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Tax incentives for supporting industries: Waiting for businesses to take advantage

Supporting industry enterprises have been supported with many preferential policies for development. Photo: Nguyen Thanh

In early June, the Government issued Decree 57/2021/ND-CP supplementing point g, Clause 2, Article 20 of Decree No. 218/2013/ND-CP (amended and supplemented in Decree No. 12/ 2015/ND-CP) on corporate income tax incentives for enterprises with investment projects to produce products on the list of supporting industry products prioritized for development (Decree 57).

Accordingly, the Decree stipulates that enterprises with investment projects (new and expanded) and production of products on the list of supporting industry products prioritized for development must be implemented before January 1, 2015, and satisfy the conditions of the Government projects on production of supporting industries according to the provisions of the Law amending and supplementing a number of articles of the tax laws No. 71/2014/QH13 and granted certificates of incentives for production of supporting industries by the competent authority to enjoy corporate income tax incentives from the tax period, which is granted a certificate of incentive for production of supporting industries by a competent authority.

After Decree 57 was promulgated, the General Department of Taxation also sent a dispatch on implementation, requesting tax departments to disseminate to taxpayers in the area to promptly implement 57 Decree in order to remove difficulties for taxpayers in the current period.

Along with Decree 57, many other tax incentives for the supporting industry have been implemented under the Law amending and supplementing a number of articles of the tax laws No. 71/2014/QH13 and Decree 111/2015/ND- Government's CP on supporting industry development.

In August 2020, the Government issued a separate Resolution on solutions to promote the development of the supporting industry. The target of the Resolution is that by 2030, supporting industry products will meet 70% of the demand for domestic production and consumption; accounting for about 14% of industrial production value; there will be about 2,000 enterprises capable of supplying to assembly enterprises and multinational corporations in Vietnam.

According to the Vietnam Association of Supporting Industry (VASI), the current policy to support the development of the supporting industry is better than the previous incentives, so businesses eligible for incentives will be able to apply new incentives that are more beneficial to business operations.

In particular, the newly issued Decree 57 has many new and more favorable points compared to the old regulations. Therefore, VASI estimates that, with tax incentives under the supporting industry development policy, supporting industry enterprises will have more favorable investment opportunities, reduce financial pressure, and invest on a larger and more modern scale.

Mr. Nguyen Duc Hoa, Director of Viet Han Joint Stock Company, said supporting industry enterprises are often small, so they face many problems, especially in finance. Therefore, the supporting policies will be very useful for the operation of supporting industry enterprises.

Thanks to the above development policies, the supporting industry in Vietnam has seen rapid and strong development. According to the Ministry of Industry and Trade, the number of enterprises operating in the supporting industry accounts for nearly 4.5% of the total number of enterprises in the processing and manufacturing industry.

Production and business revenue reached more than VND900,000 billion, contributing nearly 11% of the total revenue of the whole processing and manufacturing industry. Some Vietnamese component manufacturing enterprises have good capacity, meeting domestic demand and exporting to many fastidious markets.

Although the policy has been evaluated well, according to experts, the number of enterprises, especially domestic supporting industry enterprises participating in the production network, is still very low. At the same time, the number of businesses in the industry that can access support policies is still quite modest.

Talking more about the difficulty in receiving preferential policies, the leader of a supporting industry enterprise said that in order to receive incentives, enterprises must have a certificate of incentives for production of supporting industry products issued by a competent authority. However, not all businesses can apply for this certification or businesses have to carry out many procedures and take a lot of time to be granted a certificate.