by Joyce Roque

Mar. 11 – Foreign investment into the region’s new Asian tiger has been steady despite setbacks from the financial crisis that severely depressed exports that contribute 70 percent to Vietnam’s gross domestic product.

Foreign investors tend to gravitate towards investing in Vietnam as a hedge on their operations in China, a China plus one strategy that follows the advice of not putting all your eggs in one basket.

Opportunities then exist for foreign investors considering Vietnam as a base for business. The government is determined to push through with market reforms to complete its membership to the World Trade Organization. Moreover, it wants to attract businesses that will go beyond making the country a base for cheap labor and bring in training and production.

A foreign investor looking to enter the Vietnamese market must be aware of the taxes that will affect them in the long run. Vietnam’s taxes are implemented on a national level and no state or provincial taxes are in place.

These taxes include:

Corporate Income Tax

Withholding Taxes

Capital Assignment Profits Tax

Value Added Tax

Import Duties

Personal Income Tax

Social Security, Unemployment and Health Insurance for Local Hires

Sales Tax

Natural Resources Tax

Property Taxes

Export Duties

Foreign Contractor Withholding Tax

Double Taxation Agreements

The government also has special tax incentives available for priority areas, industries and specific forms of investment. During the first two months of this year, US$1,781.3 million worth of foreign direct investment came in or only about 27.3 percent during the previous period. There were 88 newly licensed projects worth US$1,616.1 million and  realized foreign direct investment was measured at US$1.1 billion.

For more advice in dealing with tax issues in Vietnam email vietnam@dezshira.com.