18:37, 09/07/2024
Investment incentives and investment support are both beneficial policies for investors aimed at encouraging investment. However, investment incentives and investment support are two distinct concepts and should not be confused.
Article table of contents
Do not confuse between investment incentives and investment support (Illustration)
Based on the Investment Law 2020, LAWNET would like to send our customers and members some content to clearly distinguish the regulations on investment incentives and investment support for investors. To be specific:
| Content | Investment Incentives | Investment Support |
| Eligible Subjects | - Investment projects in sectors and trades eligible for investment incentives stipulated in Clause 1, Article 16 of Investment Law 2020; - Investment projects in areas eligible for investment incentives stipulated in Clause 2, Article 16 of Investment Law 2020; - Investment projects with capital scale from VND 6,000 billion or more, disbursing at least VND 6,000 billion within 03 years from the date of issuance of the Investment Registration Certificate or investment policy approval, and meet one of the following criteria: have a total revenue of at least VND 10,000 billion each year within 03 years from the year of revenue or employ over 3,000 workers; - Investment projects to construct social housing; projects in rural areas using 500 or more laborers; projects using laborers who are disabled as regulated by the law on disabilities; - High-tech enterprises, scientific and technological enterprises, science and technology organizations; projects transferring technology on the list of encouraged technology transfer as stipulated by the law on technology transfer; technology incubators, enterprise incubators of science and technology as stipulated by the law on high technology and science and technology; manufacturers and providers of technology, equipment, products and services to meet environmental protection requirements as stipulated by the law on environmental protection; - Startup investment projects, innovation centers, research and development centers; - Investment in and business of product distribution chains by small and medium enterprises; investment in and business of technical infrastructure facilities supporting small and medium enterprises, incubation facilities for small and medium enterprises; investment in and business of co-working spaces supporting small and medium enterprises startups according to the law on support of small and medium enterprises. >> Compared to the Investment Law 2014, the Investment Law 2020 has added many more subjects (in bold) eligible for investment incentives. (according to Clause 2, Article 15 of Investment Law 2020) |
- High-tech enterprises; - Scientific and technological enterprises; - Science and technology organizations; - Enterprises investing in agriculture and rural areas; - Enterprises investing in education and law dissemination; and - Other subjects. (according to Clause 2, Article 18 of Investment Law 2020) |
| Application Forms | - Corporate income tax incentives, including applying a lower corporate income tax rate than the normal tax rate for a limited or entire project execution period; tax exemption, tax reduction and other incentives according to the law on corporate income tax; - Exemption from import tax on imported goods to create fixed assets; raw materials, supplies, components imported for production as stipulated by the law on export tax and import tax; - Exemption and reduction of land levy, land rent, and land use tax; - Accelerated depreciation, increased deductible expenses when calculating taxable income. >> The Investment Law 2020 has also added more application forms for investment incentives (in bold). (according to Clause 1, Article 15 of Investment Law 2020) |
- Support to develop technical infrastructure and social infrastructure systems inside and outside the investment project fences; - Support for training and developing human resources; - Credit support; - Support for access to production and business premises; support for displaced production and business establishments as decided by state agencies; - Support for science, technology, and technology transfer; - Market development support, information provision; - Research and development support. (according to Clause 1, Article 18 of Investment Law 2020) |
| Regulations Applicable | Investors self-determine investment incentives and carry out procedures for enjoying investment incentives at tax agencies, financial agencies, customs agencies, and other relevant competent authorities based on:
while Investment Law 2014 stipulates: > > > 1. For projects granted the Investment Registration Certificate, the investment registration authority records the content of investment incentives, basis, and conditions for applying investment incentives in the Investment Registration Certificate. > > > > 2. For projects not required to obtain an Investment Registration Certificate, investors are entitled to investment incentives if they meet the conditions for investment incentives without having to follow procedures for obtaining an Investment Registration Certificate. In this case, investors base their determination of investment incentives on the conditions stipulated in Articles 15 and 16 of this Law and other related legal regulations to self-determine investment incentives and carry out procedures for enjoying investment incentives at competent tax, financial, and customs agencies. > > as per Investment Law 2020, it is only stipulated that the investor self-determines investment incentives without any case of the investment registration authority recording it in the Investment Registration Certificate for applying investment incentives. (according to Article 17 of Investment Law 2020) |
Unlike investment incentives which investors self-determine, the application of investment support is stipulated as follows: - Based on the approved or decided planning as regulated by the law on planning, Ministries, ministerial-level agencies, and provincial People's Committees shall build investment plans and organize the construction of technical infrastructure and social infrastructure systems outside and within industrial parks, export processing zones, high-tech zones, and functional areas within economic zones. - The State supports a part of development investment capital from the state budget and preferential credit funds to synchronize the technical infrastructure and social infrastructure system inside and outside industrial parks in areas with difficult socio-economic conditions or particularly difficult socio-economic conditions. - The State supports a part of development investment capital from the state budget, preferential credit funds, and applies other capital mobilization methods to build technical infrastructure and social infrastructure systems within economic zones and high-tech zones. (according to Article 19 of Investment Law 2020) |
Thus, from January 1, 2021, investment incentives will be completely determined by investors themselves. Because investment incentives are benefits permitted by law and investors need to take the initiative to enjoy these benefits. From the above contents, it can be seen that investment incentives and investment support are phrases often used together but are actually two different concepts, and investors should not confuse them.
Note: The Investment Law 2020 of Vietnam will officially take effect from January 1, 2021, replacing the Investment Law 2014.
Thuy Tram
- Key word:
- Investment Law 2020
