Tax incentives in the processing and manufacturing industry in Vietnam

Tax incentives play a crucial role in supporting the processing and manufacturing industry in Vietnam. Companies in this sector enjoy lower corporate income tax rates and may be exempt or have reduced taxes for a specified period. They are also exempt from export tax, which boosts Vietnam's exports. Workers in areas with difficult conditions may receive personal income tax exemptions or reductions. R&D activities and high technology companies also benefit from special tax incentives. Compliance with regulations is necessary to fully utilize these incentives. Taxes are a crucial source of revenue, contributing to the stability and growth of the national economy. Tax incentives are conditions created by the state to reduce tax burdens, attract investment, and support businesses in fields that the state encourages. The processing and manufacturing industry is a key driver of exports and job creation in Vietnam. To promote this sector, the government has implemented numerous tax incentive policies to support businesses and create favorable conditions for investment. Below are some key highlights of tax incentives in this field. Corporate income tax, CIT, reduction. Companies operating in the processing and manufacturing industry often enjoy a lower corporate income tax, CIT, rate compared to other sectors. Additionally, new or expanding companies in this sector may be exempt from or enjoy reduced CIT for a specified period, depending on the location and scale of the project. The tax exemption and reduction incentives include three schemes. Exemption for four years, and a 50% reduction in payable tax for the following nine years. Exemption for four years, and a 50% reduction in payable tax for the following five years. Exemption for two years, and a 50% reduction in payable tax for the following four years. Export tax exemption. Companies in the processing and manufacturing industry are often exempt from export tax, VAT, on exported products. This improves price competitiveness in international markets and boosts Vietnam's exports. Personal income tax, CIT, exemption or reduction for workers. If a company invests in areas with difficult socioeconomic conditions, it may receive exemptions or reductions in personal income tax, CIT, for employees working there. This attracts talent and creates jobs for local communities. Tax incentives for research and development, R&D. R&D activities in the processing and manufacturing sector can benefit from special tax incentives, including exemptions or reductions in corporate income tax and import tax reductions for research equipment. Special tax incentives for high technology. Companies operating in high technology sectors often receive special tax incentives, including exemptions or reductions in CIT and VAT. These tax incentive policies not only help the processing and manufacturing industry thrive but also attract foreign investment and promote technological innovation. However, to fully utilize these incentives, businesses must comply with legal regulations and timely, accurately report their taxes. If you have any further questions or inquiries, please contact TPM via the website tpm.com.vn or hotline 090-298-1080 for the quickest support.