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Vietnam Regulatory Brief: Tax, Bidding Guidance and Tariff Lines

Tax Guidance

Decree No. 12/2015/NĐ-CP dated February 12 has further provided guidance on key changes to the implementation of the new Tax Law, which is outlined below.

Corporate Income Tax (CIT)

In line with existing withholding tax provisions and other relevant regulations, foreign entities shall be additionally subjected to CIT on transferring capital, investment projects and rights.

Expenses to be fully deductible include:

  • Life insurance benefits for employees;
  • Professional or technical training expenses in accordance with regulations;
  • Interest incurred on loans to invest in other companies once charter capital is fully contributed;
  • Cap on the deductibility of advertising and promotion expenses
  • Advertising and promotion expenses

RELATED:  Tax and Compliance Services from Dezan Shira & Associates

Investors may enjoy CIT preferential rate of 10 percent for 15 years, four years’ CIT exemption from the first year of revenue generation and 50 percent reduction of payable tax for the next nine years, when meeting specific requirements.

Value Added Tax (VAT)

VAT exemption shall be applied to fertilizer, livestock feed, poultry, seafood and other animals, replacing the previous VAT rate of five percent. In addition, imported cigarettes, spirits and beer that are subsequently exported are VAT exempt, while the relevant input VAT is not creditable.

Project Investor Selection

The Vietnamese government has issued detailed guidelines on the selection of investors in public-private partnership (PPP) projects and other land-using projects with high commercial value, announced in Decree No. 30/2015/NĐ-CP dated March 17, 2015. The decree clarifies further some articles in the Bidding Law No. 43/2013/QH13 and will come into effect on May 5, 2015.

Investor selection in most projects will be required to be carried out by international competitive bidding. Projects with initial investment under VND 120 billion and other specific appointment projects are required to be implemented following domestic competitive bidding only.

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Of note are caps applied for investor selection as follows:

For domestic bidding:

  • A cap of VND 20 million per set on selling bidding dossiers;
  • A cap of VND 5 million per set on pre-qualification invitations

 For international bidding:

  • A cap of VND 30 million on corresponding rates;
  • A cap of VND 100 million on the development of pre-qualification invitations;
  • A cap of VND 50 million on appraisal of pre-qualification invitations;
  • A cap of VND 100 million on evaluation pre-qualification invitations;
  • A cap of VND 50 million on evaluation of pre-qualification results
Tariff Lines Imported from Japan

Vietnam’s Ministry of Finance (MoF) has announced a range of import tariffs to be cut in Circular Nos. 24/2015/TT-BTC and 25/2015/TT-BTC, which came into effect on April 1, 2015, replacing Circular Nos. 20/2012/TT-BTC and 21/2012/TT-BTC of 2012.

Accordingly, 3,234 import tariff lines from Japan – or 33.8 percent of the total items imported – have been cut to zero percent for the 2015-2019 period, under the Japan-Vietnam Economic Partnership Agreement (JVEPA). Tariff lines of note include chemicals, footwear, garment materials, machinery, materials, pharmaceuticals, and textiles. According to the MoF’s Circular No. 25. Another 354 products outside the preferential tariff policy including chocolate, cocoa, jam, paddy harvesters and threshers, which will have their tariffs taxed according to the current Most Favored Nation (MFN) level.

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In addition, the other Circular No. 24 has stipulated that 2,874 products imported directly from Japan – or 30 percent of total tariff lines – will be subject to zero tariffs under the ASEAN Japan Comprehensive Economic Partnership Agreement (AJCEPA) for 2015-2019.


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