Most of foreign-invested enterprises would increasingly like to invest and do business in Vietnam in the long run. In ensuring this long-term goal, building houses for their employees to live in there is a well-oriented strategic move.
Right of foreign-invested enterprises to develop a housing project for its employees
The foreign-invested enterprises can develop housing project for its employee’s living place according to the Law on investment.[1] The Enterprise is eligible for homeownership in Vietnam if it invests in project-based housing construction in Vietnam and corresponds to regulations of Vietnamese law.[2] Furthermore, the Government also encouraged and created many incentives for the case of enterprises actively taking care of their employees’ lives.
Conditions for developing a housing project.
Particularly for the Enterprise that wants to invest in building housing for its employees, they must satisfy the following requirements:
- having an investment certificate or a relevant permission to run business in Vietnam issued by the competent agency in Vietnam;[3] and
- only providing its house for employees to live without collecting renting fee or using its house for lease, offices, or other purposes.[4]
Investment incentives eligible for a housing project.[5]
The Government encourages and creates favorable conditions for social housing projects for employees who are eligible for incentive policies on social housing, especially for the Enterprise that actively implement, namely:
- exemption from land levies and/or land rents on the piece of land which the Government allocates or leases for social housing construction;
- including their expenditures on housing construction to the production costs when calculating corporate income tax, as well as exemption and/or reduction in VAT and/or corporate income tax;
- concessional loans granted by a bank for social policies or a credit institution operating in Vietnam;
- province-level People’s Committee provides an entire or a portion of funding for technical infrastructure construction within the scope of the project for social housing construction; and
- Other preferential policies as prescribed in relevant laws.
Land fund required for developing a housing project.
The local Government often reserves empty land fund for the enterprises wishing to build houses for its employees. Specifically, once industrial parks are established a great deal of land lot has been zoned for building houses for employees working in there in the event the land lot for that purpose is not available, the local Government will adjust zoned area of the industrial park, so that the enterprises could develop a housing project for their employees.[6]
In conclusion, the foreign-invested enterprises can develop housing projects for its employees as soon as they meet the above conditions. Up to now, many enterprises, including foreign-invested enterprises, have invested in building houses for their employees. However, in a reality, the unavailability of land funds in many provinces and cities, especially in big cities surrounded by dense populations, has made it difficult to carry out this investment.
[1] Point d Clause 3 Article 4 of Law on Investment 2020.
[2] Point b Clause 1 and Point a Clause 2 Article 159 of Law on Housing 2014.
[3] Clause 2 Article 160 of Law on Housing 2014.
[4] Point b Clause 2 Article 162 of Law on Housing 2014.
[5] Clause 1 Article 58 and Clause 2 Article 59 of Law on Housing 2014.
[6] Clause 4 and Clause 5 Article 32 of Decree No. 82/2018/NĐ-CP on management of industrial parks and economic zones.