Vietnam has introduced various investment incentive policies to attract foreign investors. As per Vietnamese law, foreign investors are eligible for investment incentives when they undertake investment projects. This entitles them to receive one of the following incentive treatments[1]:
- Corporate income tax incentives, including the application of a lower corporate income tax rate than the normal tax rate for a definite term or for the entire duration of the investment project; tax exemption, tax reduction, and other incentives in accordance with the law on corporate income tax;
- Exemption from import tax on goods imported to create fixed assets; raw materials, supplies, and components imported for production in accordance with the law on import and export tax;
- Exemption or reduction of land use levy, land rent, and land use tax;
- Fast depreciation, increasing the amount of expenses deductible when calculating taxable income.
Under the provisions of the Investment Law 2020 effective from January 1, 2021, the following subjects are entitled to investment incentives:
1. Investment projects in sectors or trades eligible for investment incentives, specifically the following industries[2]
a) High-tech activities, hi-tech supporting industrial products, research and development activities, and production of products formed from scientific and technological results in accordance with the law on science; and technology;
b) Producing new materials, new energy, clean energy, renewable energy; producing products with the added value of 30% or more, energy-saving products;
c) Manufacture of electronic products, key mechanical products, agricultural machines, automobiles, auto parts; shipbuilding;
d) Manufacturing products on the list of supporting industry products prioritized for development;
dd) Producing information technology products, software, and digital content;
e) Cultivation and processing of agricultural, forestry, and aquatic products; planting and protecting forests; making salt; fishing and fisheries logistics services; production of plant varieties, animal breeds, and biotechnology products;
g) Collect, treat, recycle, or reuse waste;
h) Investment in the development, operation, and management of infrastructure works; development of public passenger transport in urban areas;
i) Pre-school education, general education, vocational education, higher education;
k) Medical examination and treatment; production of drugs, medicinal ingredients, and drug preservation; scientific research on preparation technology and biotechnology for the production of new drugs; manufacture of medical equipment;
l) Investing in physical training and sports facilities for people with disabilities or professionals; protecting and promoting the value of cultural heritage;
m) Investing in geriatric and psychiatric centers, treating patients infected with Agent Orange; centers for the elderly, disabled, orphans, and homeless children;
n) People’s credit funds, microfinance institutions;
o) Producing goods, providing services to create or participate in value chains or clusters.
2. Investment projects in investment incentive areas, including[3]
a) Areas with difficult socio-economic conditions, areas with extremely difficult socio-economic conditions;
b) Industrial parks, export processing zones, high-tech zones, and economic zones.
The preferential sites are located near Vietnam’s borders with China and Laos as well as the South Mekong region. An economic zone is an area eligible for investment incentives, which applies to areas with extremely difficult socio-economic conditions in accordance with the investment law.
3. In case a foreign investor’s project investing in Vietnam is large-scale, specifically as follows[4]
a) Investment projects with a capital scale of VND 6,000 billion or more, disbursed at least VND 6,000 billion within 03 years from the date of issuance of the Investment Registration Certificate or approval of investment policies, VND having one of the following criteria: having a total turnover of at least VND 10,000 billion per year within 03 years at the latest from the year of revenue or employing more than 3,000 employees;
b) Investment projects on construction of social housing; investment projects in rural areas employing 500 or more employees; investment projects using employees with disabilities in accordance with the law on people with disabilities;
4. In case a foreign investor’s project in Vietnam falls into one of the following fields[5]
a) High-tech enterprises, science and technology enterprises, science and technology organizations; projects involving technology transfer on the list of technologies encouraged for transfer in accordance with the law on technology transfer; technology incubators, science, and technology business incubators according to the provisions of the law on high technology and the law on science and technology; enterprises producing and providing technology, equipment, products and services to meet the requirements of environmental protection in accordance with the provisions of the law on environmental protection;
b) Innovative start-up investment projects, innovation centers, research and development centers;
c) Investing in the business of product distribution chains of small and medium-sized enterprises; business investment in technical facilities to support small and medium-sized enterprises, small and medium-sized business incubators; business investment in coworking space to support small and medium-sized enterprises and start-ups in accordance with the law on supporting small and medium-sized enterprises.
[1]Clause 1, Article 15 of the Law on Investment 2020.
[2]Clause 1, Article 16 of the Law on Investment 2020
[3]Clause 2, Article 16 of the Law on Investment 2020
[4]Points c, d, Clause 2, Article 15 of the Law on Investment 2020.
[5]Points dd, e, g Clause 2 Article 15 of the Law on Investment 2020.
