Foreign Investment – Updates on Tax Incentives
In line with the significant changes proposed in the new draft Corporate Income Tax (CIT) law, set to take effect on 1 January 2026, tax authorities have been conducting audits on the existing tax incentives for foreign-invested enterprises in industrial zones. During the reassessment of eligibility for these tax incentives, many projects were denied benefits for various reasons, including business activities outside the scope of their licenses, ineligibility for tax incentives, and misapplication of incentives for profit from investment expansion. As a result, the tax authorities have collected substantial tax liabilities and late payments, and imposed penalties for incorrect declarations.
We reviewed several recent responses from the General Department of Taxation (“GDT“) and local tax authorities regarding tax incentives for investment projects in industrial zones, including rulings 3545/TCT-CS dated 13 August 2024, 2721/TCT-CS dated 26 June 2024, and 3601/TCT-CS dated 15 August 2024. We noted that enterprises with investment projects in industrial zones should consider applying either (i) tax incentives for income sourced from projects in industrial zones or (ii) tax incentives for income sourced from projects in regions with difficult socio-economic conditions. If the projects are located in such regions, the applicable tax incentives depend on the specific location of the land where the projects are situated. The GDT has requested local tax authorities to review current tax incentives for enterprises in industrial zones to reassess eligibility during audits.
Reduction of Stamp Duty on Automobiles
Following extensive discussions among the Ministry of Justice, Ministry of Finance, and Ministry of Industry and Trade regarding the proposal to reduce stamp duty for the domestic manufacturing and assembly of automobiles, the Vietnamese Government issued Decree No. 109/2024/ND-CP on 19 August 2024. This decree reduces stamp duty by 50% on automobiles from 1 September to 30 November 2024, with the aim of revitalising the industry. The new policy is expected to stimulate automobile consumption, similar to the effects seen in 2020, 2021, and 2023, when a similar reduction was implemented for nearly six months in each of the specified years.
The details of stamp duty for automobiles are outlined in Decree No. 10/2022/ND-CP dated 15 January 2022. It specifies stamp duty rates of 2%, 6%, and 10% for first and second registrations, as well as the different types of automobiles subject to the specific rates. Further guidance regarding the applicability of this policy to imported automobiles is anticipated to be issued in due course.
If you have any queries on the above, please feel free to contact Nguyen Hung Du, Partner, Tax at du.nguyen@rajahtann.com or any of our team members.
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