As proposed in a resolution drafted by the ministry, the city People's Council, the legislative unit, will decide on the exemption from personal income tax for a period of five years for the salaries and wages of experts, scientists, individuals with special talents working at semiconductor and AI companies in the central city.

The Da Nang Administrative Center building (L) in the center of Da Nang City.

The exemption from corporate income tax for five years is also applied to businesses and intermediary organizations supporting this sector in the city, widely considered the third most important in Vietnam after Hanoi and HCMC.

Additionally, the draft resolution outlines the content, levels, subjects, procedures, and support processes for high-tech units using infrastructure and equipment to serve the development of science and technology, and innovation.

According to the ministry, the global semiconductor supply chain can be divided into four groups: circuit design, circuit manufacturing, circuit packaging-testing, and equipment manufacturing.

Vietnam can participate in the design stage, with the total global revenue in 2022 reaching about $215 billion.

Vietnam's semiconductor industry has great development potential with many investment attraction opportunities and technology transfer from international corporations, and Da Nang has strategic geographical advantages for connectivity with other regions; well-invested infrastructure; and a young, abundant high-tech workforce, it said.

Many preferential policies for experts and scientists working in semiconductors and artificial intelligence have been issued, but so far, the ministry believes that these individuals "have not received any incentives from the state, especially regarding personal income tax benefits."

Besides, start-ups in this field hardly make profits in the first five years and operate with capital from angel investors and some seed investment funds while founders and co-founders often sign contracts with investors to receive money and must pay personal income tax on these incomes.

Therefore, in the early development stage, these individuals greatly need support policies and tax incentives from the state to continue improving their products, access investment capital, and enter the market, said the ministry.

Assessing the impact, the drafting agency believes that the exemption from personal income tax for a period of five years will affect the state budget revenue, but this solution will attract more labor force in the field, positively impact the economic growth rate of Da Nang, contributing to producing many high-tech products and services, developing a high-level semiconductor industry.

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Source: VnExpress