Investment incentives – In what cases the foreign investors are eligible for when investing in Vietnam?

Currently, the Government of Vietnam has issued various investment incentive policies for the purpose of attracting foreign investors to invest in Vietnam. Therefore, when the foreign investors implement an investment project in an area eligible for investment incentives in accordance with the law of Vietnam, they will be entitled to one of the following incentives[1]:

• Corporate income tax incentives, including application of a lower rate of corporate income tax for a certain period of time or throughout the investment project execution; exemption from and reduction of tax and other incentives prescribed by the Law on Corporate Income Tax.
  
• Exemption from import tax on goods imported to form fixed assets; raw materials, supplies and components for manufacturing purposes in accordance with regulations of law on import and export tax;
  
• Exemption from and reduction of land levy and land rents;
  
• Accelerated depreciation, increasing the deductible expenses upon calculation of taxable income. 

Pursuant to the Law on Investment 2020, coming into force since January 1, 2021, when the foreign investors invest in Vietnam in the following cases, they will be entitled to investment incentives.

1. The investment project is large in scale, specifically:[2]

• Any investment project whose capital is at least VND 6,000 billion of which at least VND 6,000 billion of is disbursed within 03 years from the issuance date of the investment registration certificate or the approval for investment guidelines and which satisfies any of the following criteria: the total revenue is at least VND 10,000 billion per year within 03 years from the year in which the revenue is earned or the project has more than 3,000 employees;
  
• Social housing construction projects; investment projects located in rural areas and employing at least 500 employees; investment projects that employ persons with disabilities in accordance with regulations of law on persons with disabilities;

2. The investment project falls into one of the following areas:[3]

• Hi-technology enterprises, science and technology enterprises and science and technology organizations; projects involving transfer of technologies on the List of technologies the transfer of which is encouraged in accordance with regulations of the Law on Technology Transfer, science and technology enterprise incubators prescribed by the Law on High Technologies and Law on Science and Technology; enterprises manufacturing and providing technologies, equipment, products and services with a view to satisfaction of environment protection requirements prescribed by the Law on Environment Protection;
  
• Start-up projects, national innovation centers and research and development centers;
  
• Business investment in small and medium-sized enterprises’ product distribution chain; business investment in technical establishments supporting small and medium-sized enterprises, small and medium-sized enterprise incubators; business investment in coworking spaces serving small and medium-sized enterprises and startups prescribed by the Law on Small and Medium-Sized Enterprises

3. The investment project falls into business lines eligible for investment incentives:[4]

 

No.	Business lines and areas eligible for investment incentives
1	Hi-tech activities, hi-tech ancillary products, research, manufacturing and development of from science and technology products in accordance with regulations of law on science and technology
2	Manufacturing of new materials, new energy, clean energy, renewable energy; manufacturing of products with an added value of 30% or more; energy-saving products
3	Manufacturing of key electronics, mechanical products, agricultural machinery, automobiles, automobile parts; shipbuilding
4	Manufacturing of products on the List of prioritized supporting products
5	Manufacturing of IT products, software products, digital contents
6	Breeding, growing and processing of agriculture products, forestry products, aquaculture products; afforestation and forest protection; salt production; fishing and fishing logistics services; production of plant varieties, animal breeds and biotechnology products
7	Collection, treatment, recycling or re-use of waste
8	Investment in development, operation, management of infrastructural works; development of public transportation in urban areas
9	Pre-school education, general education, vocational education, higher education
10	Medical examination and treatment; manufacturing of medicinal products and medicinal materials, storage of medicinal products; scientific research into preparation technology and biotechnology serving creation of new medicinal products; manufacturing of medical equipment
11	Investment in sports facilities for the disabled or professional athletes; protection and promotion of value of cultural heritage
12	Investment in geriatric centers, mental health centers, treatment for agent orange patients; care centers for the elderly, the disabled, orphans, street children
13	People's credit funds, microfinance institutions
14	Manufacturing of goods and provision of services for the purposes of creating or participating in value chains and industrial clusters

4. The investment project falls into areas eligible for investment incentives:[5]

The applicable Vietnamese law stipulates that the areas eligible for investment incentives include:

• Disadvantaged areas and extremely disadvantaged areas;
•  Industrial parks, export-processing zones, hi-tech zones and economic zones.

 By: Hai Chu | LinkedIn

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[1] Clause 1, Article 15, Law on Investment 2020.

[2] Point c, d, Clause 2, Article 15, Law on Investment 2020.

[3] Point dd, e, g, Clause 2, Article 15 Law on Investment 2020.

[4] Clause 1, Article 16, Law on Investment 2020

[5] Clause 2, Article 16, Law on Investment 2020