How can foreign investors investing in industrial parks enjoy corporate income tax incentives?

What is the Industrial Park Management Board? What is an industrial park?

According to the provisions of Clause 16, Article 3 of the Law on Investment 2020, an industrial park is an area with defined geographical boundaries, specializing in the production of industrial goods and providing services for industrial production.

The Management Board of industrial parks, export processing zones, and economic zones as defined in Clause 1, Article 67 of Decree 35/2022/ND-CP is an agency directly under the Provincial People’s Committee that performs the following functions:

– Direct state management of industrial parks and economic zones in a province or centrally run city according to the provisions of Decree 35/2022/ND-CP and other relevant laws;

– Manage and organize the implementation of the function of providing public administrative services and other support services related to investment and production and business for businesses in industrial parks and economic zones.

How will foreign investors investing in industrial parks enjoy corporate income tax incentives?

1. Foreign investors investing in Industrial Parks will receive investment incentives similar to those when investing in areas with difficult socio-economic conditions, including tax policies:

Pursuant to Clause 2, Article 19 of Decree 31/2021/ND-CP and Appendix III – List of investment incentive areas issued with Decree 31/2021/ND-CP:

2. Corporate income tax incentives:

About preferential tax rates

Pursuant to point a, clause 3, Article 15 Decree 218/2013/ND-CP on corporate income tax incentives:

Preferential tax rates

…

3. The tax rate of 20% for a period of ten years applies to:

a) Income of enterprises from implementing new investment projects in areas with difficult socio-economic conditions specified in the Appendix issued with this Decree;

…

Enterprises implementing new investment projects in fields and areas with tax incentives specified in Points a and b of this Clause from January 1 January 2016 applies the tax rate of 17%.

Accordingly, when investing in an Industrial Park, investors will enjoy a preferential tax rate of 17% for a period of 10 years from the time the enterprise has revenue from the investment project.

About corporate income tax exemption and reduction

(1) In case foreign investors invest in Industrial Parks in socialized fields: according to the provisions of Point b, Clause 1, Article 16 of the Decree 218/2013/ND-CP: Tax exemption for 4 years and a 50% reduction in tax payable for the next 9 years from:

– The first year the project has taxable income; or

– The fourth year after the first year the project has revenue, if the previous 3 years had no taxable income.

(2) In case a foreign investor invests in an Industrial Park (except for an industrial park located in an area with favorable socio-economic conditions) in other fields: according to the provisions of Clause 3, Article 16 of the Decree 218/2013/ND-CP amended by Clause 6, Article 1 Decree 91/2014/ND-CP: 2-year tax exemption and 50% reduction of tax payable for the next 4 years from:

– The first year the project has taxable income; or

– The fourth year after the first year the project has revenue, if the previous 3 years had no taxable income.

Note: according to the provisions of Clause 4, Article 22 of Decree 35/2022/ND-CP then:

Costs for investment in construction, operation or purchase, lease purchase, rental of housing, service works, public utilities for workers working in industrial parks, economic zones, technical infrastructure works connected to industrial parks, functional areas of investors implementing investment projects on construction and business of industrial park infrastructure, functional areas in economic zones, investors implementing investment projects in industrial parks, Economic zones are deductible expenses when determining taxable income according to the provisions of law on corporate income tax.

In addition, foreign investors investing in industrial zones can enjoy some of the following incentives:

(i) Land rental incentives

As analyzed above, when investing in industrial zones, foreign investors Foreigners will enjoy the same policies as when investing in areas with difficult socio-economic conditions.

Therefore, businesses will be exempted or reduced in land rent according to the provisions of Clause 1, Article 110 of the 2013 Land Law.

(ii) State support to carry out administrative procedures

Pursuant to Clause 1 6 Article 22 of Decree 35/2022/ND-CP states:

Investors with investment projects in industrial parks and economic zones are supported by competent state agencies to carry out administrative procedures on investment, business, land, construction, environment, labor, trade according to the “one-stop, on-site” mechanism, support for labor recruitment and related issues others during project implementation.

(iii) The Industrial Park Management Board has the authority to issue, adjust and revoke Investment Registration Certificates for investment projects in industrial parks, except for the cases specified in Clause 3, Article 39 of the Law on Investment 2020.

It can be seen that if foreign investors choose to invest in Vietnam in the form of establishing an organization economy, first, investors need to have an investment project and apply for an Investment Registration Certificate.

The Industrial Park Management Board has the authority to issue, adjust, and revoke Investment Registration Certificates for investment projects in industrial parks, except for the cases specified in Clause 3, Article 39 of the 2020 Investment Law, which will create favorable conditions for foreign investors to shorten the time to carry out procedures. Related legal issues.

From there, a significant cost can be saved for investors.

(iv) Enjoy utility services in Industrial Parks

Currently, utility services in Industrial Parks are a quite potential field.

Along with the trend of building a closed ecosystem in Industrial Parks, most investors developing Industrial Parks want to follow the trend of linking production activities with convenient services utilities, fully meeting the living conditions and amenities for workers and experts of businesses.

This creates favorable conditions for investors, especially foreign investors, because they can minimize costs related to utility arrangement, and at the same time attract many highly qualified workers and experts.

Based on what basis to build a house? investors determine their own investment incentives and carry out procedures to enjoy investment incentives?

According to the provisions of Article 17 of the Law on Investment 2020, investors themselves determine investment incentives and carry out procedures to enjoy investment incentives at tax authorities, financial agencies, customs authorities and other competent agencies corresponding to each type of investment incentives, based on:

+ Pursuant to the subjects specified in Clause 2, Article 15 of the Law on Investment 2020,

+ Investment policy approval document (if any),

+ Investment registration certificate (if any),

+ Other relevant legal provisions.