Vietnam: Draft Prime Minister decision on Special Investment Incentives

In brief

The Ministry of Planning and Investment has recently released the draft Decision to be issued by the Prime Minister governing the Special Investment Incentives ("Draft Decision") for seeking public comments.

The Draft Decision is to provide details for implementing the provisions of Article 20.2 of Investment Law No. 61/2020/QH14 ("Investment Law") and the Government's Decree No. 31/2021/ND-CP detailing and guiding the implementation of a number of provisions of the Investment Law ("Decree 31"). According to the Draft Decision, if this Draft Decision is ratified as is, it will take effect from the signing date.


Contents

Key takeaways

  • According to Article 20.2 of the Investment Law, the following new projects/expanded projects will be entitled to Special Investment Incentives:
  1. New investment projects (including expansion of such newly established projects) of innovation centers and research and development (R&D) centers with total investment capital of VND 3,000 billion1 or more, of which at least VND 1,000 billion2 is disbursed within three years from the date of investment registration certificate (IRC) or approval of investment policy; national innovation centers established under the Prime Minister's decision (and all affiliated units located outside these centers' head offices)
  2. Investment projects in investment-incentivized industries as prescribed in Appendix 2 of Decree 31 with investment capital of VND 30,000 billion3 or more, of which at least VND 10,000 billion4 is disbursed within three years from the date of IRC or approval of investment policy
  • Special Investment Incentives will be stated in the project's IRC or a decision on approval of investment policy or written agreements with the competent state agencies.

In more detail

  1. Special Incentive Packages

Under Article 5 of the Draft Decision, eligible taxpayers will be entitled to one of the following Special Incentive Packages:

  • Package 1: Preferential CIT rate of 9% over a period of 30 years, 5-year CIT exemption and 50% CIT reduction for subsequent 10 years; land and water surface lease exemption for 18 years and 55% reduction for the remaining years
  • Package 2: Preferential CIT rate of 7% over a period of 33 years, 6-year CIT exemption and 50% CIT reduction for subsequent 12 years; land and water surface lease exemption for 20 years and 65% reduction for the remaining years
  • Package 3: Preferential CIT rate of 5% over a period of 38 years, 6-year CIT exemption and 50% CIT reduction for subsequent 13 years; land and water surface lease exemption for 23 years and 75% reduction for the remaining years

The Draft Decision introduces four additional criteria used to determine the specific Incentive Package applicable to the above-mentioned projects in investment-incentivized industries, including high technology, share of Vietnamese businesses participating in the value chain, added values and technology transfer.

During the period of entitlement to Special Incentive Packages, projects meeting the conditions applicable to any Incentive Package as prescribed in Article 5 of this Draft Decision will be entitled to such corresponding Incentive Package for the remaining period.

  1. Projects not entitled to Special Incentive Packages
  • Special Investment Incentives do not apply to ongoing investment projects that have been established/licensed before the effect of the Investment Law.
  • In addition, Special Investment Incentives do not apply to the following projects:
    1. Investment projects in mineral exploitation
    2. Investment projects in production and trading of goods and services subject to special tax under the provisions of the Law on Special Consumption Tax (except for projects on production of cars, aircraft and yachts)
    3. Investment projects of building commercial houses in accordance with the Law on Housing

1 Approx. 130.43 million USD
2 Approx. 43.47 million USD
3 Approx. 1.3 billion USD
4 Approx. 434.78 million USD

 


Contact Information
Yee Chung Seck
Partner at BakerMcKenzie
Ho Chi Minh City
yeechung.seck@bakermckenzie.com
Thanh Vinh Nguyen
Partner at BakerMcKenzie
Ho Chi Minh City
thanhvinh.nguyen@bakermckenzie.com

Copyright © 2024 Baker & McKenzie. All rights reserved. Ownership: This documentation and content (Content) is a proprietary resource owned exclusively by Baker McKenzie (meaning Baker & McKenzie International and its member firms). The Content is protected under international copyright conventions. Use of this Content does not of itself create a contractual relationship, nor any attorney/client relationship, between Baker McKenzie and any person. Non-reliance and exclusion: All Content is for informational purposes only and may not reflect the most current legal and regulatory developments. All summaries of the laws, regulations and practice are subject to change. The Content is not offered as legal or professional advice for any specific matter. It is not intended to be a substitute for reference to (and compliance with) the detailed provisions of applicable laws, rules, regulations or forms. Legal advice should always be sought before taking any action or refraining from taking any action based on any Content. Baker McKenzie and the editors and the contributing authors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The Content may contain links to external websites and external websites may link to the Content. Baker McKenzie is not responsible for the content or operation of any such external sites and disclaims all liability, howsoever occurring, in respect of the content or operation of any such external websites. Attorney Advertising: This Content may qualify as “Attorney Advertising” requiring notice in some jurisdictions. To the extent that this Content may qualify as Attorney Advertising, PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. Reproduction: Reproduction of reasonable portions of the Content is permitted provided that (i) such reproductions are made available free of charge and for non-commercial purposes, (ii) such reproductions are properly attributed to Baker McKenzie, (iii) the portion of the Content being reproduced is not altered or made available in a manner that modifies the Content or presents the Content being reproduced in a false light and (iv) notice is made to the disclaimers included on the Content. The permission to re-copy does not allow for incorporation of any substantial portion of the Content in any work or publication, whether in hard copy, electronic or any other form or for commercial purposes.