INVESTMENT INCENTIVES UNDER THE LAW ON INVESTMENT 2020

Legal basis

Law on Investment 2020;

Decree No. 31/2021/ND-CP.

1. What are investment incentives?

Currently, the legal documents do not have a specific concept of investment incentives, which can be understood, investment incentives are the incentives of the State for investors when they invest in the fields of investment. Areas and areas that are encouraged to invest in to create economic restructuring, in line with the country's socio-economic development strategy.

2. Who is entitled to investment incentives under the Law on Investment 2020?

The Law on Investment 2020 has made certain changes and additions to the beneficiaries of investment incentives compared to the Law on Investment 2014 as follows:

(i) Investment projects in sectors or trades eligible for investment incentives;

(ii) Investment projects in investment incentive areas;

(iii) The project has a capital scale of VND 6000 billion or more and meets the following conditions:

- Disburse at least VND 6000 billion or more within 03 years from the date of issuance of the Investment Registration Certificate or approval of the policy;

- Having a total turnover of at least VND 10000 billion per year within 03 years at the latest from the year of revenue or employing more than 3,000 employees;

(ii) Investment project on construction of social housing; investment projects in rural areas employing 500 or more employees; investment projects using employees with disabilities by the law on people;

(iii) High-tech enterprises, science and technology enterprises, science and technology organizations; projects involving science and technology transfer on the list of technologies encouraged for transfer under the law on technology transfer; technology incubators, science, and technology business incubators according to the provisions of the law on high technology and the law on science and technology; enterprises producing and providing technology, equipment, products and services to meet the requirements of environmental protection following the provisions of the law on environmental protection;

(iv) Innovative start-up investment projects, innovation centers, research and development centers;

(v) Investment in distribution chain business of small and medium enterprises; business investment in technical facilities to support small and medium-sized enterprises, small and medium-sized business incubators; to invest in the business in the coworking space to support small and medium-sized enterprises to start and innovate according to the provisions of the law on supporting small and medium enterprises;

(vi) Investment incentives are also applied to new investment projects and expansion investments.

3. What forms of investment incentives are there?

Types of investment incentives include:

(i) Corporate income tax incentives;

(ii) Tax exemption, tax reduction, and other incentives by the law on corporate income tax;

(iii) Exemption from import tax on goods imported to create fixed assets; raw materials, supplies, and components imported for production by the law on import and export tax;

(iv) Exemption or reduction of land use levy, land rent, and land use tax;

(v) Accelerated depreciation, increased deductible expenses when calculating taxable income.

4. How is the procedure for applying investment incentives?

Unlike the 2014 Investment Law, which determines the basis for the application of investment incentives based on the project that has been granted an Investment Registration Certificate, Article 17 of the Law on Investment 2020 and Article 23 of Decree 31/2021/ND-CP provide a basis for investors to determine investment incentives by themselves and carry out procedures for enjoying investment incentives at tax authorities, as follows:

(i) Basis for determining eligibility for investment incentives: Decision on approval of investment policy, Certificate of investment registration, Decision on investor approval;

(ii) The basis for carrying out procedures for enjoying investment incentives is based on: Contents of investment incentives in the Decision on approval of investment policies, Certificate of investment registration, Decision on approval of investors;

(iii) Bases for application of investment incentives to some enterprises and investment projects include:

- For science and technology enterprises, it is the Certificate of Science and Technology Enterprise;

- For agricultural enterprises applying high technology, it is the Certificate of agricultural enterprise applying high technology;

- For hi-tech application projects, it is the certificate of high-tech application projects;

- For supporting industry projects, it is the Certificate of Incentives for the production of supporting industry products;

- For projects involving technology transfer on the List of technologies encouraged for transfer, it is the Certificate of technology transfer encouraged for transfer according to the Prime Minister's regulations.

(iv) For investment projects that do not fall into the above cases, investors shall base themselves on the beneficiaries of investment incentives in Article 19 of Decree 31/2021/ND-CP and relevant laws. to self-determine investment incentives and carry out procedures for enjoying investment incentives at agencies applying investment incentives corresponding to each type of incentive.

5. In what cases can investors adjust investment incentives?

(i) Investors who are currently enjoying investment incentives and meet the conditions to enjoy additional benefits or enjoy higher levels will enjoy higher benefits or new incentives under a new form for the remaining time;

(ii) The investor is not entitled to the incentives specified in the Investment Registration Certificate, the Decision on approval of the investment policy, or the incentives determined by the investor himself due to failure to meet the conditions for preferential enjoyment. treat. In case the investment project satisfies the conditions for enjoying investment incentives, the investor shall be entitled to incentives according to such conditions;

(iii) If an investment project has a period that does not satisfy the conditions for enjoying investment incentives, the investor will not be entitled to incentives during that period.

ADK & Co Vietnam Lawyers Law Firm