Recently, a medium-sized foreign-invested enterprise approached HTH & Partners for legal and tax advice concerning their entitlement to Vietnam corporate income tax (CIT) incentives. The company had been enjoying significant tax incentives as a result of its investment location within a high-tech park in Vietnam. While their project and their products do not technically qualify as a high-tech project under Vietnamese law, they were permitted to operate within the park due to various factors — including a positive assessment and approval by the high-tech Park’s Management Board. Consequently, they became eligible for, and have been applying, preferential tax treatment.
Unfortunately, the State Audit Office of Vietnam has recently raised concerns regarding the company’s eligibility for such incentives. The auditors are challenging the legitimacy of the tax incentives granted and are considering retroactive tax assessments and penalties on previously exempted CIT liabilities.
Legal and Tax Advice on Corporate Income Tax Incentives in Vietnam
In his nearly 20 years of experience advising on tax matters in Vietnam, James Phan – Partner of HTH & Partners have seen multiple cases in which foreign-invested companies were granted tax incentives based on incorrect assessments by local licensing (including the People’s Committee) or industrial/high-tech park authorities. These situations often give rise to complex legal issues, including potential civil and commercial disputes between foreign investors and licensing bodies, as well as administrative disputes with the tax authorities and State Audit Office.
In this matter, we advised our client on the legal grounds supporting their entitlement to the current CIT incentive package and developed a strategic approach for engaging with the State Audit Office, the High-Tech Park Management Board, and the Park’s landlord to safeguard and maintain the incentives currently being applied.
If you would like to explore any legal or tax aspects of similar matters, please reach out to us at:
jamesphan@hthpartners.com.vn or legalenquiries@hthpartners.com.vn
