1. Subjects of investment incentives
Investment projects belong to the branches of investment incentives or lines of special investment incentives as provided for in the Annex I, Decree 118;
For investment projects with a least VND 6,000 billion capital size, it is required to disburse at least VND 6,000 billion within 03 years from the date of issuance of the Certificate for Investment Registration (CIR) or investment policy decisions. Investment projects, which can meet these conditions, will be received investment incentives as provided for investment projects in areas of which socio-economic condition is extremely difficult;
Investment projects in rural areas, which employ 500 or more workers. Investment projects which meet these conditions, will be received investment incentive as provided for investment project in areas of which socio-economic condition is extremely difficult;
Hi-tech enterprises, scientific and technological enterprises, science and technology organization;
New investment projects and expansion projects.
Investment projects which meet the conditions of investment incentives at various levels will be applied the highest level incentive.
2. Lines of investment incentives
Hi-tech activities, industrial products supporting for hi-tech, research and development;
Production of new materials, new energy, clean energy, renewable energy, manufacturing products with the added value of 30% or higher, energy-saving products;
Production of electronic products, key mechanical products, agricultural machinery, automotive, shipbuilding;
Production of industrial products supporting for textile industry, leather and footwear;
Manufacturing information technology products, software, digital content;
Aquaculture, processing of agricultural, forestry and aquatic products; forestation; salt production; fishing and fishing logistic services; manufacturing plant varieties and animal breeds; biotechnology products;
Collecting, processing, recycling or reuse of waste;
Investment in development, operation and management of infrastructure projects; development of public passenger transport in urban areas;
Preschool education, general education, vocational education;
Healthcare; drug production, drug materials; vaccines and medical products; traditional medicines; biotechnology to produce new drugs;
Investments into fitness centers, sporting event hall for the disabled or professional athletes; protection and promotion of cultural heritage values;
Investments into geriatric centers, psychiatric, treatments to patients who are affected by Agent Orange; care facilities for the elderly, the disabled, orphans, unaccompanied children;
People credit institutions, micro finance institutions.
3. Area of investment incentives
The areas have the difficult socio-economic condition, the areas have the extremely difficult socio-economic condition (Annex II, Decree 118).
Industrial zones, export processing zones, high-tech zones and economic zones (Annex II, Section 55 of Decree 118).
4. Adjustment of investment incentives
Where investment projects meet the conditions to be entitled to received more investment incentives, investors are entitled to receive those investment incentives in the remaining time;
Investors are not entitled to investment incentives under the provisions of the certificate of investment registration, the written investment policy decision in the case which investment projects do not meet the conditions for investment incentives stipulated in Certificate for investment registration, investment policy decision. Where investment projects meet the conditions of other investment incentives, investors are entitled to investment incentives according to those conditions;
Where in a certain time, investment projects do not meet the conditions of investment incentives, the investor does not enjoy investment incentives for the time that the project does not meet the conditions of investment incentives;
Any economic organizations has just established or investment projects are performed by shifting forms of economic organization, change of ownership, division, separation, merger, consolidation, transfer of investment projects which are inherited the investment incentives of the investment project before conversion, division, separation, merger, consolidation or transfer.
5. Form of investment incentives
Investment incentives are provided in the form of:
Lower tax rates for life term or part thereof, with reduction/ exemption,
Import duty exempt for assets creating fixed asset,
Reduction/ exemption of land rental.
The details are basically provided by specific laws.
6. Beneficiaries of investment incentives
6.1. Projects of investment shall be eligible for investment incentives if the projects invest in the following business lines:
High-tech activities, high-tech ancillary products; research and development;
Production of new materials, new energy, clean energy, renewable energy; productions of products with at least 30% value added; energy-saving products;
Production of key electronic, mechanical products, agricultural machinery, cars, car parts; shipbuilding;
Production of ancillary products serving textile and garment industry, leather and footwear industry, and the products in Point c of this Clause;
Production of IT products, software products, digital contents;
Cultivation, processing of agriculture products, forestry products, aquaculture products; a forestation and forest protection; salt production; fishing and ancillary fishing services; production of plant varieties, animal breads, and biotechnology products;
Collection, treatment, recycling of waste;
Investment in development, operation, management of infrastructural works; development of public passenger transportation in urban areas;
Preschool education, compulsory education, vocational education;
Medical examination and treatment; production of medicines, medicine ingredients, essential medicines, medicines for prevention and treatment of sexually transmitted diseases, vaccines, biological, herbal medicines, orient medicines; scientific research into preparation technology and/or biotechnology serving creation of new medicines;
Investment in sport facilities for the disabled or professional athletes; protection and development of cultural heritage;
Investment in geriatric centers, mental health centers, treatment for agent orange patients; care centers for the elderly, the disabled, orphans, street children;
People’s credit funds, microfinance institutions
6.2. Projects of investment shall be eligible for investment incentives if the projects invest in the following locations:
Administrative divisions in disadvantaged area or extremely disadvantaged areas;
Industrial parks, export-processing zones, hi-tech zones, economic zones.
