VietNamNet Bridge – The inconsistent and changeable investment
policies have been making foreign investors hesitate to invest in Vietnam.
The Korean Chamber of Commerce
and Industry (KoCham) has sent a document to the Minister of Finance Vuong Dinh
Hue, complaining about the unclear tax policies applied to the machine and
equipment imports to Vietnam, according to Dau tu newspaper.
Local customs agencies have
recently asked South Korean companies to pay import tax for the machines and
equipments listed in the tax-free list. The products have been imported under
the name of finance leasing companies – the companies that come forward to
import equipments to lease to KoCham’s member companies.
According to KoCham, the
government Decree No 16 stipulating the regulations on the operation and
organization of finance leasing companies pointed out that in case finance
leasing companies import products to re-lease to other companies, the import
tax rates would be the rates stipulated for the products imported directly by
companies.
The Ministry of Finance, in the
Circular No 24, which stipulates the tax duties for finance leasing companies,
also showed similar regulations.
However, though the two legal
documents are still in validity, the General Department of Customs still asks
local customs departments to collect import tax on the equipments – the
tax-free subjects.
KoCham many times lodged
complaints to the Ministry of Finance, but it has not got reply from the
ministry. Therefore, the chamber has decided to lodge a complaint again
directly to the head of the ministry.
In the document sent to the
ministry, KoCham’s Chair Kim Jai Woo emphasized that the problem has raised
doubts about Vietnam’s investment incentive policies among foreign investors.
They do not know whether they should scale up their business in Vietnam,
because they are not sure if the current policies would change in the near
future.
He went on to say that
unpredictable and changeable policies have forced foreign investors to bear
additional expenses, and made it impossible to control the investment costs in
Vietnam.
Thoi bao Kinh te Vietnam some months
ago once quoted some foreign investors as saying that the Decree No 124 guiding
the implementation of the Corporate Income Tax has “problems”. The decree
stipulated that the enterprises investing in industrial zones would no more
enjoy the corporate income tax and import tax incentives, which has discouraged
foreign investors.
The removal of the tax incentives
has not only put difficulties for foreign investors, but also made local
authorities suffer. The reports by local authorities have shown that the
investment capital in industrial zones has dropped dramatically after the new
regulation was issued.
The regulations relating to the
compensation fee for site clearance in accordance with the Decree No 69 have
also been cited as unexpected policy changes, which would affect the expenses
of foreign invested enterprises.
Some months ago, the complaint
about the changeable policies came from automobile manufacturers. Local
authorities in big cities unexpectedly raised the vehicle ownership
registration taxes. The Ministry of Industry and Trade tightened the control
over car imports by releasing the Circular 20 with the requirements which car
dealers believed would not be satisfied by anyone.
Michael Behrens, General Director
of Mercedes Benz Vietnam said on Dau Tu that automobile manufacturers need
stable long term policies to feel secure about their long term investment plan
in Vietnam. Meanwhile, the policies relating to the automobile industry have
been changing so regularly in the last few years.
He has warned that the investors,
who are considering investment opportunities, may head for more stable markets
than Vietnam.
Compiled by C. V
Business & Investment Opportunities
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