 days from the date of lawful file submission).
– On the basis of the Decision 12/2011/QD-TTg dated 24 February 2011 of Prime Minister on policies to develop some supporting industries, Decision No. 1483/QD-TTg dated 26 August 2011 of Prime Minister on issuance the incentive industrial products list, Vinh Phuc People’s Committee issued Decision No. 47/2012/QD-UBND dated 14 September 2012 on regulation the support activity to the enterprise who implements a supporting industry project invested in the industrial park, and/or cluster. They are as follows:
+ Support an amount up to VND 200 billion to the investor to cover charge of preparing document obtaining a investment certificate, or adjusting the granted investment certificate, advertisement or product promotion via provincial media.
+ Support 100% to the money that the enterprise has paid to the following fees: environmental impact assessment if the project is under the evaluation of Province People’s Committee; charge of granting land use right certificate; granting and/or re-granting, extension of the Working Permit of the expatriate who works in Vietnam, registration fee of seals
2. Priority is given to labour supply and support an amount of VND 400.000/apprentice if the enterprise does it by and for itself and in accordance with the provisions of the province (in Resolution No. 37/2011/NQ-HDND dated 19 December 2011 of Vinh Phuc People’s Council on a number of policies to support job training, job creation and poverty reduction period from 2012 to 2015, Decision No. 24/2012/QD-UBND dated 30 July 2012 of the provincial People’s Committee; Decision No 19/2012/QD-UBND dated 18 July 2012 of Province People’s Committee).
3. The Province has constructed the essential infrastructures such as road, power and water supply system, communication….to the fence of the industrial parks; and apply the the lowest land lease price in the Government’s price frame to the enterprises.
4. For the investors investing in infrastructure in the industrial cluster, the following incentives shall be given to:
– Support 100% of fee to: prepare a report on the environment impact assessment of the project; prepare planning scale 1/500 of such cluster, detect bomb and mine within the cluster’s area;
To Support the technical items inside the cluster as: solid waste collection system, waste water treatment system meeting with the standard and criteria applied to industrial cluster. For a cluster of below 10ha of land, up VND 5 billion shall be granted, a cluster of 10ha to 20ha of land: VND 7 billion, from 20ha to 75 ha: VND 10 billion.
For the production establishments in the industrial cluster, the owner shall be granted one time an amount of VND 700,000/apprentice (applied to person who is not granted a training fee as to the Solution of Province People’s Council).
5. For the encouraged investment projects, including: Education-training projects, vocational training, health, sports, environmental treatment; the investor shall be transferred the clear ground to construct the project.
6. The address http:// doithoaidoanhnghiep.gov.vn to maintain dialogue between the company and Vinh Phuc Government, and to receive claim/request from company and feedback from the relevant provincial agencies under the instruction of the Province Government. The time limit for feeding back or answering the company’s claim/request is within 5 working days only.
7. For the large projects, depending on each specific project the Province shall make a proper consideration and offer an appropriate incentive policy.