The investment incentive policies for FDI enterprises in industrial and economic zones offer significant benefits to foreign enterprises. Incentives related to Enterprise income tax, import and export taxes, and land use not only attract foreign capital but also contribute to economic development in the region. This article by DNP Vietnam Law Firm provides detailed information about the investment incentives at industrial and economic zones, helping FDI enterprises to seize opportunities and thrive in Vietnam.
1. Definitions
Foreign Direct Investment (FDI) enterprises are enterprises where foreign investors contribute capital and participate in investment management. According to Decree 35/2022/ND-CP, an industrial zone is “an area with defined geographical boundaries, specialized in industrial production and providing services for industrial production.” An economic zone is “an area with defined geographical boundaries, consisting of multiple functional areas, established to achieve investment attraction goals, economic-social development, and defense and security protection“ (clauses 1 and 13, Article 2).
According to Article 16, clause 1 of the Investment Law 2020, FDI enterprises are entitled to investment incentives in the following forms: (i) Firstly, Enterprise income tax incentives; (ii) Sencondly, Export tax and import tax incentives; (iii) Thirdly, Exemptions or reductions in land use fees, land rental fees, and land use taxes. According to Article 22 of Decree 35/2022/ND-CP, investment incentives for industrial zones are equivalent to those for areas with economically and socially difficult conditions, and incentives for economic zones are equivalent to areas with especially challenging economic and social conditions.
2. Requirements for Investment Incentives
According to points b of clause 2 and clause 5 of Article 15, and point b of clause 2 of Article 16 of the Investment Law 2020, this includes both industrial and ecônomic zones, except for enterprises investing in the following projects:
(i) Mineral exploitation.
(ii) Production and trade of goods and services subject to special consumption taxes (except projects producing automobiles, aircraft, and yachts).
(iii) Investment projects for the construction of commercial housing as prescribed by housing legislation.
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3. Enterprise Income Tax Incentives Criteria
| Criteria | FDI enterprises in industrial zones | FDI enterprises in economic zones |
| Tax rate incentives | 20% tax rate for 15 years. From 01/01/2016: 17% tax rate. | 10% tax rate. |
| Exemptions and reductions | Maximum 02 years tax exemption. 50% tax reduction for a maximum of 04 subsequent years. Note: Not applicable in industrial zones located in areas with favorable socio-economic conditions. | Maximum 04 years tax exemption. 50% tax reduction for a maximum of 09 subsequent years. Applicable period: from the first year having taxable income. If no income is generated in the first 3 years from generating revenue → counted from the fourth year. |
| Application conditions | Enterprises must implement accounting regimes, invoices, and tax documentation according to declarations. Not applicable if income is derived from sources specified in clause 3 of Article 18 of the Enterprise Income Tax Law. | |
| Legal basis | Points a, b of clause 3 of Article 13 of the Enterprise Income Tax Law 2008 (amended and supplemented in 2014, 2015); Article 2 of Decree 35/2022/ND-CP; Clause 2 of Article 14 of the Enterprise Income Tax Law. | Point a of clause 1 of Article 13 of the Enterprise Income Tax Law; Clause 3 of Article 14 of the Enterprise Income Tax Law. |
4. Import Tax Incentives
According to the Import Tax and Export Tax Law 2016, for FDI enterprises in economic zones, import tax exemptions apply to:
- Goods imported to create fixed assets for investment incentive beneficiaries as prescribed by investment law (clause 11 of Article 16 of the Import Tax and Export Tax Law 2016).
- Raw materials, supplies, and components that are domestically unproduced are eligible for this incentive. These materials must be used in investment projects within 05 years from the start of production. However, this incentive does not apply to mineral exploitation investment projects. It also does not apply to projects producing products with a high dependency on resources. Specifically, this refers to projects where the total value of resources, minerals, and energy costs accounts for over 51% of the product cost. In addition, the incentive excludes projects that produce and trade goods and services subject to special consumption taxes. This is in accordance with Clause 13 of Article 16 of the Import Tax and Export Tax Law 2016.
FDI enterprises in industrial zones are not specifically provided for import tax incentives. However, if FDI enterprises in industrial zones engage in export and import activities eligible for tax exemption or reduction, they may still enjoy these incentives.
5. Land Incentives
5.1. Incentive details
- Firstly, the competent authorities grant land rental exemption for the entire lease term. This applies if the enterprise undertakes an investment project to build worker accommodation in the industrial zone. This regulation is specified in point b, clause 1 of Article 39 of Decree 103/2024/ND-CP.
- Secondly, the competent authorities apply land rental exemption during the basic construction period. This exemption follows the approved project plan. The maximum duration is 03 years for investment incentive areas, including industrial and economic zones. These details are provided in clause 2 of Article 39 of Decree 103/2024/ND-CP.
- Finally, regarding land rental exemption after the basic construction period, clause 3 of Article 39 of Decree 103/2024/ND-CP provides further guidance. Enterprises implementing production and business projects receive varying levels of land rental exemption. The level of exemption depends on the industry and geographic area. The specific details are shown in the table below.
| Duration | Investment incentive | Specially investment incentive industries | Economically and socially difficult areas | Economically and socially especially difficult areas |
| 03 years | Yes | — | — | — |
| 07 years | — | — | Yes | — |
| 11 years | Yes | — | Yes | — |
| 11 years | — | Yes | — | — |
| 11 years | — | — | — | Yes |
| 15 years | Yes | — | — | Yes |
| 15 years | — | Yes | Yes | — |
| Entire land lease duration | — | Yes | — | Yes |
5.2. Time of land rental exemption:
Calculated from the date of the land lease decision.
- In case of delays in processing exemptions and reductions of land rent, the period delayed is not eligible for exemption or reduction (point a, clause 1 of Article 38 of Decree 103/2024/ND-CP).
- This article clarifies the incentives related to Enterprise income tax, import and export taxes, and land incentive policies. These opportunities enable FDI enterprises to minimize investment costs and optimize profits. This policy creates an attractive and sustainable investment environment for foreign enterprises. Please contact DNP Viet Nam Law Firm for in-depth consultation and optimal legal solutions for your investment project, assisting FDI enterprises to sustainably develop in Vietnam.
The information above is for reference only. If you require further details, please contact us using the information below.
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