Tax incentives in Asia-Pacific

Vietnam

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Tax incentives have played an important role in attracting FDI into Vietnam over the past decades. The effectiveness of the tax incentives policy is evident from the amount of foreign investment capital influx into the country. Tax regulations of Vietnam are regularly reviewed and revised for the purpose of stimulating the economy and maintaining a rapid and sustainable development. The overarching aim is to propel Vietnam’s economy forward by participating in high-value activities of regional and global production supply chains.

Going forward, it can be expected that tax incentives will continue to play an important role in the Government’s economic growth plans for the country.

Vietnam incentive regime overview

In Vietnam, tax incentives are granted to both foreign and local investors. Conditions and requirements of tax incentives are stipulated in the Law on Investment and the Corporate Income Tax regulations. Incentives are available to all taxpayers and typically claimed through annual tax returns via self-assessment.

Statutory:

Incentive administering body

Before incentives can be availed of, investment projects must first be registered and approved by the relevant administrative authorities such as:

  • Management boards of industrial parks, export-processing zones, high- tech zones and economic zones
  • Provincial Departments of Planning and Investment

The local tax authorities, General Department of Taxation and the State Auditor may carry out tax audit and re-assess the tax incentives claimed by the taxpayer.

General application process

  • Foreign investors investing in Vietnam for the first time must obtain an Investment Registration Certificate (IRC) before incorporating an enterprise.
  • To apply for the IRC, an application dossier must be submitted to the registration authority. If all conditions are met and the project is approved, the registration authority will issue an IRC to the investor.
  • Depending on the local registration authority, the IRC may or may not specifically state the applicable incentives. The IRC would often only refer to the relevant tax regulations in which the tax incentive is applicable rather than the specific applicable incentives.
  • Thereafter, the foreign investors would have to obtain an Enterprise Registration Certificate (ERC) to incorporate an enterprise.
  • Investor will have to make a self-assessment in its annual corporate tax filing on the applicable tax incentives.

Incentive application timeline

The timeline of the IRC application process varies, depending on the business sector applied.

  • Projects subject to in-principle approvals of authority (i.e., Prime Minister, provincial people’s committee): five working days upon receiving the investment approval from the aforementioned relevant authorities.
  • Normal projects: 15 working days upon receiving the IRC application dossier.
  • For ERC: three working days upon receiving the ERC application dossiers.

Things to note

  • In practice, the application timeline may take longer than the stipulated timeline.
  • Result from a tax audit may lead to the investment project being disqualified from tax incentives.

We provide a summary of tax incentives and other incentives in Vietnam that are available for investments in promoted sectors and promoted locations.

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