-
 Our
recent review of the current system of CIT incentives in Vietnam
suggests that there are substantial problems with complexity,
targeting, equity, definition and administration. The current
incentives regime in Vietnam is based on the award of tax
holidays and is among the most complex in the region. Since part
of this complexity arose from successive amendments over the
years, Vietnam should therefore focus on redesign of the regime
and not on further adjustment. In designing a new CIT incentives
regime, the Government should consider a targeted,
performance-based approach, based on the principles of equity,
simplicity and transparency. To achieve these objectives we have
recommended that Vietnam consider introducing a system of
incentives based on investment tax credits--awarded as a
percentage of total investment expenditure in the course of a
CIT year. This approach, with its reliance on rewarding actual
performance rather than expectations, has been used and proven
successful in a number of other countries.
Mr. Russell Muir, Lead Economist,
Foreign Investment Advisory Service (FIAS), The World Bank Group
Mr. Nguyen Khac Thanh, Managing Partner, Ernst & Young Vietnam
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When we participate
in some international and regional software trade fairs, we
realize that there are no “Made in Vietnam” products in the
world information technology map. This is not a brand of an
individual company, but a national brand that is beyond the
capacity of any single company to develop. The government needs
to take a leading role in this field. In my opinion, this kind
of support is far more important that any incentives.
Mr. Phi Anh Tuan, Deputy General Director AZ Solutions
Joint-Stock Company
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The proposal that
the incentive system should be simplified, to the extent that
there would be based only on two categories for specific
business sectors and locations, is a reasonable one. Providing
rewards which are directly linked to actual, rather than
proposed investment (i.e. that is performance rather than
expectation based) would be more effective. In short, the system
should be simple, easy to manage, cost-effective, and benefit a
majority of investors and enterprises.
Mr. Pham Xuan Mai, General Secretary, Shoe and Leather
Association of Ho Chi Minh City
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Incentives like
accelerated depreciation allowances for quick capital recovery,
less restrictions on the calculation of the taxable income (from
which various expenses can be deducted), as well as transparent
and clear regulations on invoices and documents would be
welcomed by enterprises.
It was recently proposed by experts from the World Bank Group to
only provide investment tax credits, instead of our existing CIT
exemption and deduction scheme. This would allow companies in
specific sectors to reduce their tax bill, as a proportion of
their investment expenditures. Many other countries are applying
this approach. However, two factors are critical in the
implementation of this scheme. First, a priority list of
sectors/industries in need of support should be identified,
which is aligned with a master plan addressing national
advantages and industrial development strategies. Second, that
there is a transparent and effective tax declaration system, as
well as efficient coordination between relevant government
agencies. It would be difficult to implement the proposed system
if these two factors are missing. Therefore the proposal needs
to be carefully considered.
Mr. Nguyen Van Phung, Deputy Head of Tax Policy Department,
Ministry of Finance
-
 A
survey conducted by Japan Bank for International Cooperation (JBIC)
shows that Vietnam is ranked as the fourth destination for
Japanese manufacturers to invest (after China, India and
Thailand), due to its inexpensive labor force and excellent
human resources. However, Japanese investors still cite many
unresolved issues that are mostly related to the legal system,
infrastructure, security and social conditions. It means that a
greater effort should be made to improve a number of fundamental
aspects of the business environment, in order to make Vietnam a
more attractive and competitive destination for foreign
investment. Whatever changes in investment incentive policies
are made, there should be a stable and consistent legal system
in place, so as to ensure that the rights and interests of
investors are protected.
Mr. Toshihide Hashima, Head of Vietnam Business Forum Committee,
The Japan Business Association in Vietnam
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The new
Comprehensive Investment Law will: i) lay out a level-playing
field for both domestic and foreign companies; ii) provide more
freedom and transparency to investors; iii) provide focused,
targeted and strategic incentive schemes; and iv) strengthen the
management and enterprise support capacity of our administrative
system.
Mr. Pham Manh Dzung, Head of Legal Department, MPI
& Head of CIL Drafting Committee
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