Ho Chi Minh City does not use tax incentives to attract investment.

After more than 6 months of implementing Resolution 98/2023/QH15 on piloting a number of specific mechanisms and policies for the development of Ho Chi Minh City, the locality has initially attracted a number of strategic investors to invest in high-tech projects in the right direction.

Investors still want tax incentives

One of the most important issues that investors are concerned about when investing in Ho Chi Minh City is tax incentives, especially in the context of the global minimum tax that has been applied by Vietnam since the beginning of this year.

“When the global minimum tax comes into effect, what businesses are most concerned about is whether the Government has any policies to support them or not?”, Ms. Dang Mai Kim Ngan, Deputy General Director of Deloitte Vietnam, raised the issue at the Conference on Prospects and Solutions to Attract Investors in the Context of Implementing the Global Minimum Tax and New Trends, which took place in Ho Chi Minh City recently.

According to Ms. Ngan, when deciding to invest, businesses want to know whether Vietnam's support policies are contrary to the commitments of the Organization for Economic Cooperation and Development (OECD), because they are concerned that if they are not consistent, it can easily lead to double taxation.

Answering questions from businesses, Mr. Do Van Su, Deputy Director of the Foreign Investment Department ( Ministry of Planning and Investment ) said that the Ministry of Planning and Investment is seeking opinions on the Draft Decree on the establishment, management and use of the Investment Support Fund. In particular, there are preferential support solutions such as investment subsidies, land rent exemption and reduction, credit support or credit guarantees... In addition, there are also support policies on training costs, human resource development, research and development costs, investment costs to create fixed assets, production costs of high-tech products...

The leader of the Foreign Investment Agency also specifically informed that, according to OECD guidelines, business subsidies are considered inappropriate if they violate one of four factors: the support object does not benefit all businesses; only benefits businesses affected by the global minimum tax; the subsidy is due to the implementation of the global minimum tax; the benefit policies are issued after the rules for applying the global minimum tax are in place.

“Therefore, Vietnam is reviewing the possibility of legal conflicts with the provisions on investment guarantees under the current Investment Law,” Mr. Su informed.

Do not use tax incentives to attract investment

After only a few months of implementing specific mechanisms from Resolution 98/2023/QH15, investment attraction in Ho Chi Minh City has had very positive changes.

Mr. Nguyen Anh Thi, Head of the Management Board of Ho Chi Minh City High-Tech Park, said that after Resolution 98/2023/QH15 took effect, the High-Tech Park re-established the one-stop mechanism on the spot, thereby shortening administrative procedures for investors.

For example, investor BESI (Netherlands) said that just 4 months after being granted an investment license in the High-Tech Park to produce chip packaging inspection machines, they put the machines into production. According to Mr. Thi, this is a new record in investment in the City.

From the story of BESI investing in the Ho Chi Minh City High-Tech Park, many large enterprises also agree that the issue they care most about is whether the business environment is stable and favorable or not, not tax incentives.

In the current new orientation, Ho Chi Minh City also determined not to take tax incentives as a competitive advantage in attracting investment, but the City attaches importance to improving the investment and business environment.

Mr. Vu Tien Loc, Chairman of the Vietnam International Arbitration Center (VIAC), also said that in the context of the current risky investment environment, what investors care about most is the stability and transparency of the investment and business environment and creating an ecosystem for business development, not just support measures in terms of money, taxes, and incentives.

“Currently, technology changes every 6 months, and it takes years to get an investment license, so it is very difficult to attract investment. If the investment environment is favorable, investors can generate a lot of profit without needing tax incentives. But if the procedures are slow and there is no ecosystem, even if there are many incentives, investors are still not interested,” Mr. Loc emphasized.

Expressing his views on attracting strategic investors to Ho Chi Minh City, Mr. Nguyen Anh Thi said that strategic investors must meet two conditions: helping Vietnam improve its technological capacity and attracting businesses to invest together in the global value chain. He gave an example, BESI's factory, although only having an investment capital of 5 million USD, is in the field of semiconductors and microchips - a high-tech field, with global spreading value and in line with Ho Chi Minh City's investment attraction orientation.

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