Tax perks stimulate Nidec projects
Tax perks stimulate Nidec projects
The Vietnamese government has just granted preferential corporate income tax of 10 per cent for Nidec Corporation’s three investment projects in Saigon Hi-Tech Park, encouraging the group to expand its operations in Vietnam.
This movement came following the Ministry of Finance’s proposal to grant tax incentives for investment projects by Japan’s Nidec Corporation in Ho Chi Minh City.
Nidec Corporation previously complained that its subsidiaries faced difficulties in determining the preferential corporate income tax (CIT) due to different interpretations between corporation and state audit agencies, as well as between state agencies.
These subsidiaries include Nidec Vietnam Corporation, Nidec Sankyo Vietnam, and Nidec Servo Vietnam. These firms are among five of Nidec’s subsidiaries in Saigon Hi-Tech Park.
The above subsidiaries received additional investment during 2009-2014, thus the state audit office identified businesses with value-added machinery annually since 2009, when the Law on Corporate Income Tax 2008 became effective. It is said that these projects should not be entitled to the initially granted incentives, as these activities were expanded investment projects.
Decree No.91/2014/ND-CP, dated October 1, 2014, stipulates that additional income derived from additional machinery and equipment for normal production/business activities is entitled to the incentives of the original project for the remaining incentive period, effective from the tax year 2014. However, in the case of additional investment as an expanded investment project during 2009-2013, the CIT incentive treatment is still being considered by tax policymakers.
Previously, in June 2008, the prime minister issued Official Document No.1000/TTg-KTTH to grant tax incentives to investment projects by Nidec Corporation in Saigon Hi-Tech Park. Under this, investment projects by the Japanese group in Saigon Hi-Tech Park would receive CIT of 10 per cent during project development, provided that all projects meet the regulations on hi-tech product manufacturing stipulated by the Ministry of Science and Technology.
Therefore, in a document sent by the Ho Chi Minh People’s Committee in late 2015, it was noted that the government should consider creating conditions for Nidec Corporation’s subsidiaries invested in Saigon Hi-Tech Park, as directed by the Official Document No.1000/TTg-KTTH. The investment certificates were granted by the Management Board of Saigon Hi-Tech Park to ensure consistency in the application of investment incentives.
Nidec Corporation is the world’s leading producer of hard disk drives, optical disk drives, and DC motors. Since 2005, the Management Board of Saigon Hi-Tech Park has licensed Nidec Corporation’s five projects to make hi-tech products. After 10 years of operation, these subsidiaries have contributed a significantly combined sum of $23 million to the local state budget. Their export value has been increasing, accounting for 8.7 per cent of the total export value of Saigon Hi-Tech Park, and creating jobs for nearly 12,000 employees.
