In December 2016, the government approved the principles for the establishment of the first three special administrative-economic units (SAEUs) in Vietnam, including Van Don (Quang Ninh), Bac Van Phong (Khanh Hoa) and Phu Quoc (Kien Giang). According to the final draft of the law on SAEUs which is scheduled to be voted upon by the National Assembly in June 2018, each SAEU will focus on different specialised industries:
- Van Don: advanced technology and its supporting industries; culture tourism and industry; airports and seaports; and, international commercial and financial services;
- Bac Van Phong: precise information, electronics, and mechanics technology; seaports; tourism and hotels; and commercial and financial centres; and
- Phu Quoc: tourism and hotels; eco-tourism; international convention and exhibition centres; international commercial services; asset management; healthcare; education; and, research and development.
When investing in SAEUs in the above industries, foreign investors and foreign-invested enterprises (with certain exceptions) do not have to satisfy the prevailing conditions on ownership percentage, form of investment, scope of operation and Vietnamese partners. They will also be entitled to the following:
- land lease term: 70 years, and in special cases, up to 99 years (the usual maximum land lease term is only 70 years);
- tax incentives:
- personal income tax (PIT) for those working at SAEUs: (i) 50% reduction for ordinary employees; and, (ii) exemption for the first five years (up to 2023 only), and 50% reduction after that for managers, scientists, and experts with high expertise.
- corporate income tax (CIT): (i) new projects: exemption for the first four years, 50% reduction for the next nine years of having taxable income, and a 10% CIT rate for 15 years from generating revenue; (ii) projects involving education, vocational training, healthcare, culture, sports and environment: exemption for the first four years, 50% reduction for the next nine years of having taxable income and a 10% CIT rate for the rest of the project term; (iii) projects in the prioritised industries as listed above: exemption for the first four years, 50% reduction for the next nine years of having taxable income and a 10% CIT rate for 20 years from generating revenue; and, (iv) real estate projects: 17% for five years from the first year of having taxable income (up to 2030 only).
- special consumption tax: 15% rate for the first 10 years for casinos, businesses involving electronic gaming generating prizes and betting businesses.
- land rent, water surface rent exemption: The exemption period will vary depending on the project, ranging from 15 years (minimum) to a period equal to the entire lease term (maximum).
Some issues of the draft law are still being hotly debated. One of these issues is the 99-year land lease term, which is viewed by some as a threat to the security of the territory of Vietnam, while others believe this is necessary to attract foreign investment.
|Nguyen Thi Thanh Huong||Nguyen Thuy Trang|
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