Vietnam Hopes To Lure Foreign Investors With New Tax Rules

Mary Swire, Tax-news.com, Hong Kong

22 March 2001

In order to make its investment climate more attractive to foreign investors, Vietnam has updated its tax rules for foreign firms operating in the country.

A new ordinance will take effect this week that will bring tax regulations in line with recent changes to Vietnam's law on foreign investment. The first step on this road is for foreign firms to pay local taxes in the local currency, the dong, rather than in foreign currency as has been the case up until now. However, whilst foreign and local firms might be subject to the same regulations, actual tax rates may differ. Foreign companies that are involved in oil or gas exploration or development under Vietnam's oil and gas law will not be subject to the new rule.

A Vietnam News report said that those foreign companies who reinvest profits from their original project into locally-based projects for at least three years will be eligible for partial or full income tax reimbursement: 'The (finance) ministry will decide on tax reimbursements within 15 working days of receipt of the necessary documents,' said the paper.

Manufacturing companies will be permitted to delay payment of tax on imported materials 'for a period of nine months from receipt of the customs' official tax pronouncement.'

Foreign companies wanting to invest in Vietnam have often been faced with a mountain of bureaucracy, not to mention corruption, and these tax incentives are an attempt to at least moderate the less attractive aspects of the investment regime.

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