Amend the law to add incentives to attract "big players."

Báo Đầu tư•25/11/2024

Many institutions and policies will be revised, thereby facilitating Vietnam's attraction of foreign investment.

More incentives are needed to facilitate attracting foreign investment. Photo : Duc Thanh

More incentives to attract big investors.

Regulations on special investment incentives have been incorporated into the Draft Amendment to the Corporate Income Tax Law (Draft), currently under discussion at the Eighth Session of the 15th National Assembly . Previously, these regulations were institutionalized in the 2020 Investment Law. Thus, with this amendment, the provisions on special investment incentives are now officially included in the Corporate Income Tax Law, even though this law is only expected to be discussed and not yet passed at the Eighth Session.

In addition, the regulations regarding investment incentives for expansion projects are also more clearly defined. Current regulations require separate accounting of income from expansion projects from the original investment project, but according to the Government , this is inappropriate and inadequate. Therefore, the draft has been amended to allow the additional income from expansion projects to enjoy incentives for the remaining duration of the original project and does not need to be accounted for separately.

These regulations are expected to facilitate investors, especially when they make new investments or expand existing projects, particularly large-scale projects in sectors eligible for expanded investment incentives, such as high technology and research and development (R&D).

Regarding the above issue, during the review and discussion of the Project, the Finance and Budget Committee of the National Assembly and some National Assembly deputies also expressed concerns about the effectiveness of the special incentive policy, especially when the global minimum tax policy is applied. However, in reality, this is still what foreign investors are looking forward to. This is because only investors with consolidated global revenue of 750 million EUR are subject to excise tax and must pay additional tax if the actual corporate income tax paid has a tax rate below 15%.

Some National Assembly representatives even suggested that it is necessary to redesign and supplement new incentive mechanisms to facilitate attracting large corporations.

Representative Nguyen Thanh Trung ( Yen Bai ) argued that instead of setting easy tax incentives for investors as is currently the case (where any investment is automatically tax-exempt or reduced), tax incentives and other direct state support policies should be designed with certain conditions attached, such as investment in high-tech, green technology, breakthrough industries, or a certain percentage of domestic investor participation.

During the review, the Finance and Budget Committee also highly appreciated that, in addition to income-based incentives, the Draft also stipulates several cases for applying cost-based incentives. This is precisely the form of incentive that many economic experts have recently argued should be applied to facilitate investment attraction in the new context.

According to the National Assembly's Finance and Budget Committee, while corporate income tax incentives based on R&D costs have been stipulated in several National Assembly resolutions on special mechanisms for pilot application in some localities, they have not yet been implemented in practice to provide a basis for general application.

"We urge the Government to promptly implement these measures in practice," the National Assembly's Finance and Budget Committee stated.

Vietnam's efforts to improve its business and investment environment will facilitate foreign businesses in developing projects in sectors enjoying expanded preferential mechanisms such as high technology, research and development, etc. Photo: Duc Thanh. Graphics: Dan Nguyen

Creating a "green channel" for FDI projects

Besides tax incentives, several revised institutions and policies are also expected to facilitate Vietnam's ability to attract investment. The regulation on applying a 0% value-added tax to export processing enterprises is one example.

Redesigning incentive policies for foreign investors is more urgent than ever, as global minimum tax regulations will come into effect next year.

- Representative Nguyen Thanh Trung (Yen Bai)

In fact, this is the current regulation. However, when the Value Added Tax Law is being revised, this regulation has been proposed to be amended to abolish the application of the 0% VAT rate to services provided in non-taxable zones. Immediately, many foreign investors, including Samsung and Canon, have voiced their concerns about this issue. Many economic experts also believe that narrowing the scope of businesses eligible for the 0% tax rate will affect businesses in non-taxable zones, export processing zones, and industrial parks.

Following discussions among stakeholders, the current regulation will ultimately remain unchanged.

Another important regulation proposed for reform this time is that, in the Law amending and supplementing a number of articles of the Planning Law, the Investment Law, the Law on Investment under the Public-Private Partnership (PPP) method, and the Bidding Law, the Government has proposed applying special investment procedures for projects in the fields of innovation, R&D; semiconductor integrated circuit industry, technology for designing and manufacturing components, integrated electronic circuits, chips, high-tech fields, and high-tech products that are prioritized and encouraged for investment according to the Prime Minister's decision... in industrial parks, export processing zones, high-tech zones and economic zones.

According to Minister of Planning and Investment Nguyen Chi Dung, this is the government's design of a "green channel" for foreign investment projects. During discussions on this matter, Minister Nguyen Chi Dung mentioned the example of China, where a multi-billion dollar automobile factory was built in just 11 months… to emphasize the urgency of creating a favorable and attractive investment environment, prioritizing post-audit procedures. This is also the reason the government has added regulations on special investment procedures.

Once approved, these regulations will certainly facilitate attracting foreign investment, especially investment projects in the semiconductor and AI sectors from major players.

Source: https://baodautu.vn/sua-luat-de-them-uu-dai-don-dai-bang-d230788.html