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POLICIES TO ENCOURAGE INVESTMENT IN THE CONSTRUCTION SECTOR
One of the industries with huge profits and bringing high income to the Vietnamese people is the construction industry. Because Vietnam is still a developing country, the construction of roads, houses, apartments, commercial areas, etc. is still quite high.Besides, the income of Vietnamese people is also increasing. However, the construction industry still faces many obstacles. Therefore, the Vietnamese government has policies to encourage investment in the construction sector. What are those policies? Please refer to the article below to understand more
Encouragement in construction investment activities related to VietNamese law
According to Article 10 of the Construction Law 2014 (amended in 2020), the state will encourage construction investment activities:
- The purpose is to preserve, recreate and promote the value of historical and cultural relics, cultural heritage, religion and beliefs;
- Aim to build social housing for disadvantaged people;
- Investment in construction according to planning in mountainous areas, islands, areas with particularly difficult socio-economic conditions and areas negatively affected by climate change
Domestic organization, individual and foreign organization, individual shall be encouraged and facilitated to study and apply advanced construction science and technology, use new building materials, save energy and natural resources, protect the environmental and respond to climate change; to preserve, restore and promote value of historic relic, cultural heritage, belief, religion; facilitate organization and individual to develop social housing, be involved in construction investment activities in accordance with urban plan in mountainous areas, areas of special socio-economic difficulties, and areas affected by climate change.
Entities involved in construction investment activity of all economic sectors shall be treated equally before the law, encouraged and facilitated in construction investment activities; priority shall be given to contractor who has received award for construction works quality from the State, when taking part in bidding for construction activity.
Step by step transfer some of public services supplied by state management agencies in construction investment activities to qualified social professional organizations.
Preferential policies for foreign investors in the construction line
According to Article 15 of the Investment Law 2020, subjects eligible for investment incentives include the following subjects, in which, more detailed regulations on these subjects have been stipulated by Decree 31 /2021/ND-CP define in more detail:
Investment projects in business lines eligible for investment incentives or business lines eligible for special investment incentives
Investment projects located in disadvantaged or extremely disadvantaged areas
Any investment project whose capital is at least VND 6,000 billion eligible for investment incentives if the following conditions are met:
- At least VND 6,000 billion is disbursed within 03 years from the issuance date of the investment registration certificate or the decision on approval for both investment guidelines and investor (for the project not required to obtain the investment registration certificate) or the decision on investor approval (for the project not required to obtain the investment registration certificate);
- The total revenue is at least VND 10,000 billion per year within 03 years from the year in which the revenue is earned or the project has an annual average number of at least 3,000 employees in accordance with regulations of law on labor 03 years within 03 years from the year in which the revenue is earned;
Investment projects located in rural areas and employing at least 500 employees per year in accordance with regulations of law on labor (excluding employees who work on a part-time basis and employees who sign employment contracts with a fixed term of under 12 months);
Hi-tech enterprises, science and technology enterprises and science and technology organizations; projects involving transfer of technologies on the List of technologies the transfer of which is encouraged; science and technology enterprise incubators; enterprises manufacturing and providing technologies, equipment, products and services with a view to satisfaction of environment protection requirements which are eligible for investment incentives as prescribed in Point dd Clause 2 Article 15 of the Law on Investment are enterprises, organizations, facilities and investment projects that satisfy the conditions prescribed by the law on science and technology; high technology; technology transfer; environmental protection
The start-up project and Projects of enterprises operating in innovation centers and research and development centers;
Investment in product distribution chains of small and medium-sized enterprises; investment in technical facilities to support small and medium-sized enterprises, small and medium-sized business incubators; Investing in the business of a common working area to support small and medium-sized enterprises to start creative businesses according to the provisions of law on supporting small and medium-sized enterprises
The content of investment incentives for foreign investors in the construction industry according to Article 5 of the Investment Law 2020 includes:
- Investors are entitled to carry out business investment activities in the sectors and trades that are not banned by this Law. For sectors and trade subject to conditional business investment, investors must satisfy the business investment conditions prescribed by law.
- Investors may decide by themselves on and shall be accountable for business investment activities in accordance with this Law and other relevant laws; and are entitled to access and use credit capital sources and support funds and use land and other natural resources in accordance with law.
- The State shall recognize and protect investors’ ownership of property, investment capital, incomes and other lawful rights and interests.
- The State shall treat investors equally; adopt policies to encourage and create favorable conditions for investors to carry out business investment activities for sustainable economic development
Incentives for foreign investors in the construction sector are covered by Clause 1, Article 15 of the Investment Law 2020 as well as Circular 83/2016/TT-BTC (on import and export tax incentives) and Circular 96/2015 /TT-BTC (on corporate income tax incentives) regulations, including the following points:
- Corporate income tax incentives . Specifically: impose corporate income tax lower than normal tax for a period or the entire period during which the project is implemented; Tax exemption or reduction and other incentives related to corporate income tax. Reduction from 10%-20% for a term of 10-15 years, tax exemption for up to 9 years.
- Losses can be carried forward over a five-year period and profits are not taxed when transferred abroad. You also get a tax refund on reinvested profits and accelerated depreciation.
- The Corporate Tax Law stipulates many different incentive criteria, including: investment in infrastructure development and production, software, education and environment of geographical locations, business areas, special especially important infrastructure.
- Exemption from import and export tax on goods used in the construction industry. According to Article 5 of Circular 83/2016/TT-BTC, import tax exemption for equipment, means of transport and other goods for use in implementing investment projects in Vietnam. Revenue from technology transfer activities of investment incentive projects is also exempt from income tax. Furthermore, according to international treaties that Vietnam is a member of, goods are also exempt from import and export taxes.
- Exemption and reduction of land use fees, land rent, and land use tax . Regarding exemption and reduction of “land use” fees according to the provisions of Decree No. 57/2018/ND-CP and the 2013 Land Law. Companies implementing agricultural projects are allocated land or have their purposes changed by the state. land use purpose, you do not have to pay the cost of changing the land use purpose or the land use costs for the converted land area. Regarding exemption and reduction of “land rent” fees , 10 cases have been mentioned in the Government’s ordinances and circulars, including Decree 46/2014/ND-CP, Decree 135/2016/ND-CP and Decree 135/2016/ND-CP. Decree 31/2021/ND-CP.
- In addition, the exemption or reduction of non-agricultural land use tax may be subject to certain conditions as prescribed in Circular 153/2011/TT-BTC and Circular 130/2016/TT-BTC.
- Accelerate depreciation and increase the amount of money deducted when calculating taxable income
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