Guide for businesses on tax incentives and investment incentives when changing administrative units

The Ministry of Finance provides detailed guidance on tax incentives and investment incentives for businesses when changing administrative boundaries. Photo: Hai Nguyen

A business based in Nga Bay City, Hau Giang province, sent a question to the Tax Policy Department (Ministry of Finance).

Accordingly, the Company was established and operated in Hiep Thanh Commune (Area III), Nga Bay City, Hau Giang Province. During its operation, the enterprise is eligible for and is applying a preferential tax rate of 10% with the exemption and reduction period according to Articles 15-16 of Decree 218/2013/ND-CP (4-year exemption period, 50% reduction in the next 9 years).

From July 1, 2025, according to Resolution 1668/NQ-UBTVQH15, Hiep Thanh commune was merged into Nga Bay ward (new administrative unit). Therefore, the name and level of administrative unit changed from "commune" to "ward", and the new area is not currently listed in the Appendix of preferential areas of Decree 218/2013/ND-CP. III.

Enterprises recommend that the Ministry of Finance provide guidance on the following issues:

- Determining the area: After the merger, will Nga Bay ward still be classified as an "area with particularly difficult socio -economic conditions" to continue applying incentives according to Point a, Clause 1, Article 15, Decree 218/2013/ND-CP?

- Maintaining incentives: In case Nga Bay ward is no longer in a "particularly difficult" area, will the Company continue to enjoy corporate income tax incentives (tax rate and exemption and reduction period) for the remaining incentive period according to Clause 10, Article 1 of Decree 12/2015/ND-CP or is it necessary to carry out adjustment procedures?

- What documents do businesses need to submit for tax authorities to have a basis for approval?

Regarding this issue, the Ministry of Finance responded as follows:

"1. On determining preferential investment locations

1.1. For investment projects that have been approved in principle for investment/issued with an Investment Registration Certificate:

Article 13 of the Investment Law and Article 4 of Decree No. 31/2021/ND-CP dated March 26, 2021 detailing and guiding the implementation of a number of articles of the Investment Law stipulate the guarantee of investment incentives in case of changes in law.

Accordingly, guaranteed investment incentives include: "Investment incentives are stipulated in the Investment License, Business License, Investment Incentive Certificate, Investment Certificate, Investment Registration Certificate or other documents issued by competent persons or competent state agencies, applied in accordance with the provisions of law. In which, the content of investment incentives includes the form of investment incentives based on the investment location determined in the decision approving the investment policy and the Investment Registration Certificate.

Therefore, based on the above provisions, in case a new administrative unit is established by a competent authority due to arrangement and adjustment of boundaries, it is recommended to continue applying incentives related to the investment incentive area identified in the Decision on approval of investment policy and the issued Investment Registration Certificate.

2. Regarding investment project adjustment

The Investment Law (Article 41) and Decree No. 31/2021/ND-CP (Chapter IV, Section 4) do not regulate the adjustment of investment projects in case of changes in administrative boundaries. According to the principles stipulated in Article 13 of the Investment Law and Article 4 of Decree No. 31/2021/ND-CP, projects that have been granted investment policy decisions/Investment Registration Certificates shall continue to be implemented according to this document.

In case the investor needs to adjust the investment project, please follow the following regulations:

For projects that have been approved for investment policy, project adjustments shall be made in accordance with the principles prescribed in Clause 3, Article 41 of the Investment Law and Section 4, Chapter IV of Decree No. 31/2021/ND-CP, depending on the content of the adjustment.

For projects implemented under the Investment Registration Certificate, the adjustment of the contents of the Investment Registration Certificate shall be implemented in accordance with the provisions of Article 39, Clause 2, Article 41 of the Investment Law and Article 47 of Decree No. 31/2021/ND-CP.

Based on the above provisions, taxpayers are requested to comply with the provisions of Article 13 of the Investment Law and Article 4 of Decree No. 31/2021/ND-CP dated March 26, 2021 of the Government.

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