On 26 November 2014, the National Assembly passed Law No. 67/2014/QH13 on Investment (Investment Law 2014) with many new provisions that have significant impacts for both foreign and domestic investors. The Law on Investment takes effect on July 1, 2015.
Investment incentives
Investment incentives comprise entitlement to a lower rate of corporate income tax (CIT); exemption from or reduced CIT; exemption from import duties on imported goods to form fixed assets, raw materials, supplies and components to implement investment projects; and exemption from or reduced land use fees and taxes. Investment incentives apply to the following investment projects:
(1) Involvement in preferential investment industries and trades.
(2) Being located in a preferential investment geographical area.
(3) Having a scale of investment capital being 6 trillion dong or more disbursed over three years or less after receipt of an investment certificate (IC) or investment policy.
(4) Being located in rural areas and employing 500 employees or more.
(5) High-tech enterprises, scientific and technological enterprises or scientific and technological organizations.
Investment incentives applying to the projects listed in the above (2), (3) and (4) will not apply to projects for mineral resources exploitation and production, or for goods and services subject to special consumption tax, except car production.
Preferential investment industries and trades
(1) High-tech activities, industrial products supporting high-technology, research and development activities.
(2) Manufacture of new materials, new energy, clean energy, renewable energy; manufacture of products with added value of 30 per cent or more or saving energy.
(3) Manufacture of electronics, prioritised mechanical products, agricultural machinery, cars, car accessories and shipbuilding.
(4) Manufacture of products to support the garment, leather and shoe industries, and products specified in the above (3).
(5) Manufacture of IT products, software and digital products.
(6) Breeding, growing and processing agricultural, forestry and aquaculture products; planting and protecting of forests; salt production; fishing and fishing logistics services; creation of plant and animal varieties, and manufacture of biological technology.
(7) Collection, reprocessing or reuse of waste.
(8) Development, operation and management of infrastructure facilities, and development of public transportation in urban areas.
(9) Pre-school education, general education and vocational education.
(10) Medical consultation and treatment, production of medicines, raw materials for the production of medicines, principal medicines, essential medicines and medicines for prevention and treatment of social diseases, vaccines, medical biological products, medicines from pharmaceutical materials, oriental medicines; scientific research for preparation technology or biological technology for the production of new medicines.
(11) Investment in sports or physical practices and competition facilities for disabled people or for professional people, and the protection and promotion of cultural heritages.
(12) Investment in centres for geriatrics, psychiatry or treatment of patients exposed to Agent Orange, or care centres for the elderly, disabled, orphans or street children.
(13) People's credit funds and micro finance organisations.
Investment certificate
The following projects are required to follow these procedures to obtain an IC:
(1) Investment projects of foreign investors
(2) Investment projects of economic organizations (a) having foreign investors holding 51 per cent of charter capital or more; or the most partnership members being foreign individuals applicable to partnership company; (b) having economic organisations specified in the above (a) holding 51 per cent of charter capital or more; (c) having foreign investors and economic organisations specified in the above (a) holding 51 per cent of charter capital or more.
The Investment Law 2014 includes investment projects not subject to implementation of the procedures for IC issuance as follows:
(1) Investment projects of domestic investors
(2) Investment projects of economic organisations having foreign invested capital and not listed in the above (2).(a), (b) and (c) will implement investment procedures in accordance with provisions applicable to domestic investors when they invest and establish economic organisations; investment in the form of a capital contribution or purchase of shares or capital parts of economic organisations; investment in the form of a business co-operation contract.
(3) Investment in the form of a capital contribution, or purchase of a share or capital parts of economic organisations.
Investment activities to be prohibited
The Investment Law 2014 provides details of investment activities to be prohibited such as drugs, chemicals and minerals; specimens of wild fauna or flora, and specimens of species of endangered and rare wild fauna or flora specified in the Investment Law 2014 and others; prostitution; human trafficking or the sale of human body parts; and businesses related to a sexual reproduction.
