Firms demand sweeter tax incentives

Foreign-invested companies in Binh Duong province met with the province’s customs officers last week and said Decree 87/2010/ND-CP, which took effect on October 1, 2010 to replace the Decree 149/2005/ND-CP, needs improving.

These companies said the decree had failed to define whether or not tax incentives for foreign-invested companies established before October 1, 2010 in specific areas and sectors will remain as stipulated in the Decree 108/2006/ND-CP issued in 2006.

Deputy head of Binh Duong province’s Customs Office Le Van Danh said: “Article 16 of the Decree 87 is to replace Decree 149 without mentioning Decree 108, so projects and businesses established before October 1, 2010 with higher incentives on import-export tax rate than the current rate regulated in the Decree 87 still enjoy incentives within the remaining regulated time.”

Decree 108, providing detailed provisions and guidelines for implementation of a number of Investment Law articles, has an appendix specifying the list of sectors entitled to investment incentives.

It comprises sectors entitled to special investment incentives and sectors entitled to investment incentives. Its second appendix also contains the list of geographical areas entitled to investment incentives, comprising geographical areas with difficult socio-economic conditions and geographical areas with difficult socio-economic conditions.

“All tax incentives applied for the businesses established after October 1, 2010 will be regulated in accordance with Decree 87, which has less incentives than the previous Decree 108,” Danh said.

The tax incentive vagueness for import-export businesses are also rooted from the inconsistencies in regulation interpretation of customs-related agencies over time.

Michael Chen Huang Ming, director of New Choice Company Limited, said: “One of my company’s imported materials was coded differently between 2008 and 2010 by the southern control centre, leading to a 10 per cent import tax difference for this material now. The problem is that Binh Duong province’s tax agency now requires us to fulfil accumulative tax debts for this imported materials back in 2008 to 2010 in line with its new code’s import tax.”

“I don’t know why the centre now codes the material differently. But if that is necessary, the new tax band for the new code should just be applied from 2010 when the material is coded differently,” Ming said.

Danh said: “The code for this material is changed as the way the importer processes it has changed in favour of the importer.”