Taking effect in less than 02 months, from January 1st 2021, Law on Investment (“LOI”) is bringing new points on investment incentives and support. So as to “clean the nest to welcome eagle”, new appearance of investment law is expected to encourage and attract more investment capital flows to seek development opportunities in Vietnam, especially from foreign investors.

Supplementing forms of incentive

In addition to tax exemption (corporate income tax, import–export tax, land tax), LOI 2020 supplements the form of accelerated depreciation and reasonable deductible expense increase when calculating the taxable incomes.

Therefore, this incentives help to reduce the taxable calculation ratio. In other words, they indirectly decrease the amount of tax to be paid. Upon this, enterprises will have more recourses to pour into business development.

More beneficiaries of incentive

Regarding business lines, the supplement of 04 following new faces will upgrade the investment incentive sector list as provided in LOI 2020 to 14, including: (1) manufacture products from the results of science and technology; (2) college education; (3) preservation of pharmaceutical products, manufacture of medical equipment; (4) manufacture of products and provision of services for the purpose of creating or participating in the value chains or industrial cluster; (5) supporting industry products are prioritized to be developed (textiles, footwear, electronics, …).

Regarding investment project, LOI 2020 supplements many beneficiaries including: (1) innovative start-up projects; (2) project supporting small/medium-sized enterprises; (3) social housing projects; (4) project using disabled employees; (5) project using technology that is promoted to transfer (speech recognition, biometrics, etc.); (6) technology incubators, science and technology enterprises; (7) project for environmental protection.

Besides, from 01/01/2021, in order to get incentives, the projects from more than 6.000 billion not only shall disburse at least 6.000 billion VND within the first 03 years but also shall have gained at least 10.000 billion VND per year no later than 03 years or use more than 3.000 employees. At the same time, the projects of manufacturing and trading aircraft, yacht are removed while the law adds the commercial house project into the restricted list for applicable incentives.

Obliviously, LOI 2020 favors the projects which promotes science technology and express the social responsibility, serve for the stable and sustainable development of the society.

Special incentives and support

In the sweet first 03 years, the special incentives and support will come to (1) the projects of establishment or expansion of the innovation and creation, research and development center (from 3.000 billion VND and have disbursed 1.000 billion VND/03 years) or of national innovation and creation centers; and (2) the projects of 30.000 billion VND or more which disbursing 10,000 billion VND/03 years in business lines for special incentives. The special offer applies according to the investment results, there is no longer incentive ceiling for new projects.

In addition, the Government may ask for the permission from the National Assembly about other incentives if necessary to encourage a particular project or to develop special economic zone.

With criteria of huge capital and unprecedented incentives, these provisions aim at attracting foreign capital flows which are moving with strong potential and opportunities to Vietnam.