The Incentives of Investment into Medical Equipment Manufacturing in Vietnam

Joining in new-generation agreements like CPTPP, EVFTA, and become a part of number bilateral agreements, with the State’s efforts in making legal policies transparent, along offering the appropriate incentives, has made Vietnam a bright spot in attracting foreign investment.

The Investment law prescribes the following forms of investment incentives:

• Corporate income tax incentives, including a lower corporate income tax rate than the normal tax rate for a definite term or for the entire duration of the investment project; tax exemption, tax reduction;
• Exemption from import tax on goods imported to create fixed assets; raw materials, supplies and components imported for production in accordance with the law on import and export tax;
• Exemption or reduction of land use levy, land rental, and land use tax;
• Accelerated depreciation, increasing deductible expenses when calculating taxable income.

The manufacturing medical equipment belong the list of attracting investment fields with reasonable incentives designed by the Vietnamese government. Accordingly, when investing in this field, investors will gain certain incentives, which will vary depending on the production portfolio, location, capital size, in general, including one or some of the following cases:

TAX INCENTIVES

• Corporate income tax (CIT) applies a preferential tax rate of 10% throughout the operation of the investment project, exempted from tax for maximum 4 years. The project is implemented in a regulated area with difficult or extremely difficult socio-economic conditions, the tax payable shall be reduced by 50% for the next 9 years, if the project is implemented in an area that is not on the list of areas with difficult or special socio-economic conditions reduce 50% of tax payable in the next 5 years;
• Import tax: Exemption from import tax on goods imported to create fixed assets; exemption from import tax on raw materials used in the production of medical equipment for a period of 5 years in certain cases;
• Value added tax rate applies 5% when having one of the following documents: (a) Import license; (b) Certificate of registration of circulation; (c) Receipt of application for publication of standards in accordance with the law on health; (d) According to the list of medical equipment subject to specialized management of the Ministry of Health, goods codes are determined according to the list of exported and imported goods.

INCENTIVES ON LAND RENTAL

Depend on the areas which the project will be implemented, the exemption for land rental will long from 3 to 11 years.

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Note: This article is for informational purposes only and it is not a legal advice. The content of the article represents its own of TTVN Legal, it subject to change without prior notice.