Viet Nam - A Guide for Business and Investment - asean-korea centre

exempted from payment of land rental (in the case ofleasing land) for the whole span of their projects.“EPZ Enterprises”, respectively) are granted with thefollowing preferential treatments:o During the term of the projects, the BOT, BTO and BTenterprises are, subject to approval of the competentState bodies, permitted to pledge or mortgage assetsand land use rights (“LURs”) in accordance with thelaws on land of Vietnam.Government Guarantee Undertaking: The Governmentof Vietnam will, depending on the nature of each ofBOT, BTO and BT projects, appoint an authorised bodyto issue, on behalf of the Government, guarantees forloans, provision of raw materials, consumption of products,and any other contractual obligations in favourof the investors, the BOT, BTO and BT Enterprises, andother enterprise participating in these projects if aGovernment guarantee undertaking is required underthe relevant BOT, BTO or BT contract.Industrial Zones/ Export Processing Zones/HighTech Zones (“Industrial Zones”) /Economic ZonesIn 1991 the Vietnamese Government introduced a policyto develop these special administrative zones in aneffort to geographically diversify investment locations,to accelerate export, and to create more jobs.Industrial Zone & Export Processing ZoneIndustrial Zone (“IZ”) is a zone in which enterprisesspecialising in the production of industrial goods andthe provision of services for industrial production areconcentrated.Export Processing Zone (“EPZ”) is an industrial zonespecialising in the production of goods for exports andthe provision of services for such production and exportactivities.Investment in IZs and EPZs is generally regulated byDecree No. 108/2006/ND-CP of the Government dated22 September 2006 implementing the Law on Investment(“Decree 108”).Developers of IZs and EPZs and iinvestors operatingand doing business in these zones (collectively referredto herein as “IZs Developers” and “IZ Enterprises” and• Corporate Income Tax (“CIT”):Depending on certain criteria, investment in IZ/EPZwill be entitled to 10%, 15%, or 20% CIT rate, andup to 4 years of CIT exemption from the first profitmakingyear, and 9 years of 50% reduction of theCIT rate from the subsequent year;• Import Duties and Value Added Tax: IZ Developers,IZ Enterprises and EPZs Enterprises may be exemptedfrom payment of import duties and valueadded tax on goods imported for the purposes ofestablishment and implementation of their investmentprojects.• Land Use:Incentives include preferential land rental rate, exemptionfrom payment of land use fees for the landarea allocated to the investor by the State , or exemptedfrom payment of land rental (in the case ofleasing land) for the whole span of their projects.o Where IZ Developers, IZ Enterprises and EPZ Enterprisespay their land rental on an annual basis, theyhave the rights to (i) mortgage or use as guarantee assetsattached to land, (ii) sell or contribute as capitalassets attached to land, (iii) sell or lease out factories,offices and warehouse built in the IZ; and (iv) sub-leasethe land area on which infrastructure facilities havebeen completed (please note that the right mentionedin (iv) is only applicable to IZ Developers). Those IZDevelopers, IZ Enterprises and EPZ Enterprises whopay the land rental for the entire term of their leaseone-off, are entitled to additional rights. In particular,during the term of their land lease or sub-lease, theyare permitted to (i) assign the value of their LURsProduction line of a motor part in Tan Thuan Export Processing Zone- Ho Chi Minh cityViet Nam - A Guide for Business and Investment 33PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT