Latest regulations on investment incentives for foreign investors

Investment incentive policies

1. What form of investment incentives apply to foreign investors?

According to Article 15.1, Law on Investment 2020, forms of incentives include:

• 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.

2. Which entities are eligible for investment incentives?

According to Article 15.2, Law on Investment 2020, entities eligible for investment incentives include:

• Investment projects in business lines eligible for investment incentives specified in Law on Investment 2020.

• Investment projects located in the areas eligible for investment incentives specified in Law on Investment 2020.

• 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.

• 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 co-working spaces serving small and medium-sized enterprises and startups prescribed by the Law on Small and Medium-Sized Enterprises.

• Investment incentives shall be given to new investment projects and expansion projects. The level of each type of incentive shall be specified by regulations of the Law on Taxation, the Law on Accounting and the Law on Land.

However, investment incentives do not apply to:

a) Mineral mining projects;

b) Projects on manufacturing/sale of goods/services subject to special excise tax according to the Law on Special Excise Tax, except for projects on manufacturing of automobiles, aircrafts and yachts.

c) Commercial housing construction projects prescribed by the Law on Housing.

Investment incentives applied for a fixed term and on the basis of results of project execution. Every investor must satisfy conditions for investment incentives in accordance with regulations of law during the period of enjoying investment incentives. An investment project that is eligible for various levels of investment incentive, including investment incentive specified in Article 20 of Law on Investment 2020 may apply the highest level.

3. Which business lines of foreign investors are eligible for investment incentives?

Business lines eligible for investment incentives

According to Article 16.1, Law on Investment 2020, business lines eligible for investment incentives include:

• 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;

• Manufacturing of new materials, new energy, clean energy, renewable energy; manufacturing of products with an added value of 30% or more; energy-saving products;

• Manufacturing of key electronics, mechanical products, agricultural machinery, automobiles, automobile parts; shipbuilding;

• Manufacturing of products on the List of prioritized supporting products;

• Manufacturing of IT products, software products, digital contents;

• Breeding, growing and processing of agricultural 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;

• Collection, treatment, recycling or reuse of waste;

• Investment in development, operation, management of infrastructural works; development of public transportation in urban areas;

• Pre-school education, general education, vocational education, higher education;

• 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;

• Investment in sports facilities for the disabled or professional athletes; protection and promotion of value 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;

• Manufacturing of goods and provision of services for the purposes of creating or participating in value chains and industrial clusters.

4. In which areas do foreign investors receive investment incentives?

Areas eligible for investment incentives according to Article 16.2, Law on Investment 2020 include:

• Disadvantaged areas and extremely disadvantaged areas;

• Industrial parks, export-processing zones, hi-tech zones and economic zones.

5. Legal grounds

• Law on Investment No. 61/2020/QH14 of the National Assembly on June 17, 2020.

• Decree 31/2021/ND-CP of the Government on elaboration of some Articles of the Law on Investment on March 26, 2021.

Legal services on matters related to foreign investors at Siglaw:

• Provide consultation, assist, and prepare all necessary records and documents.

• Apply and monitor the process of dossiers by State authorities.

• Assist customers to receive results from State authorities.

With many years of experience in the field of providing legal consultation services for foreign investors and have successfully performed for clients for many years, we affirm that SIGLAW's services will definitely make customers satisfied, save time and costs.