Vietnam issues decision on special investment incentives: Allen & Gledhill

20 December 2021

On 6 October 2021, Vietnam issued Decision No. 29/2021/QD-TTg on Special Investment Incentives (“Decision 29”), an implementing regulation of the 2020 Law on Investment (“LOI”). Decision 29 sets out the incentives for certain investment projects specified in Clause 2, Article 20 of the LOI and came into effect on its date of issuance.

Decision 29 stipulates that an investment project which satisfies the conditions for eligibility can benefit from reduced corporate income tax (“CIT”) rates as well as relief from land and surface rental fees.

The eligible investment projects and applicable incentives are as follows:

Group 1: New investment projects, innovation centres, R&D centres with a total investment capital of VND 3 trillion (approximately US$131 million) or more, which disburse at least VND 1 trillion (approximately US$43 million) within three years from the issuance date of the investment registration certificate (“IRC”) or Decision on Investment Approval (“DIA”) and national innovation centres; and
Group 2: Investment projects in preferred sectors with total investment capital of VND 30 trillion (approximately US$1.3 billion) or more, which disburse at least VND 10 trillion (approximately US$439 million) within three years from the issuance date of the IRC or DIA.

Eligible projects	Incentives
Projects under Group 2	CIT: CIT rate at 9% over 30 years, five years exemption from CIT and the subsequent 10 years 50% of CIT rate Land and water surface rent: Rent exemption for 18 years and 55% reduction for the remaining of the project lifetime
Projects under Group 1, excluding national innovation centres Projects under Group 2 that satisfy one of the following: Level 1 high-tech projects Level 1 supply chain projects Added-value accounts for 30% to 40% of the total cost of the final output products provided by that taxpayer; Level 1 technology transfer projects.	CIT: CIT rate at 7% over 33 years, six years exemption from CIT and subsequent 12 years 50% of CIT rate Land and water surface rent: Rental exemption within 20 years and 65% reduction for the remaining project lifetime
National innovation centres Projects under Group 2 that also satisfy one of the following: Level 2 high-tech projects Level 2 supply chain projects Added-value accounts more than 40% of the total cost of the final output products provided by that taxpayer Level 2 technology transfer projects	CIT: CIT rate at 5% over 37 years, six years exemption from CIT and subsequent 13 years 50% of CIT rate Land and water surface rent: Rent exemption for 22 years and 75% reduction for the remaining project lifetime.