In recent years, Vietnam has continuously improved its legal system and implemented various tax incentive policies to attract foreign direct investment (FDI), especially in the high-tech sector — one of the country’s priority areas for development.
Below is a summary of key tax incentive policies, compiled and analyzed by DNP Viet Nam Law Firm.
1. What conditions must be met to be recognized as a high-tech enterprise in Vietnam
According to Article 3 of Decision No. 10/2021/QD-TTg, based on Points a and b, Clause 1, Article 18 of the Law on High Technology 2008 (as amended by the Investment Law 2014 and 2020), in order to be recognized as a high-tech enterprise, a company must simultaneously satisfy the following conditions:
1.1 Revenue from high-tech products:
At least 70% of the enterprise’s annual net revenue must come from high-tech products.
1.2 Expenditure on research and development (R&D):
The enterprise must allocate a significant portion of its expenditure to R&D activities, specifically:
- Enterprises with capital of VND 6,000 billion or more and over 3,000 employees: minimum R&D expenditure of 0.5%.
- Enterprises with capital of VND 100 billion or more and over 200 employees: minimum R&D expenditure of 1%.
- Other enterprises: minimum R&D expenditure of 2%.
R&D expenditure includes costs for infrastructure, R&D personnel training, acquisition of intellectual property rights for R&D purposes, patent registration fees in Vietnam, etc.
1.3 Ratio of qualified R&D personnel:
The enterprise must ensure that its R&D staff meet the following minimum qualification ratios (college level or higher):
- Enterprises with capital of VND 6,000 billion and over 3,000 employees: at least 1% of the total workforce.
- Enterprises with capital of VND 100 billion and over 200 employees: at least 2.5% of the total workforce.
- Other enterprises: at least 5% of the total workforce.
Note: Employees with college-level qualifications must not account for more than 30% of the total R&D workforce.
2. Corporate Income Tax (CIT) Incentives
In Vietnam, standard enterprises are subject to a corporate income tax (CIT) rate of 20% on taxable income in a fiscal year. However, enterprises operating in high-tech sectors or investing in high-tech projects may be eligible for attractive CIT incentives if they meet the requirements regarding accounting regimes, invoices, documents, and fulfill all tax declaration and payment obligations. Specifically:
2.1 Preferential tax rate of 10% for 15 years:
This incentive applies to income derived from new investment projects in fields such as scientific research, technological development, or the application of high technology listed as a priority for development under the Law on High Technology.
(Legal basis: Point b, Clause 1, Article 19 of Circular 78/2014/TT-BTC)
2.2 Tax exemption for 4 years, 50% tax reduction for the following 9 years:
This applies to income from new investment projects in socialized sectors, implemented in areas with difficult or extremely difficult socio-economic conditions. Accordingly, if a high-tech project qualifies as a new investment project and meets the conditions above, it may be eligible for this incentive.
(Legal basis: Clause 1, Article 20 of Circular 78/2014/TT-BTC)
2.3 Preferential tax rate of 5% for 37 years:
This special incentive is granted to level-2 high-tech projects or specially incentivized investment projects. To be eligible, the project must meet one of the following criteria:
- The value-added content of domestic components reaches at least 40%;
- Involves level-2 technology transfer;
- Or involves the participation of Vietnamese enterprises in level-2 supply chains.
(Legal basis: Point b, Clause 3, Article 5 of Decision 29/2021/QĐ-TTg)
3. Import Duty Incentives for High-tech FDI Enterprises
High-tech foreign direct investment (FDI) enterprises are exempt from import duty for raw materials, supplies, and components that are not yet produced domestically, and used for production activities under the following circumstances:
- Investment projects in specially incentivized sectors;
- Projects located in areas with extremely difficult socio-economic conditions;
- High-tech enterprises, science and technology enterprises, or scientific and technological organizations.
(Legal basis: Clause 13, Article 16 of the Law on Export and Import Duties 2016)
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4. Other Support for High-tech FDI Enterprises
4.1. Incentives for High-tech Research and Development (R&D) Activities
- FDI enterprises investing in high-tech R&D are entitled to exceptional incentives under Clause 1, Article 12 of the Law on High Technology 2008.
- Enterprises conducting self-funded R&D in high technology that demonstrates effective applications in economic, social, national defense, security, or environmental sectors may receive financial support from the National Program for High Technology Development.
- They may also access funding and support from various sources, such as the Science and Technology Development Fund, the High-tech Human Resources Training Fund, and the Technology Transfer Fund.
4.2. Incentives for High-tech Technology Transfe
If an FDI enterprise engages in high-tech technology transfer to serve research, development, or the production of high-tech products, then according to Article 13 of the Law on High Technology 2008, the enterprise shall:
- Be entitled to the highest level of incentives as prescribed by the Law on Technology Transfer;
- Receive support for importing high-tech technologies, machinery, and equipment that are not yet manufactured domestically, to serve key projects in the fields of socio-economic development, national defense, and security.
The information above is for reference only. If you require further details, please contact us using the information below.
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