Tax Incentive Policy for Investment Projects with Changes in Project Ownership

1. Entities Eligible for Tax Incentives

Clause 11, Article 16 of the Law on Export and Import Duties No. 107/2016/QH13 and Article 14 of Decree No. 134/2016/NĐ-CP dated September 1, 2016, by the Government (amended and supplemented by Clause 7, Article 1 of Decree No. 18/2021/NĐ-CP dated March 11, 2021), stipulate the exemption of import duties for goods used to create fixed assets for entities receiving investment incentives. Clause 1, Article 41 of the Investment Law No. 61/2020/QH14 allows investors to adjust objectives, transfer part or all of the investment project, merge projects, or divide a project into multiple projects, and to use land-use rights or project assets to contribute capital to establish businesses or conduct business cooperation in accordance with the law.

Accordingly, for investment projects where adjustments are made in compliance with regulations, the corresponding tax policies will apply (provided the eligibility conditions are still met).

2. Procedures and Conditions for Continued Tax Incentives in the Event of Project or Ownership Changes

Decree No. 134/2016/NĐ-CP dated September 1, 2016, by the Government (amended and supplemented by Decree No. 18/2021/NĐ-CP dated March 11, 2021) outlines procedures for cases such as the transfer of investment projects entitled to incentives and the transfer of tax-exempt imported goods from one incentivized project to another under the same project owner. However, there are no specific provisions for cases involving changes in project ownership, such as transferring fixed assets created from tax-exempt imported goods for incentivized projects through the establishment of new businesses, capital contributions to form businesses, company splits, mergers, consolidations, or type conversions.

Therefore, the General Department of Customs requests provincial and municipal Customs Departments to take the following actions:

• Upon receiving information about an investment project within their jurisdiction that is undergoing an ownership change (through reports from the initial project owner, information from state management agencies, or other sources), the managing Customs authority must send a formal invitation to the initial project owner and the new owner for joint discussions, which should be documented in writing.
• The new project owner is responsible for meeting all legal obligations related to tax, including the proper use of tax-exempt goods for the project and reporting the utilization of these goods for the financial year to the customs authority that managed the tax exemption list, in according with the relevent regulation.
• In case the enterprise fails to attend the meeting as requested or exhibits signs of violations or specific risks, customs authorities should promptly inspect the use of tax-exempt goods in according with the relevant regulation, gather and verify on-site information at the project, document the findings, and implement necessary inspection, supervision, and control measures.