Incentives of corporate income and excise taxes may be curtailed at the special economic zones
By An Chi
May 17, 2018 | 08:25 AM GMT+7
The latest draft law of the special economic zones has been amended based on the opinions of several members of the National Assembly to reduce incentives for several investment projects including casino, tourism and entertainment services.
Phu Quoc Island.
According to international experience, casino business services, electronic games with prizes, betting services are highly profitable business activities, which in the long run are likely to contribute significantly to the state budget, thus the provision of excise tax incentives in the draft law is necessary.
However, since this is an attractive business sector to investors, preferential policies should be calculated rationally, ensuring no loss of state budget.
In particular, the new draft law only exempts land rents and water surface rents for a maximum of 30 years in Van Don, Van Phong and up to 20 years, in Phu Quoc as most of special economic zones (SEZs) are already located in high value and favourable positions, which will certainly be attractive to investors, thus maximum tax exemption or reduction is unnecessary.
The new draft law also reduces corporate income tax incentive. In particular, income from business services subject to special consumption tax of this project will be subject to the tax rate of 17 percent within five years from the date of earning income instead of 10 percent in 10 years previously.
In addition, the draft law also reduces the excise tax incentive, which is set at 15 percent for 10 years and applies only to business services in the service area, tourism and entertainment meeting the conditions of strategic investors.
From the very beginning of its initiation, SEZs have received many positive responses from the public, as the development of three SEZs including Van Don, Phu Quoc and Van Phong are expected to create more jobs, technological infrastructure and service industries, thereby boosting people's incomes.
As a result, a majority of economists consider that offering special unprecedented incentives to these zones is necessary condition to attract more domestic and foreign investment capital.
Based on the recent report on the adjustment of the proposed law on SEZ of the National Assembly Standing Committee, many members suggested that the proposed tax exemption and reduction should only be applied in the first phase instead of continuing in a long period of time to prevent the exploit of tax incentives.
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