Vietnam Market Watch: Housing Tax, Garment Exports, and Investment in Quang Ninh
Finance Ministry Considers Additional Tax for Ownership of Multiple Houses
The Ministry of Finance is proposing a policy to pay additional tax for owners of more than one house. The ministry has tasked its tax policy department with developing the plan, though it is unlikely to be implemented before 2020. Analysts have stated that homeowners should pay tax rates progressively, increasing on the second and any subsequent homes. Currently the state only gets a modest amount from its land use tax, which they say is not enough to cover expenses that maintain working public amenities.
Tax authorities have set a land use tax of 0.03-0.07 percent based on government mandated property prices while other countries levy a rate of 1 to 1.5 percent on the property’s market price. The taxing of multiple houses will be included in the Law on Asset Taxes to regulate national assets, as well as to increase the state budget. In addition to increasing government collections, the move is aimed to prevent real estate speculation.
Garment Sector May Miss Yearly Export Target
Vietnam’s garment and textile sector will struggle to achieve its export turnover target of US$31 billion due to lack of orders, which could result in the lowest growth level in the past decade. Export turnover reached US$18.7 billion in the first eight months of the year reaching 64 percent of the annual target. Companies are facing increased production costs, limited orders and pressure by exporters to reduce selling prices, while the exchange rate and salary policies have made prices increase by two to four percent.
Vietnam Textile and Apparel Association (VITAS) have asked member companies to avoid internal competition and cooperate on share orders. It further stated that local firms should reach export turnover of around US$2.66 billion a month in the year end months to meet the yearly target. Nevertheless, textile and garment sectors still attract foreign investors. In 2015, around US$2 billion worth of FDI capital was invested in the sector.
Authorities Seek More Investment in Quang Ninh
Authorities in Quang Ninh province are looking for funds for at least 14 investment projects in the tourism and property sector for the 2016-2020 period. Out of the 14 projects, the eco-tourism resort on Phuong Hoang Island is the most important. The project is located at the Van Don Economic Zone with villas, hotels and a marina which requiring capital of US$250 million. Other projects, include a golf course with hotels as well as another ecotourism resort on Nat Dat Island, will require US$150 million investment.
Apart from these, are infrastructure projects like the Dam Nha Mac Industrial Service Zone, the Van Don-Tien Yen Highway and the Industrial Breeding Development Center. Authorities in Quang Ninh had previously granted investment certificates to 1,619 new projects with registered capital of US$9.79 billion, up 24.3 percent year-on-year as of August. Around 5.9 million tourists have visited Quang Ninh in the first seven months of the year – a four percent increase year-on-year as per the Quang Ninh Department of Culture, Sports and Tourism. Out of this, 2.1 million were international visitors, up 42 percent year-on-year.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
Annual Audit and Compliance in Vietnam 2016
In this issue of Vietnam Briefing, we address pressing changes to audit procedures in 2016, and provide guidance on how to ensure that compliance tasks are completed in an efficient and effective manner. We highlight the continued convergence of VAS with IFRS, discuss the emergence of e-filing, and provide step-by-step instructions on audit and compliance procedures for Foreign Owned Enterprises (FOEs) as well as Representative Offices (ROs).
Navigating the Vietnam Supply Chain
In this edition of Vietnam Briefing, we discuss the advantages of the Vietnamese market over its regional competition and highlight where and how to implement successful investment projects. We examine tariff reduction schedules within the ACFTA and TPP, highlight considerations with regard to rules of origin, and outline the benefits of investing in Vietnam’s growing economic zones. Finally, we provide expert insight into the issues surrounding the creation of 100 percent Foreign Owned Enterprise in Vietnam.
Tax, Accounting and Audit in Vietnam 2016 (2nd Edition)
This edition of Tax, Accounting, and Audit in Vietnam, updated for 2016, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in Vietnam, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who must navigate Vietnam’s complex tax and accounting landscape in order to effectively manage and strategically plan their Vietnam operations.
- Previous Article Vietnam Market Watch: Consumer Goods, Farm Exports, and Lagging Internet Speeds
- Next Article Trump, Trade, and the Future of the Trans Pacific Partnership