06:00 | 10/08/2021 Industry
(VEN) - Support industry projects are entitled to preferential corporate income tax (CIT) as part of government efforts to help support industries develop in the context of the Covid-19 pandemic severely affecting different industries and countries worldwide.
Support industry development is one of Vietnam’s top priorities
Government Decree 57 retroactively benefits enterprises that have been producing support industry components prior to 2015, not only those that started production since 2015. Accordingly, eligible enterprises will be entitled to CIT exemption for four years, 50 percent CIT reduction for the next nine years, and 10 percent preferential tax rates for the first 15 years on income arising from such production.
Apart from Decree 57, many other tax incentives for support industries have been implemented in accordance with revised tax laws and support industry development regulations. In August 2020, the government issued a resolution setting a 2030 target for support industry enterprises to meet 70 percent of domestic production and consumption demand and account for about 14 percent of the country’s industrial production value. Another goal is to have 2,000 support industry enterprises capable of supplying directly to assembly companies and multinational corporations in the country.
According to the Vietnam Association for Supporting Industries (VASI), the current policies for support industries are better than the previous incentives, and support industry enterprises will have more favorable conditions and development investment opportunities.
Practical policies needed
According to the Ministry of Industry and Trade, support industry enterprises account for almost 4.5 percent of all processing and manufacturing enterprises in the country, with revenues of more than VND900 trillion, representing nearly 11 percent of the processing and manufacturing industry’s total revenue. Some Vietnamese component manufacturers are capable of meeting domestic demand and exporting products.
Support industry development is one of the top priorities of Vietnam. However, domestic support industries remain weak and need more practical incentive policies, said Do Phuoc Tong, President of the Ho Chi Minh City Association of Mechanical and Electrical Enterprises.
Although many incentive policies have been launched, the number of support industry businesses benefitting from them remains modest. It is necessary to prepare industry and support service development policies towards minimizing outsourcing and dependence on supply from the outside. This will add value to products and improve Vietnam’s position in the global supply chains, said Pham Ngoc Hung, Vice Chair of the Ho Chi Minh City Business Association.