Foreign companies depend on Vietnam’s consistent business environment

During a meeting with Prime Minister Pham Minh Chinh on Saturday, a representative of German engineering and electronics company Bosch in Vietnam pointed out the inconsistencies in legal regulations that make it difficult for them to invest in the country.

“Quick changes in policy can make it difficult for both businesses and tax authorities to enforce and comply,” he commented.

The representative said after the 2019 inspection, the tax incentives that Bosch received were partially abolished as per regulations introduced after it made its first investment steps.

Such changes went against investment protection terms specified in the Investment Law, he said.

Referring to tax policy, a representative of Eurocham also said the top priority for European investors is transparency in tax law development.

For many years, Vietnam has used corporate income tax incentives as a top priority for attracting investment. With the Organization for Economic Cooperation and Development to implement the global minimum tax rule in the near future, the Eurocham representative suggested that Vietnam could apply policies from Europe and other countries to directly support investors.

Finance Minister Ho Duc Phuc said Vietnam has made many tax reforms. The common tax rate has been lowered by 5% to 20%, for instance.

In some areas of investment incentives, this tax rate is currently 10%. Depending on the subject, the preferential tax rate can be 9% within 30 years. Some businesses can be exempt from taxes for six years, and have payable tax reduced by 50% in the next 13 years.

“This is a very favorable mechanism,” he said.

Administrative procedures are also a concern among foreign business representatives in Vietnam. They complained the lengthy procedure is causing a lot of trouble and wasting time.

Tim Evans, CEO of HSBC in Vietnam, said the average an investor needs is six to nine months to set up a business in Vietnam, while they expect the licensing time to be shortened to three months.

Evans proposed state management agencies should have regular discussions with FDI enterprises to clarify regulations related to capital flow, financing, business establishment and incentives.

The Eurocham representative also suggested the government should soon approve the Power Development Master Plan VIII to make way for the transition to green and clean energy projects in Vietnam.

“We don’t want to put a burden on the Vietnamese economy as well as raise electricity prices. We just want to have a specific roadmap for the energy transition,” the Eurocham representative said.

During the meeting, PM Chinh also pledged to create a safe and transparent investment environment and urged foreign companies to keep faith while doing business in Vietnam.