04 notable new points on investment incentives in Vietnam from January 01, 2021

1. Supplementing projects eligible for investment incentives

Specifically, according to Clause 2 Article 15 of the Law on Investment 2020 of Vietnam, there are 09 more projects eligible for investment incentives compared to the Law on Investment 2014. Supplemented projects eligible for investment incentives include:

- Projects on investment in social housing construction;

- Investment projects that employ persons with disabilities in accordance with regulations of law on persons with disabilities;

- 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;

- Technology incubators, science and technology business incubators according to the provisions of the law on high technology and the 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;

- Investment in business in small and medium-sized enterprises’ product distribution chain;

- Investment in business in technical establishments supporting small and medium-sized enterprises, small and medium-sized enterprise incubators;

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

Concurrently, the Law on Investment 2020 of Vietnam supplements the criteria that 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 for any investment project whose capital is at least VND 6,000 billion. However, investment incentives for investment projects located in the areas (Note: The Government will promulgate, amend and supplement the List of areas eligible for investment incentives); investment project whose capital is at least VND 6,000 billion; projects on investment in social housing construction; 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 do not apply to:

- Projects on investment in mineral mining;

- Projects on investment in 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.

- Projects on investment in commercial housing construction prescribed by the Law on Housing.

2. Supplementing 01 form of investment incentives

Specifically, according to Clause 1 Article 15 of the Law on Investment 2020 of Vietnam, 01 form of investment incentives has been supplemented, which is “accelerated depreciation, increasing the deductible expenses upon calculation of taxable income”. Thus, there are 04 forms of investment incentives applied from January 01, 2021, including:

- 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.

3. Supplementing business lines for investment incentives

According to Article 16 of the Law on Investment 2020 of Vietnam, there are some business lines supplemented compared to the Law on Investment 2014. Supplemented business lines include:

- Higher education;

- Manufacturing of products formed from science and technology results in accordance with regulations of law on science and technology;

- Manufacturing of products on the List of prioritized supporting industry products;

- Storage of medicinal products, manufacturing of medical equipment;

- Manufacturing of goods and provision of services that create or participate in value chains and industry linkage clusters.

Beside, according to the business lines eligible for investment incentives, the Government shall compile and amend the List of business lines eligible for investment incentives and determine business lines eligible for special investment incentives to be included in the List of business lines eligible for investment incentives when the Law on Investment 2020 of Vietnam takes effect.

4. Applying special investment incentives and assistance

According to Article 20 of the Law on Investment 2020 of Vietnam, the Government shall decide to apply special investment incentives and assistance with a view to encouraging the development of some investment projects that exert significant socio-economic effects. Objects eligible for special investment incentives and assistance include:

- Projects on investment in establishment (including the expansion of such establishment project) of innovation centers and research and development centers with a total investment capital of at least VND 3,000 billion and disbursing at least VND 1,000 billion within 03 years from the issuance date of the investment registration certificate or the approval for investment guidelines; the National Innovation Center established under the Prime Minister's decision;

- Investment projects in the business line eligible for special investment incentives with an investment capital of at least VND 30,000 billion and disbursing at least VND 10,000 billion within 03 years from the issuance date of the investment registration certificate or the approval for investment guidelines.

Thus, the above-mentioned objects shall be eligible for special investment incentives and assistance and the duration of application of special investment incentives are prescribed by the Law on Corporate Income Tax and the Law on Land. Concurrently, it should be noted that special investment incentives and assistance do not apply to:

- Any investment project that has been granted the investment certificate, the investment registration certificate or the decision on investment guidelines before January 01, 2021;

- Projects on investment in mineral mining;

- Projects on investment in 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.

- Projects on investment in commercial housing construction prescribed by the Law on Housing.

Ty Na

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