Enterprises engaged in supporting industries would be entitled to numerous incentives and supports from the State, under a draft decree prepared by the Ministry of Industry and Trade (MoIT) with a view to creating a breakthrough in development of the industries.
Specifically, projects manufacturing products for supporting industries would be exempted from corporate income tax (CIT) for the first four years and enjoy a 50- percent reduction in the subsequent nine years, counting from the first year of generating taxable incomes. In case the enterprises earn no taxable incomes for three consecutive years after their projects have turnover, the tax exemption and reduction period would start from the fourth year. Meanwhile, training and technology transfer experts working for these projects would enjoy a 50-percent reduction of personal income tax.
Goods imported to create fixed assets and serve production of spare parts, which cannot be produced at home, would be exempt from import duty. Enterprises would also get financial support to deal with environmental issues.
Regarding projects to manufacture hi-tech products, the draft proposes the application of the preferential CIT rate of 10 percent for the first 15 years of operation, CIT exemption for four years and a 50-percent reduction for the subsequent nine years.
In terms of land rental, projects located outside industrial parks would be entitled to a 50-percent reduction for the first 11 years of operation, while those within industrial parks would be offered land rental exemption for 11 years, followed by a 50-percent reduction for subsequent nine years. Existing projects would also be eligible for these incentives if they could improve their production capacity by at least 20 percent.
Under the draft, small- and medium-sized enterprises (SMEs) operating in supporting industries may borrow from the Supporting Industry Investment Fund, which would be soon set up, soft loans at an interest rate not exceeding 80 percent of that of ordinary loans for a term of up to 10 years. In addition, they would be eligible for a six-month extension of the value-added tax payment time limit.
Statistics show that Vietnam has only 656 enterprises making spare parts, while there are over 58,000 enterprises operating in industrial sectors. “It has been very hard for local enterprises to join big foreign firms’ supply chains, because the State does not support them in terms of incentive,” MoIT Minister Vu Huy Hoang was quoted by the Investment Review as saying.-
