Investment incentives in South Phu Yen Economic Zone

In our previous update we have outlined investment incentives in three industrial zones in Phú Yên province. Besides those three industrial zones, there is also an economic zone called South Phú Yên Economic Zone, much larger than any other industrial zone, and that even includes the totality of Hòa Hiệp industrial zone, which is also a non-tariff zone.

South Phú Yên Economic Zone was created relatively recently and its purpose is to support the general development of the province. In order to attract investors, Phú Yên province established a variety of investment incentives, especially in terms of taxes. Hence we if you are looking for a place in which you can invest, or if are just interested in investing in Vietnam, we strongly recommend you to read the following part of this article.

Investment incentives in South Phú Yên Economic Zone can be divided into six different parts:

1. Corporate Income Tax:

a. Preferential tax rates shall be calculated from the first year of operations generating income for:

- New businesses established in the framework of an investment projects in the economic zone shall benefit from a preferential tax rate of 10% throughout a period of 15 years.

- Regarding large scale enterprises or enterprises that use high, new technology or invest in sectors that require particular incentives, the Minister of Finance will apply for an extension of the preferential tax rate of 10% period (but not exceeding 30 years) to the Prime Minister.

- According to the Prime Minister's decision, businesses operating in social sectors (education and training, vocational training, health, culture, sports, and environment) shall benefit from a 10% income tax rate throughout their whole period of operations.

b. Exemptions and tax reductions:

Tax exemptions shall have a maximum duration of four (4) years and a maximum reduction of 50%. Those taxes shall be calculated since the first year of operations generating taxable income and they will have to be payed within a period of nine years following the four (4) years period of tax exemption.

2. Value added tax (VAT):

a. Nontaxable items:

- Imported raw materials meant to produce goods for export under a production contract signed with a foreign party.

- Goods and services traded between foreign companies and non-tariff zones, goods and services traded between non-tariff zones not subject to VAT tax.

- Technology transfer in accordance with the Law on Technology Transfer.

- Intellectual Property rights transfer in accordance with the Law on Intellectual Property.

- Computer software.

b. Items subject to a 0% tax rate:

- Goods, export services, international transportation.

- Foreign reinsurance services.

- Credit services, capital transfer, financial services.

- Telecommunication services.

- Natural resources, minerals not yet processed in accordance with the Government regulations.

c. Items subject to a 5% tax rate:

- Clean water for production and life purposes.

- Fertilizers, insecticides, pesticides, and plant/animal growth stimulants.

- Fodder for cattle, poultry, and other livestock.

- Handmade products such as sedge, bamboo, leaves, straw, coconut shells, water hyacinth, and other handcrafted products made from raw agricultural materials.

- Machinery and equipment for agricultural production.

- Children toys, books of all kinds.

3. Export and Import taxes:

a. Nontaxable items:

- Goods for export from non-tariff zones.

- Goods imported into the non-tariff zone and used only in this non-tariff zone.

- Goods transported from one non-tariff zone to an other non-tariff zone.

b. Items exempted from taxes:

- Temporarily imported goods, re-exported goods or temporarily exported goods, with the purpose of re-import after participating in fairs, exhibitions, and products presentations abroad.

- Goods imported in order to be processed for a foreign part, goods sent abroad for processing.

- Goods imported in order to create fixed assets for investment stimulation projects.

- Goods produced, processed, recycled or assembled in non-tariff zones without using imported raw materials or spare parts.

4. Excise tax:

Goods subjected to excise tax that are imported imported from abroad or from inland and sold in non-tariff areas, and goods traded between non-tariff zones are not subject to excise tax.

5. Land and water surface lease tax:

a. Land and water surface lease tax shall not be applicable in the following cases:

- Investment projects in especially encouraged investment sectors.

- Projects, approved by competent authorities, using land in order to build apartments for workers in industrial zones.

- Projects, approved by competent authorities, shall be exempted of taxes during their construction period.

- From the date the project is completed and put into operation, specifically as follows:

- Land and water surface lease tax shall not be applicable for fifteen (15) years for projects in encouraged investment sectors.

- Land and water surface lease tax shall not be applicable for eleven (11) years for other projects.

b. Land lease rates:

- The land lease rate for each projects shall be stable throughout a period five (5) years.

- The land lease rate per year for projects in encouraged investment sectors and particularly encouraged investment sectors shall be 0.25% of the original land rent rate.

c. Lease duration:

The maximum time of land lease is 70 years.

6. Investment Support:

The Management Board will create favorable conditions to support investors throughout the process of completing the registration procedures and investment projects' implementation. Foreign investors, overseas Vietnamese and their family members shall be granted multiple entries visas with a validity period fitting with their work and residence period in South Phú Yên Economic Zone.

Viet Australia
Viet Australia Auditing Company is an independent auditing organization licensed and established in 2007 in the Socialist Republic of Vietnam.