North Vietnam has become a new electronic industry settlement! Ernst & Young teaches war on setting up factories and tax incentives
With the changes in the global economic and trade situation, major Taiwanese electronics manufacturers began to set up factories in Vietnam, and drove upstream and downstream component manufacturers to settle in, forming a new electronics industry cluster. Ernst & Young held a series of lectures today to teach Taiwanese businessmen to use Vietnam’s freedom Trade Agreement (FTA), integrate the supply chain to reduce tariff costs, and explain the operational, taxation, and legal issues that are easily encountered when investing in North Vietnam.
Risks and precautions that Taiwanese businessmen should pay attention to when investing in Vietnam? Huang Zhipeng, consultant to the National Federation of Industry and former ambassador to Vietnam Representative Office, said that Taiwanese businessmen should pay attention to local strikes in Vietnam or corruption in some local governments. Local workers may go on strike due to dissatisfaction with wages and benefits. In terms of “fixing the root cause”, it is necessary to operate decently, take care of employees, and share profits reasonably. In case of poor management, proper communication must be made to resolve labor doubts and dissatisfaction.
What issues should Taiwanese businessmen pay attention to when setting up factories in North Vietnam? Cao Yaowen, Director of EY Vietnam Chinese Service Platform, shared that the Vietnamese government provides protection and preferential measures to foreign investors, including import tariff exemptions, accelerated depreciation, increased deductible expenses for calculating taxable income, and land rent reductions.
In terms of free trade agreements, Sun Xiaowen, a certified accountant of Ernst & Young Taiwan Overseas Business Development Center, said that enterprises should make good use of Vietnam’s extensive free trade agreements, especially the two important regional trade agreements CPTPP and RCEP, and take corresponding action plans. Apply for a certificate of origin, or choose to become an approved exporter, issue a declaration of exporter or producer.
Sun Xiaowen pointed out that basically the rules for the identification of originating goods need to comply with one of the conditions of complete production, local production or processing, or substantial transformation, but the exception is the CPTPP’s origin identification rules, which can be identified by the regional accumulation system, that is The degree of processing in a single country is not high, and the cumulative added value of the two countries reaches the recognized standard, then the two countries must comply with the CPTPP rules of origin and apply the tax reduction and exemption benefits.
EY Consulting Vietnam Joint Stock Company General Director, Huong Vu shared that Vietnam has advantages such as strategic geographical location, international economic and trade environment, competitive labor force, and political stability, making it the preferred destination for foreign investment enterprises.
Huong Vu pointed out that since Vietnam attracted the first batch of foreign investment in 1988, the Vietnamese government has recognized that foreign direct investment plays an important role in Vietnam’s economy. In response to the impact of BEPS 2.0 pillar two (Pillar two), Vietnam established a special working group , trying to find the best solution.
Huong Vu emphasized that Vietnam, as a country receiving investment, has considered the relevant recommendations of the Organization for Economic Cooperation and Development (OECD), so it has seen that the Vietnamese government is committed to improving the investment environment and business management, creating better conditions for investors and reducing investment. The cost of compliance, even the Prime Minister of Vietnam has emphasized this matter.