The Ministry of Finance (MOF) has unexpectedly agreed to offer attractive investment incentives to the Thai PTT Group, which plans to set up the Nhon Hoi Oil Refinery in Binh Dinh province.
Nguyen Dinh Thi, director of the MOF's Tax Department, said that offering tax incentives to the Nhon Hoi oil refinery project's investor is “absolutely in accord” with the current laws.
The government's decisions on offering investment incentives to huge investors recently have faced strong opposition from the public.
Economists believe that Vietnam offers too many incentives and incurs loss of revenue for the state's coffers, while it does not gain anything in exchange for the loss.
MOF once expressed its disagreement to give huge investment incentives to Nhon Hoi. The ministry showed disagreement in a document released in April, saying that the “oil refinery project was not mentioned in the overall development program of the industry”.
And it has unexpectedly changed its viewpoint on the project.
Thi explained that the investment incentives aim to encourage foreign investors to pour capital into Vietnam.
Under the current laws, businesses will be able to enjoy the highest possible incentives if they develop large-scale projects, and if they can satisfy one of two conditions.
First, the projects must have capital of at least VND6 trillion which must be disbursed within three years since the day the investors received the investment registration certificates.
They must have the total revenue of VND10 trillion per annum three years after the day they began making revenue.
Second, the projects must have investment capital of at least VND6 trillion which must be disbursed three years after the day they got an investment registration certificate, and they must employ more than 3,000 workers.
The investors will bear a preferential corporate income tax of 10 percent for 15 years, if their projects utilize high technology, and will enjoy a tax exemption for four years and 50 percent tax reductions over the next nine years.
Sources said Vietnam is welcoming oil refinery projects because it wants to produce more petroleum products domestically to ease reliance on imports.
The Dung Quat Oil Refinery now can meet only 30 percent of the domestic demand.
The petrol price in Vietnam has increased five times this year, while the petrol price in Vietnam is now more expensive than in the US.
However, when asked whether Vietnamese can buy Nhon Hoi's products in the future at low prices once the oil refinery can enjoy huge investment incentives, Thi said the petrol prices would depend on market demand.
“We cannot ask investors to sell products to us at low prices just because we offer incentives to them,” Thi said, adding that the major goal of investment incentives is to attract more investors to Vietnam.
A local newspaper some days ago quoted its sources as saying that PTT Group has sent words intimating that it would not develop the project in Vietnam if their proposals for tax incentives are refused.
dung quat oil refinery, ministry of finance, to set up, binh dinh province, oil refinery project, corporate income tax, investment incentives, nhon hoi, set up, oil refinery, binh dinh, tax incentives, overall development, development program, foreign investors
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