Foreign investors suffering losses may enjoy tax incentives

National Assembly Office Chairman Nguyen Hanh Phuc

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Will the firms that sustained damages be provided some kind of support to help them stabilise their operations?

In principle, giving tax breaks is the right of the National Assembly. If the government recognises the need to support firms through tax incentives, it may look for the NA’s approval in the on-going session.

Since the rioting incident just happened, the NA has yet to receive any government proposals on tax incentives for firms whose operations were affected by the incident.

In the media, representatives of many firms said that despite suffering losses in the range of hundreds of thousands of US dollars, the companies are still confident in the Vietnamese government’s assurance of their assets and operations in the country. They are still committed to doing business in Vietnam over the long-term, particularly after the workers who engaged in the illegal rioting have recognised their error and returned to work.

How should the country support damaged firms then?

For the assets which were insured, insurers need to quickly assess the damage, determine the value of those losses, and making timely compensation to help these firms restore full productivity.

For force majeure losses, after getting insurer indemnity, tax management bodies need to help firms fill in procedures for tax reduction, return, or exemption, in-line with existing regulations.

Would you clarify it?

For example, according to the Law on Import and Export, businesses whose import and export items are being supervised by customs bodies might be offered tax reductions if their imports and exports incurred damage due to force majeure reasons.

Businesses which have paid taxes on import-export items that have yet to be imported or exported will get a tax refund. 

According to the Corporate Income Tax Law, damages incurred from natural disasters, epidemics or force majeure not subject to indemnity will be considered reasonable costs to be deducted in setting taxable income.

Firms’ assets were damaged due to force majeure reasons so tax and customs bodies, as per tax laws, need to quickly complete procedures to ensure firms get tax reductions and refunds within 30 days after these bodies receive completed tax records.

How has the financial sector supported affected firms?

Many domestic and foreign firms have expressed their appreciation to the Ministry of Finance’s responses in helping foreign-invested enterprises return to normal production-business after last week’s incidents. After the prime minister issued Notice 697/CD-TTg, dated May 15, to ensure order and security, the finance minister sent urgent dispatches requiring leaders of financial departments in localities to take consistent measures to ensure normal production of businesses and leaders of tax and customs organisations to learn about and tackle firms’ difficulties and report back to authorities so timely support can be provided to firms and they can return to normalcy.

How has the incident affected firms’ production and business?

As it just took place, no detailed figures are available. The government will report on it to the NA, including assessing damage and how it has impacted firms’ production, business, and the local investment climate. 

Once these government reports are ready, they will be promptly shared with the media.