Exemption or reduction of land rent; support for advertising costs, vocational training, investment in building facilities, etc. are incentives and supports that enterprises enjoy when investing in agriculture and rural areas.
Enterprises are entitled to incentives and support when implementing investment projects in the fields of biotechnology and high technology application in production; production of raw materials and processing of animal and poultry feed; production of crafts; plant protection, veterinary services in rural areas, etc. This article will share the forms of investment incentives and the beneficiaries of investment incentives under the Law on Investment (2020).
According to Article 15 of the Law on Investment (2020), forms of investment incentives include
- Corporate income tax incentives, including the application of a lower rate of corporate income tax for a certain period or throughout the investment project execution; exemption from and reduction of tax and other incentives prescribed by the law on corporate income tax.
- Exemption from import tax on goods imported to form fixed assets; raw materials, supplies and components for manufacturing purposes in accordance with regulations of law on import and export tax.
- Exemption and reduction of land levy and land rents.
- Accelerated depreciation, increasing the deductible expenses upon calculation of taxable income.
According to the provisions of Articles 15 and 16 of the Law on Investment (2020)
- Investment projects in industries and trades eligible for investment incentives, including the farming and processing of agricultural, forestry and aquaculture products, planting and forest protection, salt making, seafood exploitation and fishery logistical services; the production of plant varieties, animal breeds, biotechnology products;
- Investment projects in areas where investment has been prioritized, including areas with difficult socio-economic conditions, and areas with extremely difficult socio-economic conditions; Industrial parks, export processing zones, hi-tech parks and economic zones are eligible for investment incentives.
Accordingly, the specific investment incentives for these subjects will be as follows
- Exemption from land rent and water surface rent for projects implemented in areas with difficult or extremely difficult socio-economic conditions from the date the project is completed and put into operation, specifically as follows:
- 7 years for investment projects in areas with difficult socio-economic conditions.
- 11 years for investment projects in areas with extremely difficult socio-economic conditions; investment projects on the list of sectors especially encouraged for investment; projects on the list of investment incentive sectors invested in areas with difficult socio-economic conditions.
- 15 years for projects on the list of investment-encouraged sectors invested in areas with extremely difficult socio-economic conditions; projects on the list of fields of special investment encouragement to be invested in areas with difficult socio-economic conditions.
The list of areas of investment encouragement, areas of special investment encouragement, areas with difficult socio-economic conditions, and areas with extremely difficult socio-economic conditions shall comply with the regulations of the Government
- Exemption or reduction of land rent and water surface rent for agricultural projects
- Agricultural projects with investment incentives and investment incentives when renting land or water surface from the State shall apply the preferential land prices set by the People’s Committees of the provinces and centrally run cities and land lease, stable water surface lease for at least 5 years.
- For agricultural projects with special investment incentives, such projects are entitled to the exemption from land rent or water surface rent from the date on which the State leases land or water surface.
- For agricultural projects with investment incentives, such projects shall be entitled to the exemption from land rent or water surface rent for the first 15 years from the date on which the State leases land or water surface and a 50% reduction in land and water surface rent for the next 7 years.
- For the agriculture projects under encouraged investment, such projects are entitled to the exemption from land rent or water surface rent for the first 11 years from the date on which the State leases land or water surface and a 50% reduction for the next 5 years.
- Small and medium-sized agricultural enterprises shall be entitled to the exemption from land rent or water surface rent by the State for the first 5 years from the date of completion of the project and put into operation and a 50% reduction of land or water surface rent for the next 10 years.
- Incentives on corporate income tax
|No.||Tax rate||Conditions||Time of application||Exemption, reduction of CIT|
|CIT exemption||CIT reduction|
|1||10%||– Income of enterprises from implementing new investment projects in areas with extremely difficult socio-economic conditions, economic zones, high-tech zones;
– Income from enterprises implementing new investment projects: scientific research and technological development; high-tech applications; production of composite materials, all kinds of light construction materials, rare and precious materials; production of renewable energy, clean energy, energy from waste destruction; biotechnology development; environmental protection
|15 years from the first year of having taxable income from the investment project||4 years||50% for the next 9 years|
|2||20%||– Income of enterprises from implementing new investment projects in areas with difficult socio-economic conditions;
– Income of enterprises from implementation of new investment projects, including: production of high-grade steel, production of energy-saving products, production of machinery and equipment for agriculture, forestry, fishery and salt production; production of irrigation equipment; production and refinement of animal, poultry and aquatic feed; traditional industry development. From January 1, 2016, the income of enterprises specified in this Clause is subject to the tax rate of 17%;
– Incomes of enterprises from implementing new investment projects in industrial parks, except for industrial parks in areas with favorable socio-economic conditions.
|15 years from the first year of having taxable income from the investment project||2 years||50% for the next 4 years|
In addition, enterprises investing in agriculture and rural areas also enjoy preferential policies and additional investment support of the State such as support for human resource training, market development; support land concentration; credit access and support; basic investment; research, transfer and application of hi-tech agriculture, and other supports are issued by the Government with specific guidance from time to time.
The above are some typical incentives for investment activities based on the criteria of the agricultural sector and the project location. The details of each applied incentive will be determined based on the size, project objectives, investment capital and other needs of the investors.