Overall, the development of the supporting industry in Vietnam is generally considered as falling short of its inherent potential. It is a fact that many production projects lack capital, technology, and land for constructing factories. As such, most would agree that the supporting industry requires a boost to foster growth.

To provide additional motivation for enterprises in the supporting industry, the Government has implemented tax reduction policies and incentives specifically tailored for these businesses. How can these incentives reach enterprises in this industry? How can businesses obtain confirmation of these incentives? Which authority is responsible for confirming these incentives? What are the specific conditions and procedures? This article will address these questions.

Supporting industry production projects are eligible for supporting industry incentives.

To understand the beneficiaries of these incentives, it is helpful to reiterate the concept of a supporting industry. A supporting industry refers to sectors involved in the production of raw materials, materials, components, and parts used in the manufacturing of finished products, as defined in Article 3, Clause 1 of Decree 111/2015/ND-CP. In this context, the supporting industry encompasses sectors engaged in the production of input materials and auxiliary industrial products in Vietnam that play a supportive role in the production of the main products.

The beneficiaries of supporting industry incentives are projects involved in the production of priority-supported industrial products listed in Article 11, Clause 1 of Decree 111/2015/ND-CP. These projects include new investment projects, expansion projects, and technology innovation projects that involve the application of new equipment, new production processes, or the production of products with at least a 20% increase in manufacturing capacity. Furthermore, Clause 3, Article 3 of Circular 55/2015/TT-BTC provides a clear explanation of projects subject to new investment projects for the production of supported industrial products, which can be categorized as follows:

  • Every first-time investment project or project that comes into operation independently of an existing project (hereinafter referred to as an independent project).
  • Every existing project expands its scale, enhances productivity, innovates technology for the manufacture of supporting products using new equipment and manufacturing processes with an increase in productivity by at least 20%.

For more details, the attached Appendix of Decree 111/2015/ND-CP lists the prioritized supported industrial products, including seven types of products in the textile and garment sector, seven types in the leather and footwear sector, nine types in the electronics sector, sixteen types in the automobile manufacturing and assembly sector, eight types in the mechanical engineering sector, and eight types of supporting industrial products for high-tech industries.

Which authority has the jurisdiction to confirm incentives for the supporting industry sector?

The authority responsible for confirming incentives for supported industrial production projects is specified in Article 7 of Circular 55/2015/TT-BCT as follows:

  • The competent authority of the local government where the project is located, or the Ministry of Industry and Trade shall carry out the incentive certification of such projects of SMEs.
  • The Ministry of Industry and Trade shall carry out the incentive certification of projects for the manufacturing of supporting products that are invested in by other types of businesses.

Therefore, the competent authority for confirming incentives for supported industrial production projects listed in the prioritized list of supported industrial products is the local authority where the project is implemented and the Ministry of Industry and Trade.

The process of confirming incentives for the supporting industry sector is processed as follows

According to Article 5 of Circular 55/2015/TT-BCT, the documentation and procedure for confirming incentives for projects producing products in the supporting industry prioritized development list are as follows:

  • 06 copies of the application: 01 original and 05 duplicates;
  • The application shall be sealed, and the applicant’s information shall be specified in the file folder;
  • Where changes in the project affect the conditions for investment incentives, the applicant shall submit to the competent authority an additional application in which the scope of changes is included.

Documents requested in the application:

  • A written request for incentive certification (Appendix 2 hereof);
  • A Certificate of Enterprise Registration or Certificate of Business Registration;
  • A description of the project:
    • With respect to a first-time project or an independent project: a proposal for project investment under the current regulations of the laws on investment and construction;
    • With respect to an existing project:
      • A description of current status of its manufacturing processes, facilities (plants), machines and equipment (a list of machines and their capacity, specialized equipment; measuring and quality control devices); the project’s capacity; the latest annual internal audit report (or an annual financial statement);
      • A description of investment in scale expansion, and technical innovation using new devices and manufacturing processes with an increase in productivity by at least 20% under the current regulations of the laws on investment and construction.
    • The decision on approval for environmental impact assessment (for new investment projects) or a commitment to environmental protection under the law on environmental protection or an as-built certificate, and environmental protective measures (for existing projects).
    • A Certificate of conformity to EU technical regulations (standards promulgated by CEN – European Committee for Standardization) or the equivalent (if any) granted by certifying agencies that are permitted to exercise certification activities under the provisions of laws on product quality;

The procedure is as follows:

Step 1: Submission of documents. The enterprise submits the documents directly, by post, or online to the competent authority at the project location or the Ministry of Industry and Trade.

Step 2: Document appraisal. Within 5 working days, the competent authority examines the documents. If the documents are incomplete or invalid, a written notice will be issued to the organization or individual to supplement and complete the documents. If the documents are complete and valid, within 15 working days, the competent authority will appraise the content of the documents, including the conformity of the production project to the provisions of Decree No. 111/NĐ-CP dated November 3, 2015 on supporting industry development, the legal procedures of the project, the feasibility and appropriateness of technical and technological solutions applied in the production process of the project, the financial capacity and investment efficiency of the project, and the project’s ability to meet environmental protection conditions.

Step 3: Incentive confirmation. Within 30 working days, the competent authority issues a written notification to the enterprise, confirming the results of the incentive confirmation. The incentive confirmation process is completed.

Note: In addition to complying with incentive regulations, the responsibility of the enterprise after receiving the industrial support incentive confirmation is to submit annual reports on the production and business situation of the products enjoying incentives to the Ministry of Industry and Trade before January 31 of the following year. In case of violations, the incentive confirmation certificate may be revoked, and the incentives may be recovered.

The above are the guidelines for enterprises in the supporting industry to follow regarding procedures for confirming incentives for supporting industrial production projects. Stay tuned for more informative articles on our website. If needed, please contact us at letran@corporatecounsel.vn for more detailed instructions.