Of the total 508 licensed projects, 240 are domestic projects worth US$3.533 billion while the rest is composed of 268 foreign-invested projects. In 2009, the IPs were able to sign in US$130.79 million of projects, including US$91.4 million of foreign direct investment.

Capital city, Hanoi has 16 IPs and 39 industrial complexes. Eight IPs are operational employing more than 90,000 people. Export processing zones and IPs are looking at generating US$180 million worth of investments for 2010, an increase of 11 to 13 percent.

Interest income earned for a company in construction or pre-operating phase shall not be included under corporate income tax (CIT) incentives. The company must pay CIT on interest income following applicable regulations and the tax recognition of this income will not  begin the commencement of the CIT incentive period.

Previously, taxpayers were able to list interest income under CIT incentives. The letter did not advise on the tax treatment for interest income when a company finally comes into its operation stage.

For help in dealing with business taxes in Vietnam email vietnam@dezshira.com.

The event was organized by Hanoi’s Association for Vietnamese Overseas, the Hanoi Business Association, the Vietnam Chamber of Commerce and Industry and Vietnam Television. It will feature 500 booths showcasing various products and services as part of an international trade and investment promotion program to benefit the domestic market.

It is also a chance for multinational organizations in the country to advertise and market education, tourism and trade with local businesses since it overseas Vietnamese, representatives of international organizations and foreign ambassadors are expected to attend the event. Specifically, the booths will deal with businesses related to exports, real estate, tourism, services, franchises and Tet sales.

Businesses cite Vietnam’s legal system, cumbersome administrative procedures, underdeveloped infrastructure and transport systems, high input, high expenses for land and ineffective investment promotions as reasons that hinder investment in the country.

Vietnam wants to bring in US$22 billion to US$25 billion worth of FDI this year plus around US$11 billion in FDI disbursement. In 2009, Vietnam reported total pledged FDI amounting to US$21.48 billion, 70 percent decrease from the previous period.

The rule was implemented since 2008 but was not strictly enforced but beginning January 26 it will be on its mandatory filing and enforcement phase. Penalties worth US$5,000 will be charged to companies that fail to comply with the new rule in addition to possible increased inspections and delay of cargo.

The index is useful for investors looking at entering Vietnam because it gives  a comprehensive look of the country’s 63 provinces and more importantly gets into the details of why certain provinces have better economic growth than others.

The results of the report are based on information surveyed from 9,890 Vietnamese companies; providing a thorough analysis of economic governance and regulatory environment. It recommends that authorities improve transparency and labor quality in Vietnam’s provinces to encourage more investment and growth.

According to the report, businesses perceive that infrastructure quality in the country has improved. Danang and Binh Duong were named as the best places for good economic governance in the country. Moreover, businesses said that aspects such as entry costs, access and security of land, time costs, labor quality, and confidence in legal institutions showed signs of definitive improvement over the past year.

The report also mentioned aspects of doing business in the country that have declined namely transparency, informal charges, and the proactivity of local leaders.

A copy of the 111 page report can be downloaded here.

The new circular does not exempt local companies from export and import tariffs, corporate income taxes and double taxation avoidance agreements with other countries. Local companies reported revenue losses or profits abroad although not reaching taxable threshold will just need to submit their financial reports to the government to calculate for corporate tax income.

Local companies have been more aggressive in pursuing overseas investments. Last year, local enterprises committed US$7.2 billion for 457 projects located in 50 countries, a 43 percent increase from 2008.

Last year, 16 local projects worth VND728 billion and 27 foreign direct investment projects capitalized at US$91.4 million were approved in Hanoi. The city now has a total of 14 industrial parks, behind Dong Nai with 28, Binh Duong with 21  and Ho Chi Minh City with 17.

Local industrial parks have attracted a total of 508 projects that include 240 FDI projects amounting to US$3.5 billion and 268 domestic projects worth VND11.16 trillion.

Previously, accounting records were required to be maintained in Vietnamese dong. Foreign companies wanting to use another currency for their financial records needed to submit an application form to the ministry.

The chosen accounting currency unit must be mainly used for a foreign company’s banking transactions, services and selling prices quotations.
It is also allowed to use the same foreign currency as the currency unit to account for revenue, employee salary and payment of material costs.

Authorities have been working towards strengthening its corporate accounting system. Foreign direct investment to Vietnam in 2009 was hit by the global downturn sliding by 70 percent from the previous year earlier US$21.48 billion.

The General Department of Taxation announced that beer and spirits higher than 40 proof will slapped a 45 percent tax and 50 percent afterward. Alcohol with less than 40 proof will be meted a lower tax of 25 percent.

Previously, wine labeled less than 40 proof was charged a 20 percent tax and stronger drinks were charged a 30 percent to 65 percent tax. Vietnam has been imposing high tax rates on alcohol in the past years. For 2006-2007, beer was taxed 30 percent and 40 percent to 75 percent for 2008-2009.