Regulations on investment incentives in Vietnam

by DungTran

Regulations on investment incentives in Vietnam. Types of investment incentives in Vietnam. Subjects entitled to investment incentives in Vietnam. Let us learn about this topic with LSX law firm as follow:

Types of investment incentives in Vietnam

The Investment Law 2020 provides for specific investment incentives as follows: 

  • Corporate income tax incentives; 
  • Tax exemption, tax reduction; 
  • Import tax exemption for goods imported to create fixed assets; 
  • Raw materials, supplies, and components imported for production under the law on import and export tax;
  • Exemption or reduction of land use levy, land rent, and land use tax; 
  • Rapid depreciation, increasing the deductible expenses when calculating taxable income

Subjects entitled to investment incentives in Vietnam

The subjects eligible for investment incentives specified in Clause 2, Article 15 of the Law on Investment 2020 can be listed as:

Firstly, investment projects with a capital scale of VND 6,000 billion or more; disbursed at least VND 6,000 billion within 3 years; from the date of issuance of the investment registration certificate or approval of investment policies; concurrently having one of the following criteria: having a total revenue of at least VND 10,000 billion per year; within 03 years at the latest from the year of turnover; or employing more than 3,000 employees;

Secondly, investment projects in Vietnam on construction of social housing;

Thirdly, investment projects using employees with disabilities under the law on people;

Moreover, projects with technology transfer on the list of technologies encouraged for transfer under 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 under the provisions of the law on environmental protection;

In addition, innovative start-up investment projects, innovation centers, research, and development centers;

Besides, 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; invest in a business in the coworking space to support small and medium-sized enterprises; and start-ups under the provisions of the law on supporting small and medium-sized enterprises…. 

Preferential rules and conditions

The Investment Law 2020 sets out specific conditions for projects to enjoy investment incentives in a selective; right, and reasonable manner, maximizing benefits for investors but must be consistent with policies of the State economy and society. According to the provisions of Clauses 6 and 7, Article 15 of the Law on Investment 2020; investment incentives are provided on the following principles:

  • Investment incentives are applied for a limited time and based on the investor’s project performance. Investors must meet the conditions for enjoying incentives as prescribed by law during the time of enjoying investment incentives.
  • Investment projects that are eligible for different levels of investment incentives, including special investment incentives, are eligible for the highest investment incentives. 

Special investment incentives in Vietnam

Regulations on special investment incentives in Vietnam

Special investment incentives are new regulations to encourage large-scale investment, influence Vietnam’s economy and society, and enable significant projects or special administrative-economic units. Specifically, in Articles 20 and 4, Article 75 of the Investment Law 2020, special investment incentives apply to the following projects:

  • Investment projects to establish new (including the expansion of such newly established projects) innovation centers; research and development centers with total investment capital of 3,000 billion VND or more; disburse at least VND 1,000 billion within 03 years from the date of issuance of the investment registration certificate or approval of investment policy; The national innovation center was established under the Prime Minister’s decision.
  • Investment projects in industries and trades with special investment incentives with an investment capital of 30,000 billion VND or more; disburse at least VND 10,000 billion within 03 years from the date of issuance of the investment registration certificate or approval investment policy. 

Investors should pay attention to taxes, investment support methods

The Investment Law 2020 sets out the investment support method and the duration of special incentives according to the actual situation of the projects and the efficiency of investment activities. Specifically, Clause 4, Article 75 of the Investment Law 2020 stipulates: For investment projects entitled to special investment incentives, the following:

  • For tax rates: apply a preferential tax rate that is reduced by no more than 50% compared to the preferential tax rate; the time of application of the preferential tax rate shall not exceed 1.5 times of the time of application of the preferential tax rate and may be extended for no more than 15 years and shall not exceed the duration of the investment project;
  • For the period of tax exemption and reduction: apply tax exemption for a maximum of 6 years and a 50% reduction of payable tax for a maximum of 13 subsequent years. 

Finally, hope this article about Regulations on investment incentives in Vietnam is helpful for you!

If you have any questions; please contact Lawyer X for quick and best legal services: +84846175333 or email: hoangson@lsx.vn

Related questions

Do foreign investors in Vietnam have to pay tax?

Yes. One of the obligations of foreign investors is to declare and fully pay taxes in accordance with the law.

The agency that licenses the establishment of a company with 100% foreign capital

Accordingly, the licensing agency continues to be decentralized to the people of the province. Then, the management committee and the management board of industrial parks, export processing zones and high-tech zones. For some important or sensitive business areas; the issuance of investment certificates by the provincial People’s Committee or the Board of Directors must be based on the investment policy or economic plan approved by the Prime Minister.

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