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concentration in big cities have not been established yet. between investment attraction goals, policy design, and
Thirdly, the procedures for receiving incentives are not policy implementation must be ensured. The incentives
transparent. Several preferential policies have been issued, must be correct and only be applied to investment projects
but none of them regulate conditions and procedures to enjoy in economic and technical infrastructure development,
incentives, making enterprises face difficulties obtaining social infrastructure, environmental protection, and
certification as beneficiaries of incentives from state agencies. investment in difficult socio-economic areas.
Fourthly, investment incentives are mainly based on The fourth is that it is advisable to convert profit-based
tax and land incentives. Although the incentives are high, incentives to incentives through investment efficiency and
they are not effective. To attract FDI into Viet Nam, we added value.
have given FDI enterprises the best land plots in many Reducing the number of subjects eligible for tax
fields. However, the excessive preference for land does exemption, corporate income tax for a definite time, and the
not attract foreign direct investors. In contrast, it causes duration of tax exemption and reduction plays a significant
certain damages and losses to the host country. part. It is necessary to apply some more appropriate tax
Fifthly, the list of industries, fields, and areas eligible incentives that have been successfully applied by many
for investment incentives is unsuitable. For example, there countries, including deducting tax liability or taxable income
is no preferential distinction between the manufacturing according to the implementation scale of the investment
industry and commercial and service activities, as well as project, allowing to include more deductible expenses than
among investment sectors in economic zones. The scope actual expenses for some activities that the State needs to
of the incentive policies is quite large both in terms of encourage, such as spending on research and development.
fields and geography, while our country’s resources are The last is to limit the frequent changes of investment
limited, leading to low investment efficiency. incentive policies that affect business results as well as the
Finally, the incentive policies are unstable due to the investment strategies of foreign investors.
constant change of tax and land incentives, as well as To raise the stability of investment incentive policies,
administrative procedures, making businesses unable to in the process of promulgating policies, the planners
predict business performance in the medium and long must forecast and anticipate trends as well as changes in
term. This makes foreign investors insecure and lacks the economic and political context in Viet Nam and other
confidence when doing long-term business in Viet Nam. nations. At the same time, managers need to develop
investment incentive policies so that they are suitable
Solutions to improve investment incentive policies
for specific circumstances to achieve high efficiency in
To improve investment incentive policies to attract different contexts.
FDI capital more effectively, Viet Nam can implement the
following solutions: References:
The first is to increase transparency and consistency in 1. Ministry of Planning and Investment (2018), Draft strategy and strategic
legal documents on investment incentives. orientation to attract new generation FDI from 2018 to 2030.
It is necessary to review all legal documents and 2. Tran Thi Minh Chau (2007), Policies on investment promotion in Viet Nam, National
guidelines for implementing tax laws to correct unclear Political Publishing House, Ha Noi.
content. Next, we need to eliminate exceptions in tax 3. Phan The Cong, Le Nhu Quynh (2020), “Tax incentive policies to attract foreign direct
laws and reduce cases where the authority to decide tax investment capital of some countries and lessons for Viet Nam,” Proceedings of the
obligations is delegated to the executive authority. In all National Scientific Conference: Orientations, perspectives, and solutions to develop
cases, tax incentives must have an application period and the FDI sector in implementing the sustainable development strategy, innovating
end date specified in the law. the growth model, and restructuring the Vietnamese economy until 2035.
The second is to properly and rationally use tax incentives 4. Nguyen Ngoc Phong Lan (2020), “Tax incentive policies to attract FDI in Viet Nam,”
and avoid redundancy and waste. Journal of “Development and Integration,” No. 51(61), March - April 2020, p. 3-9.
The following requirements should be implemented 5. Nguyen Thi Viet Nga (2019), “Talking about Viet Nam’s investment incentive policies
for the investment incentive to be effective. First of all, for FDI enterprises,” Review of Finance, 1st period, October 2019.
we shall use the incentives selectively and carefully and 6. Dinh Trong Thang and Tran Tien Dung (2019), “The status of preferential policies
close to the actual conditions. Incentives must be made to attract FDI into Viet Nam", Review of Finance, 1st period, May (704), pp. 13-17.
simple and easy. Next, they must be explicitly issued for 7. Le Xuan Truong (2019), “Tax policies to attract foreign direct investment enterprises
each investment area and field and publicly announced to to Viet Nam,” Review of Finance.
avoid arbitrary application. Investment incentives must 8. OECD (2020), “Tax Challenges Arising from digitalization", Report on Pillar, One
be based on the performance of the investment project, Blueprint, 14 October 2020.
not on the plans or proposals in the investors’ plans.
The third is clearly defining the objectives and areas or Author’s information:
industries that need tax incentives. MA. Le Nhu Quynh
It is crucial to identify priority sectors, fields, and Thuongmai University
targets to attract investment actively. Consistency Email: quynhle.vcu@gmail.com

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