Tax incentives barred by WTO

Hanoi (VNA/VNS) - The Ministry of Finance has issued a long-awaited official letter
to confirm the elimination of certain corporate income tax incentives found in
conflict with WTO rules and principles of national treatment and non-discrimination.

Prior to Vietnam's accession to the WTO in 2007, enterprises in industrial and
export processing zones with a certain proportion of their production output
intended for export had been eligible to enjoy corporate tax preferences.

Under these preferences, for instance, a firm that exported more than 50 percent of
its products enjoyed a 20 percent corporate tax rate, compared to the prevailing
rate of 28 percent.

Eliminating the tax preferences, while bringing the nation into compliance with the
WTO, would also dishonour commitments made to specific investors.

An official letter acknowledged this by reminding firms which have lost tax
incentives that they are still entitled to enjoy other lawful preferences to which
they are already eligible for projects in industrial and export processing zones, in
poor or remote areas, or which create jobs for a large number of employees.

The firms can opt to enjoy preferential policies that the country was applying
either at the time its set up business in Vietnam or at the time of Vietnam 's
WTO accession.
Except for apparel enterprises, firms that were granted investment licences
before the country's WTO accession and which were enjoying preferential
corporate tax treatment based on export ratios would continue to enjoy the
tax incentives, but only until the end of 2011.-Enditem