6.3. Any project in which the capital investment is at least VND 6,000 billion, or at least VND 6,000 billion is disbursed within 03 years from the day on which the Certificate of investment registration or decision on investment policies is issued;
6.4. Any investment project in a rural area that employ at least 500 workers;
6.5. High-tech companies, science and technology companies, and science and technology organizations.
Followings are the summary of current incentives available to investors:
► Tax incentives
a. Incentives on Corporate Income Tax
Tax incentives and criteria for eligibility to tax holidays and reduction are set out in the CIT regulations, i.e. the tax incentives are granted to new investment projects based on regulated encouraged sectors, encouraged locations and the size of the project.
The sectors which are encouraged by the Vietnamese Government include education, health care, sport/culture, high technology, environmental protection, scientific research, infrastructure, software production and renewable energy.
Locations which are encouraged include qualifying economic and high-tech zones, certain industrial zones and difficult socio-economic areas.
Business expansion projects which meet certain conditions are also entitled to CIT incentives. New investment projects and business expansion projects do not include projects established as a result of certain acquisitions or reorganizations.
Preferential CIT Rates
10% CIT rate shall be applied:
within 15 years for new investment projects in an area with especially difficult socio-economic conditions, in economic zones and in high-tech zones; and to new investment projects in the sectors of high technology, scientific research and technological development, investment in development of especially important infrastructure facilities of the State, and production of software products; the products support the high technology sector; the products support the garment, textile and footwear, IT, automobiles assembly, mechanics sector and are not produced domestically as at 1 January 2015, or if produced domestically, they meet the quality standards of the EU or equivalent.
for the entire operational period is applicable to enterprises operating in the sectors of education and training, occupational training, health care, culture, sport and the environment;
15% CIT rate shall be applied:
within 10 years applied to: income of the company from farming, breeding, processing of agriculture and aquaculture products in an area other than disadvantaged areas or particularly disadvantaged area
17 % CIT rate shall be applied:
for the first 10 years applies to new investment projects in areas with difficult socio-economic conditions;
for the entire operational period is applicable to agricultural service co-operatives and to people’s credit funds.
Large manufacturing projects with investment capital of VND6,000 billion or more disbursed within 3 years of being licensed (excluding those related to the manufacture of products subject to special sales tax or those exploiting mineral resources) can also qualify for CIT incentives if the projects meet either of the following criteria:
Minimum revenue of VND10,000 billion/annum for at least 3 years after the first year of operations; or
Headcount of more than 3,000 at least 3 years after the first year of operations.
From 2015, large manufacturing projects are defined to include projects with investment capital of VND12,000 billion or more, disbursed within 5 years of being licensed (excluding those related to the manufacture of products subject to special sales tax or those exploiting mineral resources) and using technologies appraised in accordance with relevant laws.
Additional tax reductions may be available for companies engaging in manufacturing, construction and transportation activities which employ many female staff or employ ethnic minorities.
Tax incentives which are available for investment encouraged sectors do not apply to other income, which is broadly defined.
The table below summarizes the CIT preferential rates, exemptions and reductions:
b. Incentives on Import Tax
Import duty exemptions (as regulated in Decree 87/2010/ND-CP dated 13th August 2010 of the Government detailing a number of articles of the Law on import and export duties)
Exemption from import duty is granted to:
Goods temporarily imported, then re-exported, for exhibition purposes if they meet certain requirements
Goods imported to form fixed assets of projects which are included in encouraged projects in the Investment Law, including: machinery and equipment; certain means of transportation and construction materials (which cannot be produced in Vietnam; raw material, spare parts, etc.)
Plant varieties and animal breeds permitted to be imported for the execution of investment projects in the sectors of agriculture, forestry and fishery.
