Overview of investment preference policies A string of investment preference policies on corporate income tax, land lease, finance, export, as well as loss carryforward have been introduced with a view to luring investors to encouraging investment areas and fields. Concessionary land and water surface lease   Incentives are stipulated at Decree 121/2010/ND-CP, dated December 30, 2010 on land and water surface lease fee. Accordingly, land and water surface lease fees are exempted within three years since projects which are listed in the domains of investment preferences start operation or those which are relocated to safer places due to environmental pollution. Seven years of land and water surface lease fee exemption are given to projects in the list of geographical areas with difficult socio-economic conditions entitled to investment preferences. Projects in areas with extremely difficult socio-economic conditions, in the list of domains entitled to extremely investment preferences, and in areas with difficult socio-economic conditions get 11 years of fee exemption. Meanwhile, land and water surface lease fees are exempted up to 15 years for projects in domains entitled to investment preferences in areas with extremely difficult socio-economic conditions or in domains entitled to extremely investment preferences in areas with difficult socio-economic conditions. Especially, agricultural projects get the biggest incentives. Agricultural projects entitled to extremely investment preferences get land lease fee exemption. Those entitled to investment preferences enjoy 70% of land lease fee exemption. Those entitled to encouraging investment preferences get 50% of land lease fee exemption. Corporate income tax incentives Under the corporation income tax (CIT) law which was passed by the National Assembly on June 19, 2013 and came into effect since January 1, 2014, the standard corporate income tax rate is reduced to 22%, which will be further reduced to 20%, effective on January 1, 2016. Category Tax rate Conditions Applicable period Corporate income tax (CIT) cuts and exemption   CIT exemption period CIT reduction period 1 10% - Incomes from new investment projects in areas with extremely difficult socio-economic conditions, economic zones, and high-tech zones; - Incomes from newly-invested projects on scientific research and technological development; application of high-tech as specified; high-tech incubation and high-tech manufacturing of composite materials, light construction materials, and rare materials; production of renewable and clean energy, energy from eliminating waste; development of bio-technology, and environmental protection. - Corporate incomes from social engagement activities such as education-training, vocational training, healthcare, culture, sports, and environment. - Scientific research and technological development, application of high-tech as specified; high-tech incubation and high-tech incubator enterprises; venture investment in the development of high-tech as specified; investment in construction and commercial operation of high-tech incubation and high-tech incubator enterprises; investment in development of specially important state infrastructure. - Income of agricultural enterprises that use high-technology: (1) Generally income from newly-established investment projects in the production sector, i.e., manufacturing sector, that has minimum investment capital of US$300 million that is spent over a period of three years or less from the date of the investment certificate, and (2) Generating total annual revenue of VND10,000 billion (US$425 million) no later than three years from the first year that generates revenue; or Having more than 3,000 full-time employees. 15 years since the first year subjected to corporate income tax   Four years 50% cuts in nine years   2 10% - Income of press agencies providing newspapers (including press advertising), publishers conducting publishing activities as specified in the Law. - Income from activities in forestation, tending of forests; breeding, rearing and growing agricultural, forest and aquaculture products in areas with; production of artificial strains, new plant varieties, livestock breeding; production, mining and refining of salt; investment in post-harvest preservation of agricultural products, preservation of agricultural and aquaculture products and foodstuffs. - Income of enterprises from socialization activities in the sectors of education and training, vocational training, culture, medical health, sports and the environment. Indefinite NONE NONE 3 20% 17% (from January 1, 2016) - Income from newly-invested projects based in areas with difficult socio-economic conditions. - Income from newly-invested projects in the manufacture of high-quality steel; production of energy saving products; manufacture of machinery and equipment serving for agriculture, forestry, pisciculture (fish farming); manufacture of irrigation equipment; production and refining of feed for cattle, poultry and aquatic resources; development of traditional trades and occupations. 10 years Two years  Four years   4 20% 17% (from January 1, 2016) Income of micro-financial organizations Indefinite Two years Four years 5 20% Income from newly-invested projects in Industrial Zones (except for industrial zones located in large urban areas with favorable socio-economic conditions). Indefinite NONE NONE Exemption of duty The Government’s Decree 149/2005/ND-CP, dated December 6, 2005 stipulates detailed provisions for implementation of law on import and export duty as follow: • Goods that are imported for processing for a foreign party and are entitled to import duties exemption upon its import and export duties upon re-exported of finish goods to foreign party; • Goods that are exported abroad for processing for a Vietnamese party and are exempted from export duties, and are entitled to import duties exemption for the value of parts of goods exported for processing under the contract; • Goods imported to form fixed assets for encouraging investment projects; • Plant crop and breedings which are permitted to import for implementation of investment projects in fields of agriculture, forestry and aquaculture; • Goods imported by the BOT enterprise and its sub-contractors for implementation of BOT, BTO, BT projects; • Exemption of duty for imported goods in service of oil and gas activities; • Shipbuilding yards shall be entitled to exemption of export duty for exported products of sea-going vessels and exemption of import duty for the machinery and equipment forming fixed assets; • Import duty shall be exempted in respect of raw materials and supplies directly used in processing of software which have not yet been producible in; • Import duty shall be exempted in respect of the goods imported for direct Viet Nam use in activities of scientific research and technological development; • Raw materials, supplies and spare parts imported for manufacture of projects in the list of specially encouraging investment fields; • Raw materials, supplies and semi-finished products which have not yet been producible in Viet Nam and are imported for manufacture of projects in the list ofencouraging investment fields; • Goods manufactured, processed, recycled and assembled in non-tariff zones without use of imported raw materials and components shall be subject to exemption of duty; •Machinery, equipment and means of transport (excluding automobiles of less than 24 seats and automobiles designed to carry both passengers and goods equivalent to those of less than 24 seats) imported by the foreign contractor in form of temporary import for re-export in service of execution of ODA-funded works and projects in VietNam. In addition, Decree 68/1998/ND-CP, dated September 3, 1988 regulates natural resource tax and Decree 158/ND-CP, dated December 10, 2003 stipulates the implementation of the Value added Tax (amended). Enterprises suffering from losses are allowed to conduct loss carryforward to next year. The amount of loss is deducted to taxable income. Duration of loss carryforward is less than five years. VGP