​Deloitte Vietnam – Tax Alert – Proposed Tax Incentive Changes

Over the past 30 years of social-economic reforms, Vietnam’s tax incentive regimes have been constantly changing to align with the changes of political and social landscapes. The Ministry of Finance is drafting an amended Corporate Income Tax Law, which is expected to take effect in 2021 or later.

Deloitte launchs Tax Alert to keep enterprises updated with the latest tax incentive proposals of The Ministry of Finance (MoF) and Deloitte’s view on actions to do to head up with the changes for tax incentive optimization.
MoF is drafting an amended Corporate Income Tax Law, which is expected to take effect in 2021 or later, as follows:

Location-based Corporate Income Tax (“CIT”) incentives to be narrowed to remote areas only
Sector-based CIT incentives to be navigated to fuel prioritized industries (software services and digital content production, science and technology enterprises, automobile manufacturing and investment projects in rural areas using at least 500 full-time employees).

The MoF is also proposing not to grant CIT incentives for projects manufacturing products subject to Special Sales Tax (excluding automobiles) for consistency with the current Investment Law and remove CIT incentives for:

Biotechnology development projects (due to the lack of specialized legal documents)
Projects with minimum investment capital of VND 6,000 billion (Still keep CIT incentives for projects with investment capital from VND 12,000 billion).

Subject to tax incentive amendment proposals, Deloitte’s view for investors to optimize incentives is:

For established projects in EZs and IZs, they could still enjoy the tax incentive schemes  prior to its official effective date.
To new investment and expansion in EZs or IZs, the timing of the investment (i.e in 2019 or 2020) should be considered.
Any risk of incentives being impacted or any opportunity for higher tax incentives for current and future projects should be identified
Impacted investors then can work out end-to-end strategic plans regarding timing of investment, possible business restricting and licensing.

 
We also introduce in the Alert the link to download Deloitte’s global report of Innovation and Investment Incentives available in 43 countries.
 
Deloitte Contacts
Thomas McClelland
Tax Leader
+84 28 3910 0751
tmcclelland@deloitte.com
 
Bui Ngoc Tuan
Tax Partner
+84 24 6268 3568
tbui@deloitte.com

Bui Tuan Minh
Tax Partner
+84 24 6268 3568
mbui@deloitte.com

Phan Vu Hoang
Tax Partner
+84 28 3910 0751
hoangphan@deloitte.com
 
Suresh G Kumar
Tax Partner
+84 28 3910 0751
ksuresh@deloitte.com

Dion Thai Phuong
Tax Partner
+84 28 3910 0751
dthai@deloitte.com
 
Vo Hiep Van An
Tax Partner
+84 28 3910 0751
avo@deloitte.com

Dinh Mai Hanh
Tax Partner
+84 24 6268 3568
handinh@deloitte.com