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Investment policies change, investors fear they would lose incentives
A lot of foreign invested projects have got stuck just because the foreign investors still have not got agreements with local authorities about the investment incentives.
The 2005 investment law and the decrees, guiding the implementation of the law always emphasized the principle of non-retrospectiveness. This means that is the newly issued policies have negative impacts on the legal benefits that investors can enjoy in accordance with the investment licenses, the investors will still be able to enjoy the investment incentives promised to them before.
However, in reality, a lot of investors complain that they meet troubles with the new policies.
Doosan Vina is a typical example. The 100 percent foreign invested enterprise was established following the investment license granted by the Dung Quat Economic Zone on November 20, 2006.
Under the Decision No 50 dated March 11, 2005, released by the Prime Minister, the projects in the economic zones will enjoy the exemption from the import tax on the materials, parts, accessories and semi-finished products that still cannot be domestically, for five years since the day the investors start their production.
As officially becoming operational since February 25, 2009, Doosan Vina believes that it is eligible for enjoying the import tax exemption stipulated in the legal document.
However, trouble arose when on March 3, 2010, the Decision No 50 was replaced with the Decision No 25 on the operation regulations of the Dung Quat Economic Zone. Therefore, Doosan Vina was requested to follow the regulations of the new legal document, under which, it will not be able to enjoy the import tax exemption.
Doosan Vina has recently sent a dispatch to the General Department of Customs, asking for the permission to continue enjoying the tax exemption in accordance with the Decision 50 until February 24, 2012 (for five years since the day of starting production).
Doosan Vina is not the only example which got troubles when a new policy is set up.
The story about the investment of Samsung Complex has become the hot topic recently in the public. The investor has been told that he will not be able to enjoy the tax incentives when he wants to expand the investment scale from 670 million dollars in the first phase to 1.5 billion dollars in the second phase. He has been explained that the investment policies have changed.
Because of the same reason, Nokia, the well known hi-tech group, which plans to set up a mobile phone factory in Bac Ninh province, still cannot carry out its project, spending time re-negotiating with local authorities and relevant agencies about the investment incentives. The investor wants to enjoy the investment incentives that Samsung once got in its first phase of operation.
The disagreements on tax incentives are the main reasons which have made Samsung’s and Nokia’s projects get stuck, even though the investors both have expressed their determination to invest in Vietnam.
Meanwhile, the tax incentives applied for the enterprises in industrial zones also have not found clear answers.
Under the Decrees 108 and 29 issued in 2008, economic zones, industrial zones and export processing zones can enjoy the same tax incentives as the ones applied to the enterprises operating in the areas with difficult economic conditions.
However, the current laws on the corporate income tax stipulate that the enterprises investing in the industrial zones cannot enjoy the incentives any longer.
Similarly, the enterprises also cannot enjoy import tax preferences as the enterprises in difficult areas, because the Decree No 87 issued in 2010 do not allow this.
Tax incentives and the principle of non-retrorespectiveness are the topics mentioned regularly these days on business forums. However, the problem has not been settled by competent agencies to the every root. Meanwhile, analysts have warned that when the foreign direct investment flow tends to decrease, the changes in the policies may lessen Vietnam’s attractiveness.
vietnamnet, TBKTVN
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