Recent Tax Reforms and Incentives for Foreign and Domestic Companies

We are pleased to report on the latest developments in tax policies and incentives introduced by the government to promote economic growth and attract investments. The recent reforms aim to provide equal treatment to both foreign and domestic companies while stimulating specific sectors, such as manufacturing and healthcare. Below is a summary of the key changes:

1. Reduced Income Tax Rate for Foreign Companies: The income tax rate for foreign companies with a permanent establishment has been lowered from 37.5% to 30%. This reduction ensures that foreign companies are treated on par with local domestic companies.

2. Expanded Special Tax Operating Framework: The scope of the Special Tax Operating Framework has been expanded to include large capital investments in various manufacturing activities. This expansion aims to encourage investment and innovation in the manufacturing sector.

3. Exemptions for Human Vaccine Manufacturers: Local manufacturers of human vaccines now enjoy exemptions on royalties and interest paid. This incentive aims to support and incentivize the production of essential vaccines domestically.

4. Exemptions for Special Economic Zones (SEZs): SEZ developers, operators, and enterprises are exempt from taxes on gains from property transfers, interest, and management fees paid to non-resident persons for the first 10 years. Additionally, investment allowances of 100% for hotel and manufacturing buildings and machinery have been extended to investments outside the city and within SEZs.

5. Streamlined Tax Refunds and Zero-rated VAT: Tax refunds will now be paid within six months or can be offset against future tax liabilities. Furthermore, VAT on the supply of exported services and e-mobility supplies has been zero-rated, reducing the tax burden on these sectors.

6. Reduced Import Declaration Fee and Railway Development Levy: The rate of Import Declaration Fee and Railway Development Levy has been reduced, easing the cost of importing goods.

7. Expansion of Special Economic Zones: Special Economic Zones have been expanded to include non-customs controlled areas. Goods with local content imported into these zones are now exempt from import duties, promoting local industries.

These measures are designed to attract investment, foster economic growth, and create a favorable business environment. The government is committed to supporting both foreign and domestic companies and ensuring equal treatment. These reforms will contribute to the overall development and competitiveness of the country's economy.