Deputy PM backs preferential policies for efficient FDI firms
Deputy PM backs preferential policies for efficient FDI firms
The Government’s preferential policies should be extended to well-performing foreign direct investment (FDI) firms only to ensure fairness for State-owned firms and prevent possible revenue losses for the State budget, the Government news website reported, citing Deputy Prime Minister Vuong Dinh Hue.
At a meeting on February 28 with the National Assembly’s Economic Committee and the relevant ministries and agencies on the performance of FDI firms and incentives offered to them, Deputy PM Hue stated that incentives should be applied in an appropriate manner, focusing on attracting projects run by multinational groups.
At the meeting, Deputy Minister of Finance Huynh Quang Hai noted that Vietnam currently hosts 21,400 FDI enterprises, accounting for some 3% of the total number of firms operating in the country.
FDI companies have maintained high revenue and profit growth. In 2017, the sector reported a revenue increase of 26% over 2016.
These enterprises have made up more than 70% of the country’s trade revenue and 15% of the State budget revenue.
However, FDI attraction still has shortcomings, with capital mainly flowing into labor-intensive sectors and areas with favorable conditions.
In addition, more than half of the FDI firms in Vietnam have reported losses in the last three years, while transfer pricing has become more complicated.
The sector’s contribution to the State budget is growing at 7%, well below the growth of their pretax and posttax profits, at 19.2% and 22%, respectively. According to the Ministry of Finance, the FDI sector enjoys more tax preferential policies than other economic sectors.
Specifically, FDI firms’ exempted corporate income tax makes up 76% of the total exempted tax amount. Nearly half of these firms’ corporate income tax is reduced, while the rates are 4.8% for State-run enterprises and 14% for non-State enterprises.
Speaking at the meeting, Deputy Governor of the State Bank of Vietnam Nguyen Thi Hong reported that the central bank’s recent survey showed that 140 FDI enterprises’ loans were over four times higher than their charter capital.
