From December 23, 2024, what are the regulations regarding criteria for high technology application investment projects to produce high-tech products in Vietnam?

From December 23, 2024, what are the regulations regarding criteria for high technology application investment projects to produce high-tech products in Vietnam?

Based on Article 4 of Circular 08/2024/TT-BKHCN (effective from December 23, 2024), the criteria for high technology application investment projects to produce high-tech products are as follows:

(1) The objectives and activities of the investment project align with the tasks of the high-tech zone as specified in Clause 2, Article 31 of the High Technology Law 2008.

(2) Implement environmentally friendly measures and energy savings.

(3) Comply with the planning, capability of supplying technical and social infrastructure of the high-tech zone and relevant legal regulations.

(4) The investor proposes an investment project with financial capability or mobilizes other legal resources to meet the capital requirements for construction, maintenance, and operation of the project; possesses the technological and managerial capabilities to ensure project implementation is on schedule and according to plan.

(5) The technology applied in the investment project must be categorized in the prioritized high technology list for investment development issued by the Prime Minister's Decision.

(6) Utilize energy efficiently and effectively.

(7) The quality management system reaches international industry-specific standards.

(8) Comply with environmental standards and technical regulations in the field of the investment project's activities according to Vietnamese law. Encouragement to achieve international environmental standards like ISO 14000 or equivalent standards.

(9) The products of the investment project must be on the list of high-tech products encouraged for development issued by the Prime Minister's Decision, in which the annual revenue from high-tech product production of the investment project must account for at least 80% of the total annual revenue of the investment project.

(10) The number of employees holding vocational education certificates or higher education degrees must constitute at least 75% of the total workforce of the investment project.

(11) The number of employees with college-level education or higher directly participating in research, development, and technology application activities of the investment project must satisfy the following requirements:

- For investment projects with capital scale from 6,000 billion VND or more, disbursing a minimum of 6,000 billion VND within 3 years from the date of issuance of the Investment Registration Certificate or investment policy approval, with total workforce from 3,000 people or more: must be at least 2.5% of the total employees of the investment project;

- For other cases: must be at least 5% of the total employees of the investment project;

- Employees directly engaging in research, development, and technology application activities of the investment project regulated in this clause must have indefinite-term labor contracts or fixed-term contracts of 1 year or more to directly participate in research, development, and technology application activities of the investment project, where employees with college education account for no more than 30%.

(12) The ratio of total annual expenditure for research, development, and technology application to the total annual revenue of the investment project must meet the following requirements:

- For investment projects with a capital scale from 6,000 billion VND or more, disbursing a minimum of 6,000 billion VND within 3 years from the date of issuance of the Investment Registration Certificate or investment policy approval, or investment projects with total annual revenue reaching at least 10,000 billion VND within 3 years from the year of revenue: must be at least 0.5%;

- For other cases: must be at least 1%.

(13) The project's technology line must be synchronously invested, reaching an advanced level, organized following specialization and automation, in which at least 1/3 of the automatic devices are program-controlled; arranged in a workspace that ensures occupational safety and hygiene standards according to Vietnamese law. Priority is given to 100% new investments.

From December 23, 2024, what are the regulations regarding criteria for high technology application investment projects to produce high-tech products in Vietnam? (Image from the Internet)

When shall a high technology application investment project to produce high-tech products be considered a level 1 high-tech investment project?

According to point a, clause 1 of Article 3 of Decision 29/2021/QD-TTg on criteria for high technology, technology transfer, Vietnamese enterprises participating in the chain, local production value, it is identified that a high technology application investment project to produce high-tech products is considered a level 1 high-tech investment project when it simultaneously meets the following conditions:

- Revenue from high-tech products achieves at least 70% of the total net annual revenue of the project;

- Total expenditure on research and development activities over the net revenue minus input value (including the value of imported and domestically purchased raw materials and components for production) of the investment project reaches at least 0.5% annually;

- The ratio of labor directly involved in research and development to the total workforce of the investment project organization achieves at least 1%.

Is a level 1 high-tech investment project eligible for corporate income tax incentives in Vietnam?

According to point b, clause 2 of Article 5 of Decision 29/2021/QD-TTg on corporate income tax rates as follows:

Corporate Income Tax Rate

...

2. Preferential tax rate of 7% for 33 years applies to income from investment projects in one of the following cases:

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b) Investment projects subject to the provisions at point b, clause 2, Article 20 of the Investment Law and meeting one of the four following criteria:

- Is a level 1 high-tech project;

- Includes a Vietnamese enterprise participating in the level 1 chain;

- The value added makes up more than 30% to 40% of the total cost of the final output product supplied by the economic organization;

- Meets the level 1 technology transfer criteria.

...

Thus, a level 1 high-tech investment project will be eligible for corporate income tax incentives with a preferential tax rate of 7% for 33 years if it falls under the investment project group with capital scale from 30,000 billion VND or more, with a minimum disbursement of 10,000 billion VND within 3 years from the date of issuance of the Investment Registration Certificate or investment policy approval.