Financial hub plans expand in scope
Financial hub plans expand in scope
A major move from the National Assembly will facilitate Vietnam to develop its own regional and international financial centres, with special tax incentives for investors and businesses.
The 15th National Assembly (NA) at its ninth session will discuss and may adopt a resolution on the establishment of regional and international financial centres (IFCs) in mid-2025.
Ho Chi Minh City has an ambition to sit on par with other financial centres in the region, photo Le Toan |
The draft resolution, which is being prepared by the Ministry of Planning and Investment, will be submitted to the National Assembly Standing Committee this month for consideration. It covers many types of tax incentives for investors and businesses investing in these centres.
For example, when it comes to the personal income tax (PIT) policy, managers, scientists, and highly qualified experts with income subject to PIT arising at the IFC will be exempt from this type of tax.
Others who have income subject to PIT arising at the financial centres and at their member units shall be exempted from PIT until the end of 2035, and the PIT payable in the following years shall be halved.
Ventures in priority development sectors and occupations shall be subject to a 10 per cent corporate income tax (CIT) during the project implementation period, with tax exemption for four years and 50 per cent reduction of tax payable in the next nine years.
In addition, income from projects of hundreds of the largest corporations in the world, as well as credit institutions, financial companies, and wholly foreign-owned investment funds, shall be exempted from CIT for an additional two years and have half of the tax payable reduced for the next four years from the time of taxable income in addition to the CIT incentives.
“If an investor has a project that meets many conditions to enjoy many different incentives, the investor can choose to apply the most beneficial one,” the draft resolution stated.
Furthermore, foreigners and Vietnamese people holding foreign passports working or doing business investment activities at the financial centres and their family members will be granted multiple-entry and exit visas with a validity period corresponding to the working period at the centres. They will also be granted temporary residence in the centres and in Vietnam.
Foreigners and Vietnamese holders of foreign passports working with financial centre management agencies are exempted from entry visas for a duration of no more than 30 days.
Last November, Vietnam’s Politburo approved the establishment of an IFC in Ho Chi Minh City and a regional financial centre in the central city of Danang. Shortly after, the government issued an action plan for development.
To oversee this, an inter-agency steering committee was established, chaired by Prime Minister Pham Minh Chinh, with Permanent Deputy PM Nguyen Hoa Binh serving as the Standing Deputy Head.
At present, Vietnam is also consulting on international experiences in developing IFCs such as the UK, Singapore, Dubai, and Kazakhstan. Last month in Hanoi, Deputy Prime Minister, Minister of Foreign Affairs Bui Thanh Son hosted a reception for Ali Ijaz Ahmad, CEO of Singapore-based Makara Capital, asking the group to support Vietnam in developing IFCs.
Ahmad said that the most important factor in founding an IFC was the quality of personnel, and their living and working conditions. Another important issue is building a legal system to facilitate the inflow and outflow of capital, ensuring capital recovery and safe cash flows.
Vietnam is also working with the UK on this issue. According to the British Consul in Ho Chi Minh City, Vietnam can learn from the UK to develop the centres successfully. The UK is one of the world’s leading international financial and business centres.
“The UK government and regulators have worked closely with industry and other key stakeholders to achieve this position. An approach would be underpinned by high standards, robust rules and principles-based regulatory framework, a strong ecosystem of financial and related professional services, common law, and a vibrant fintech infrastructure that supports all other economic activity,” the consul said.
Since 2022, with strong support from financial advocacy group TheCityUK and UK businesses in Vietnam, the consul has been working closely with Vietnamese authorities including Ministry of Planning and Investment, Ministry of Finance, the State Bank of Vietnam, authorities in Ho Chi Minh City and Danang, and other stakeholders to provide technical assistance, recommendations, and capacity building activities to share best practices and assist Vietnam to design an IFC, which utilises the strengths of the Vietnamese economy.
