INVESTMENT INCENTIVES

1.  Form of investment incentives

In Vietnam, investment incentives are given to both domestic and foreign investment projects in a number of business sectors and in certain geographical areas.

1.1. Forms of investment incentives

According to Clause 1 Article 15 Law on Investment 2020, forms of investment incentives includes:

• Corporate income tax incentives, including applying a corporate income tax rate lower than the normal tax rate for a period of time 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 duties on imported goods for the creation of fixed assets; raw materials, supplies, imported components for production in accordance with the law on export tax and import tax;

• Exemption or reduction of land use fees, land rent, land use tax;

• Accelerated depreciation, increase the level of expenses deductible when taxable income is calculated. [1]

1.2. Subjects eligible for investment incentives

• Investment projects belonging to lines eligible for investment incentives or lines eligible for special investment incentives as prescribed in Appendix II of Decree 31/2021/ND-CP.

• Investment projects in areas with difficult socio-economic conditions or areas with extremely difficult socio-economic conditions as prescribed in Appendix III of Decree 31/2021/ND-CP.

• Investment projects with an investment capital of VND 6,000 billion or more are apply investment incentives when they fully meet the following conditions:

+ Disbursement of at least VND 6,000 billion within 03 years from the date of issuance of the Investment Registration Certificate, Decision on approving investment policies simultaneously with investor approval (for projects not subject to investment registration certificate issuance) or Decision on investor approval (for projects not subject to the issuance of investment registration certificates);

+ Having a total revenue of at least VND 10,000 billion per year in the latest time after 03 years from the year of revenue or employing an average of 3,000 regular employees annually or more in accordance with the law on labor at the latest after 03 years from the year of revenue.

• Investment projects to build social housing in accordance with the law on housing.

• Investment projects in rural areas employ an average of 500 or more regular workers annually in accordance with the law on labor (excluding part-time and under-12-month contracts).

• Investment projects employ 30% or more of the annual average number of regular workers who are disabled people according to the law on disabled people and the law on labor.

• High-tech enterprises, science and technology enterprises, scientific and technological organizations; projects with technology transfer on the List of technologies encouraged for transfer; technology incubators and science and technology business incubators; manufacturing enterprises, providing technologies, equipment, products and services to serve environmental protection requirements are enterprises, organizations, units and investment projects that meet the conditions in accordance with the law on science and technology; high technology; technology transfer; environmental protection.

• Innovative start-up investment projects, innovation centers, research and development centers include:

+ The National Innovation Center is established according the decision of the Prime Minister;

+ Other innovation centers established by agencies, organizations, individuals to support the implementation of innovative start-up investment projects, establishment of innovative enterprises, activities to promote innovation, research and development at the center to meet the conditions prescribed by law;

+ Innovative start-up investment projects in accordance with the law;

+ Projects that establish a research and development center.

• Investment in product distribution chain business of small and medium-sized enterprises; business investment in technical facilities to support small and medium-sized enterprises, small and medium-sized business incubators; investment in co-working areas to support small and medium-sized enterprises to start innovative businesses in accordance with the law on supporting small and medium-sized enterprises.

2.  Principles of investment incentives

The Investment Law 2020 sets out specific conditions for the projects to enjoy investment incentives in the direction of selective, right object, reasonableness, maximizing benefits for investors but must be in accordance with the social and economic policies of the State. According to the provisions of Clauses 6 and 7, Article 15 of the Law on Investment 2020, investment incentives are carried out according to the following principles:

• Investment incentives are applied to new investment projects and expansion investment projects.

• Investment incentives are applied for a limited time and on the basis of the results of the project implementation. Investors must meet the conditions for preferential treatment in accordance with the law during the period of enjoying investment incentives.

• Investment projects that meet the conditions for enjoying different levels of investment incentives, including special investment incentives shall be enjoyed with the highest investment incentive.

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