Exclusive incentives for special economic zones recommended
The draft Law on Special Administrative-Economic Units, which proposes a series of land and tax incentives to attract more investment to three special economic zones in Quang Ninh, Khanh Hoa, and Kien Giang provinces, has been officially submitted to the National Assembly Standing Committee.
Under the draft, individuals who earn taxable incomes at Van Don, Bac Van Phong, and Phu Quoc special economic zones will enjoy exemptions from personal income taxes for five years, but not beyond 2030, and a 50 per cent reduction in subsequent years.
Foreign investment projects to be implemented for at least ten years and that satisfy conditions on investment in certain sectors will enjoy corporate income tax exemptions for two additional years and a 50 per cent reduction for four years more than other projects.
Such incentives will also apply to projects of foreign investors listed among the 500 largest groups worldwide and those of wholly foreign-owned credit institutions, financial companies, or investment funds. If an investor is eligible for different incentives in corporate income tax for the same project, they may select the most beneficial.
The draft also suggests allowing domestic and foreign-invested economic organizations to mortgage their land-attached assets at foreign credit institutions or directly receive land use rights transferred from organizations or individuals that have land use rights for the conduct of investment projects.
Moreover, the land use term for production and business purposes in special administrative-economic units would be 99 years for sectors such as science and technology and new technology, innovation startup support zones, research and development centers, and key sectors prioritized for development. The term would be 70 years for other sectors.
For the Phu Quoc special economic zone in Kien Giang province, the draft recommends the granting of permanent residence cards (which act as visas) to foreigners with investment projects worth at least $5 million and who live in Phu Quoc for five or more years.
The allowance level will be increased to 50 per cent from 30 per cent of the base salary for cadres, civil servants, and public employees working in the zone.
Under the draft, Phu Quoc will receive investment to become an international-standard commercial, service, and trade center, with fishing, aquaculture, aquatic product processing, and fishing logistics services prioritized for development.
Meanwhile, sea and island tourism, innovative industry, and hi-tech agriculture will be developed in Van Don in Quang Ninh province, while a deep-water port, logistics, and high-quality health and convalescent care services will be developed in Van Phong in Khanh Hoa province.
Minister of Planning and Investment Nguyen Chi Dung emphasized three key points when compiling the law. Other than institutionalizing the Party’s line and constitutional provisions, Vietnam also needs to actively build a new development model to maintain the country’s competitiveness against other countries.
He said the success of economic zones relies on six elements: an adjusted law simplifying administrative procedures, abolishing restrictions in business and investment, tax and fee incentives, special incentives for foreign investors in prioritized sectors in each period, an internationally-competitive preferential policy and investment environment, and, lastly, a strategic location for special economic zones.
Policy makers believe that the draft law “almost” has greater incentives and creates more favorable conditions than free economic zones in China, South Korea, Japan, Indonesia, Malaysia, Thailand, Singapore, and Myanmar.
Perspective of the future Van Don Special-Economic zone in the northern province of Quang Ninh (Source: VOV).
Under the draft, individuals who earn taxable incomes at Van Don, Bac Van Phong, and Phu Quoc special economic zones will enjoy exemptions from personal income taxes for five years, but not beyond 2030, and a 50 per cent reduction in subsequent years.
Foreign investment projects to be implemented for at least ten years and that satisfy conditions on investment in certain sectors will enjoy corporate income tax exemptions for two additional years and a 50 per cent reduction for four years more than other projects.
Such incentives will also apply to projects of foreign investors listed among the 500 largest groups worldwide and those of wholly foreign-owned credit institutions, financial companies, or investment funds. If an investor is eligible for different incentives in corporate income tax for the same project, they may select the most beneficial.
The draft also suggests allowing domestic and foreign-invested economic organizations to mortgage their land-attached assets at foreign credit institutions or directly receive land use rights transferred from organizations or individuals that have land use rights for the conduct of investment projects.
Moreover, the land use term for production and business purposes in special administrative-economic units would be 99 years for sectors such as science and technology and new technology, innovation startup support zones, research and development centers, and key sectors prioritized for development. The term would be 70 years for other sectors.
For the Phu Quoc special economic zone in Kien Giang province, the draft recommends the granting of permanent residence cards (which act as visas) to foreigners with investment projects worth at least $5 million and who live in Phu Quoc for five or more years.
The allowance level will be increased to 50 per cent from 30 per cent of the base salary for cadres, civil servants, and public employees working in the zone.
Under the draft, Phu Quoc will receive investment to become an international-standard commercial, service, and trade center, with fishing, aquaculture, aquatic product processing, and fishing logistics services prioritized for development.
Meanwhile, sea and island tourism, innovative industry, and hi-tech agriculture will be developed in Van Don in Quang Ninh province, while a deep-water port, logistics, and high-quality health and convalescent care services will be developed in Van Phong in Khanh Hoa province.
Minister of Planning and Investment Nguyen Chi Dung emphasized three key points when compiling the law. Other than institutionalizing the Party’s line and constitutional provisions, Vietnam also needs to actively build a new development model to maintain the country’s competitiveness against other countries.
He said the success of economic zones relies on six elements: an adjusted law simplifying administrative procedures, abolishing restrictions in business and investment, tax and fee incentives, special incentives for foreign investors in prioritized sectors in each period, an internationally-competitive preferential policy and investment environment, and, lastly, a strategic location for special economic zones.
Policy makers believe that the draft law “almost” has greater incentives and creates more favorable conditions than free economic zones in China, South Korea, Japan, Indonesia, Malaysia, Thailand, Singapore, and Myanmar.
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