Certain goods imported by BOT enterprises and their contractors for carrying out BOT, BTO, BT projects
Certain goods imported for oil and gas activities
Goods temporarily imported (and then re-exported) for carrying out ODA projects
Goods (i.e. material, semi-finished products) imported for implementing export processing contract with foreign parties, etc.
Raw materials and supplies imported to directly serve the production of software products, which cannot be domestically produced yet, are exempt from import duty.
Goods imported for direct use in scientific research and technological development, including machinery, equipment, spare parts, supplies and means of transport which cannot be domestically produced yet, technologies which cannot be domestically produced yet; scientific documents, books and newspapers and journals and electronic scientific and technological information sources are exempt from import duty.
Raw materials, supplies and accessories which cannot be domestically produced yet and are imported for production activities of investment projects in domains in which investment is specially encouraged or in geographical areas with extremely difficult socio-economic conditions are exempt from import duty for 5 (five) years after the date of commencement of manufacture.
► Incentives on Land Rental
The table below summarises the incentives on Land Rental (as regulated in Decree 46/2014/ND-CP dated 15 May 2014 of the Government on Regulations on collection of land and water surface rental fees):
► Sectorial investment incentives
a. Projects located in Industrial parks
b. Projects located in economic zones
Government supports in IPs, EPZs, and EZs infrastructure development
Compensation and site clearance for IP infrastructure development in selected areas of difficult socio-economic conditions
Providing technical infrastructure “out of the fence” of IPs
Providing technical infrastructure “to the fence” of functional zones of EZs.
Compensation and site clearance for functional zones of Ezs and establishment of resettling areas for villagers whose land has been withdrawn by the Government
Employees in Ezs shall rent houses (with land use right) inside the EZs
One rental fee applied to both foreign and domestic investors
Government supports in house building for IP employees
Exemption from land rental fees
Enjoy corporate income tax, import tax, and other special investment incentives applied to List of special investment incentive sectors
Preferential or soft loans.
Government supports in waste treatment plant construction
Exemption from land rental fees
Incentives of corporate income tax and export tax applied to specially investment incentive sectors
State budget for water treatment plant construction allocated in selected areas of difficult socio-economic conditions
Preferential or soft loans
State budget for sewage treatment plant construction in functional zones of EZs.
► Incentives for projects in high - technologies (Law on High technology)
(List of high technologies and hi-tech products prioritized for development is regulated by Prime Minister’s Decision No. 66/ 2014/QD-TTg dated November 25, 2014)
Hi-tech enterprises are entitled to the highest incentive level under the laws on Land, Corporate income tax, Value-added tax, Import duty and export duty;
The State supports the building of information, transport, electricity and water infrastructure, executive offices and waste treatment systems in hi-tech parks or hi-tech application agricultural parks.
Provincial-level People’s Committees shall, within the ambit of their powers and tasks, conduct land clearance and create favorable conditions for organizations and individuals to invest in hi-tech parks or hi-tech application agricultural parks.
Eligible for fundings by the National Master plan on high technologies development
Eligible for financial aids by Funds for science and technology development and other Funds for activities in R&D, human resources training and technology transfers.
► Incentives for projects in supporting industries
(regulated by Decree No. 111/2015/ND-CP dated November 03rd, 2015 on development of supporting industry)
Enterprises investing in supporting industries are entitled for these following incentives and assistance from the government (the list of prioritized supporting products is regulated by Decree No.111/2015/ND-CP):
Research and Development: Advertisement of their projects are posted on the official website of Ministry of Industry and Trade free of charge; financial support are offered for their trade and investment promotional expenses; facilitations are offered for their engagement in product and service supply chains.
Infrastructure support: They are prioritized in terms of land allocation; have access to the infrastructures, public and other services in industrial clusters and industrial zones; and get support in labor recruitment and training; They shall enjoy incentives of land for production for SMEs (in accordance with Decree 56/2009/ND-CP) and incentives on land under the laws on high technology.
Science & Technology and labor training support: They are considered for getting financial aid for part of the expenses of technology transfer, purchasing design copyright, softwares, hiring foreign experts, and human resources training
Financial support: They are considered for getting part of the State’s credit for investment development; entitled to tax incentives in accordance with provisions of the Law on High Technology.
Supporting industries development: Projects with products on the List of supporting industry’s products with development priority will be given relevant incentives and support. Investors should develop their project application forms in accordance with current law and regulations, in which states their proposal for eligible incentives, then submit to the Appraisal Board of supporting industry projects for appraisal and approval to report to the Prime Minister for final decision.
► Incentives for enterprises invest in agriculture and rural areas