Regulations on investment incentives in Hanoi City, Vietnam from January 1, 2025

Regulations on Investment Incentives in Hanoi City, Vietnam from January 1, 2025 (Image from the Internet)

Capital Law 2024 was passed by the 15th National Assembly of the Socialist Republic of Vietnam, 7th session on June 28, 2024.

Regulations on Investment Incentives in Hanoi City, Vietnam from January 1, 2025

According to Article 43 Capital Law 2024, investment incentives in Hanoi City, Vietnam are as follows:

- Investment projects in Hanoi City, Vietnam entitled to incentives include:

+ New investment projects in the fields of sports and cultural industries, including advertising, architecture, software and entertainment games, handicrafts, design, cinema, publishing, fashion, performing arts, fine arts, photography and exhibitions, television and radio, cultural tourism, and culinary culture according to detailed categories decided by the City People's Committee;

+ New investment projects to establish preschool education facilities, high-quality education facilities, multi-level education facilities; preschool and general education facilities in economically and socially disadvantaged areas; training facilities for people with disabilities, children with difficult circumstances;

+ New investment projects to establish high-quality, modern medical examination and treatment facilities; medical examination and treatment facilities in economically and socially disadvantaged areas;

+ Investment projects in non-public social support facilities, voluntary drug rehabilitation facilities, voluntary drug rehabilitation service providers at home, community;

+ Technological, information technology, innovation, and start-up projects in key science and technology fields of the Capital;

+ Projects using high and advanced technology in the field of environment, coping with climate change, waste and wastewater treatment; projects building high-tech agricultural zones, high-tech agricultural projects, and traditional craft village development projects.

- Investors investing in projects specified in points a, b, c, d, and e, clause 1, Article 43 of the Capital Law 2024 are entitled to the following incentives:

+ Exemption of land rent, water surface rent for 10 years and a 50% reduction in land rent, water surface rent for the remaining period.

Innovative start-up enterprises, scientific and technological organizations, and intermediary organizations supporting start-up innovation are entitled to a 50% reduction in production and business premises rent at the city's innovation centers;

+ Application of a 5% corporate income tax rate, including 4 years of corporate income tax exemption and a 50% reduction in payable corporate income tax for the next 9 years.

The tax exemption and reduction period for the income of enterprises implementing new investment projects specified in clause 2, Article 43 of the Capital Law 2024 is calculated from the first year of taxable income from the investment project.

- Enterprises with innovative activities and innovative start-up enterprises in key science and technology fields of the Capital are entitled to the following incentives:

+ Exemption from corporate income tax for 5 years from the time of tax payable on income from the start-up innovation activities of start-up businesses, science and technology organizations, innovation centers, and intermediary organizations supporting innovative start-ups arising in the city;

+ Personal income tax, corporate income tax exemption for individuals and organizations with income from transferring contributed capital, and rights to contribute capital to innovative start-ups in the city;

+ Exemption from certain criteria for pre-qualification dossiers, bidding dossiers, proposal dossiers on the competence and experience of bidders when participating in the city's bid packages, including requirements for revenue, financial resources, similar contracts, and other requirements to match the characteristics of innovative enterprises.

When evaluating and ranking bidding dossiers, innovation start-up enterprises operating in the city are given priority as if they supply goods with local production costs of 25% or more according to the law on bidding; the method of calculating incentives is implemented according to the law;

+ Personal income tax exemption for 5 years on salary and wages of specialists, scientists, particularly talented individuals, and innovative start-up individuals working at innovative start-up enterprises, science and technology organizations, innovation centers, and intermediary organizations supporting innovative start-ups in the city.

- Organizations and individuals investing in projects specified at point d, clause 1, Article 43 of the Capital Law 2024 are entitled to the following incentives:

+ Exemption from land use fees upon establishment, corporate income tax exemption for income from activities of non-public social support facilities, voluntary drug rehabilitation facilities, voluntary drug rehabilitation service providers at home, and community;

+ Interest rate support on loans for the first 5 years of establishment according to the City People's Council's regulations;

+ Contributions and sponsorships from organizations and enterprises for consulting, propaganda, drug prevention, voluntary drug rehabilitation, developing new drug rehabilitation models, post-rehabilitation management, and rewards for enterprises, organizations, and individuals with achievements in drug prevention are considered as legitimate expenses for enterprises when accounting.

Contributions and sponsorships from individuals for consulting, propaganda, drug prevention, voluntary drug rehabilitation, developing new drug rehabilitation models, post-rehabilitation management, and rewards for organizations and individuals with achievements in drug prevention are deducted from income before tax calculation for resident individuals in the city.

- Strategic investors selected according to Article 42 of the Capital Law 2024 are entitled to the following incentives:

+ Exemption of land rent, water surface rent for 10 years and a 50% reduction in land rent, water surface rent for the remaining period for economic individuals and organizations implementing investment projects under points b and c, clause 1, Article 42 of the Capital Law 2024;

+ Preferential policies for customs procedures according to the customs laws and tax procedures according to the tax laws for export and import goods of investment projects implemented by strategic investors in the city when meeting the conditions for applying preferential policies under the customs and tax laws, except for conditions on export and import turnover;

+ Human resource development support; infrastructure and social infrastructure works; support costs for high-tech products; research and development;

+ Other incentives and supports decided by the City People's Council to meet urgent requirements in attracting strategic investors.

- Organizations and individuals investing in underground parking and high-rise parking projects are entitled to the following incentives:

+ Exemption from land rent and space use fees during the entire project implementation period;

+ Support of 100% of payable import tax on equipment and production lines directly serving the high-tech underground parking and high-rise parking projects;

+ Permission to use a maximum of 25% of the project's total floor area according to the approved plan to invest, exploit services supporting parking activities;

+ Interest rate support on loans for the first 5 years according to the City People's Council's regulations.

More details can be found in the Capital Law 2024 which comes into force in Vietnam from January 1, 2025, except for the following provisions which comes into force in Vietnam from July 1, 2025:

- Management and use of underground space specified in Article 19 Capital Law 2024;

- Establishment of commercial and cultural development zones specified in clause 7, Article 21 Capital Law 2024;

- Development of science and technology, innovation, and digital transformation specified in Article 23 Capital Law 2024;

- Controlled experimentation specified in Article 25 Capital Law 2024;

- Implementation of build-transfer contracts specified in Article 40 Capital Law 2024.

Vo Tan Dai

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