MOF reduces preferential incentives for Economic Zones
01-04-2015 13:48:25+07:00
MOF reduces preferential incentives for Economic Zones
The Ministry of Finance (MOF) has rejected a proposal on offering tax incentives to the Chu Lai Open Economic Zone (EZ) in the central province of Quang Nam.
In reply to the Ministry of Planning and Investment about investment incentives to help develop support industries in the Chu Lai EZ, MOF said the proposed incentives were “unreasonable” and “go beyond the jurisdiction of the Prime Minister”.The Vietnam News Agency quoted its sources as saying that MOF has been asked to offer the tax exemption for the first four years of operation -- a preferential tax rate of 5 percent in the next 10 years and a preferential tax rate of 10 percent in the next six years.
The agency compiling the supporting industries development plan has also suggested a 10 percent preferential corporate income tax for another 10 years to be applied to projects making finished products in the automobile industry, and making machines in agriculture and fishery which have investment capital of over VND2 trillion or employ over 4,000 workers.
The proposed incentives are described as “too demanding” which cannot be found in the current corporate income tax law.
MOF also pointed out that the proposal on the 70 percent personal income tax cut in the first five years of operation and the 50 percent reduction in the following years was “unreasonable”.
Citing current laws, MOF said tax reductions would only be offered to subjects who are in difficulties because of natural disasters, fire or terminal diseases.
The same answer has also been given to a proposal on tax exemption to be applied to the automobile, agriculture and fishing machine manufacturers when they buy supporting industries’ products.
The products, such as welding rods, bolts, screws and bearings, are being taxed 10 percent, while the tax exemption proposal needs to be approved by the National Assembly.
Reacting to MOF’s answers, analysts said MOF seemingly has decided to stop ‘overindulging’ enterprises in EZs and industrial parks (IPs).
An analyst said that high investment incentives were the reason behind the establishment and the ineffective operation of many EZs in recent years.
A newly released report by the Ministry of Construction showed that too many EZs have been set up throughout the country and the majority of them have been operating ineffectively.
There are 44 EZs located in coastal and border areas, each of which covers large areas of between 10,000 hectares and hundreds of hectares. However, the occupancy rate of the EZs is low because it has been difficult to attract investors to them.
The 295 IPs in Vietnam, covering a total area of 84,000 hectares, are in the same situation.
