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REVIEW of FINANCE - Issue 4, 2022
use levy and land rental applied to reduce payable
FIGURE 1: AVERAGE CORPORATE INCOME TAX BY REGIONS
IN THE WORLD BY THE END OF 2021 (%) amounts at the rates of 20%, 30%, or 50% or exemption
or reduction for 7 years, 11 years, or 15 years. Since
the beginning of July 2014, land incentives have been
implemented under the Law on Land (2013) and the
decrees regulating the collection of land use fees, land
rents, and water surface rents. Some vital documents
Africa Asia Erope North South G7 OECD BRICS EU27 G20W orld Viet Nam contained contents to support enterprises in terms of land
America America
rent and water surface rent exemption for projects eligible
Source: OECD (2022)
for investment incentives, namely the Joint Circular No.
Currently, countries in ASEAN have agreed on the 87/2016/TTLT-BTC-BTNMT guiding the appraisal of the
lowest corporate income tax rate. The rule of the Global draft land price list and land price plan of the Land Price
Minimum Corporate Tax of 15%, expected to come Appraisal Council and the Joint Circular No. 88/2016/
into force in 2023, will lose the advantage of using tax TTLT-BTC-BTNMT stipulating dossiers, order, and
incentives to attract foreign investors. Therefore, to procedures for receiving and transferring dossiers of
maintain a competitive advantage in attracting foreign determining financial obligations of land users. These two
investment and not to lose tax revenue, the Vietnamese circulars defined the responsibilities of relevant agencies
government needs to change domestic tax regulations in deciding land prices, moving records determining
and design new investment incentives that take into financial obligations of land users, carrying out reforms,
account the global minimum tax. publicizing administrative procedures, and shortening
The second is the export-import policies. the time to determine land use levies and land rent.
The Law on Import and Export Tax on commercial In 2017, to attract investment, enhance management
goods was promulgated by the National Assembly on efficiency, and effectively use land financial resources
December 29 , 1987. The scope of regulation of the Law in economic zones and hi-tech parks, the Government
th
was the relationships between tax collection and payment issued the Decree No. 35/2017/ND-CP dated April 3,
from the export and import of commercial goods. Since 2017, to stipulate land use fees, land rent, and water
1991, the import-export tax policies have been reformed surface rent in economic zones and hi-tech zones with
in the direction of encouraging the import of machinery, incentives higher than those of normal investment
equipment, and materials for production and prioritizing projects. In addition to the above tax and land incentives,
the export of processed goods over raw materials. In the Vietnamese Government has implemented financial
January 2007, Viet Nam became a member of WTO and investment incentives in other fields such as insurance
officially joined the global trading system. Annual tariff and securities and removed barriers to foreign workers.
reduction based on commitments in WTO, ASEAN, and
other countries for raw materials and supplies that could Evaluation of investment incentive policies of Viet Nam
not be produced domestically helped FDI enterprises in to attract foreign direct investment capital
particular and enterprises, in general, decrease input costs
in production and raise the competitiveness of domestic Viet Nam’s investment incentive policies have played
products compared to imported goods. For that reason, an indispensable role in motivating and encouraging
the Law on Import and Export Tax was continuously foreign investors to develop production and business,
updated and revised in 2001, 2005, and 2016 to meet the promote exports, and ensure economic growth. However,
requirements of integration commitments, improve export these policies are not specific and not attractive to
preferential policies, and attract foreign investment. foreign investors.
In 2020, the Government issued Decree No. 57/2020/ Firstly, the preferential policies for FDI capital are
ND-CP (amending the Decree No. 122/2016/ND-CP). inconsistent and compatible among the provisions in the
This Decree supplements regulations on applying a legal documents. Investment incentives are included in
preferential import tax rate of 0% for raw materials, many laws, causing overlaps and even contradictions.
supplies, and components that can not be produced Secondly, there is a lack of adequate incentive
domestically to manufacture and process (assemble) mechanisms to connect FDI with domestic investment.
products that are prioritized for development for the Incentive policies are not attractive enough to encourage
automobile manufacturing and assembling industry from FDI projects that transfer technology and management
2020 to 2024 (Tax incentive program for the automobile skills to Vietnamese enterprises and support domestic
supporting industry). enterprises to increase their linkage capacity, acquire

Investment preferential policies related to land technology, and train human resources. Furthermore,
there is a lack of policies to develop industrial clusters
Before June 30 , 2014, land incentives were divided and domestic production chains. Regulations on the
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into two forms: land allocation with a collection of land minimum wage gap between regions to limit labor

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