VIETNAM UPDATES INVESTMENT INCENTIVES TO BOOST FDI

Vietnam is stepping up efforts to maintain its attractiveness to foreign companies by updating its investment incentives, particularly through its new Corporate Income Tax (CIT) regime effective October 2025. These changes signal strong commitment to draw in high-technology, large-scale, and value-adding projects.

Key takeaways for international businesses:

·         Preferential CIT Rates by Sector and Scale:
Projects in high-tech industries such as AI, semiconductors, renewable energy, R&D, and software can benefit from a 10% CIT rate for up to 15 years. Other sectors in preferential categories may be eligible for 15–17% rates depending on location and type.

·         Tax Holidays and Reductions Remain Attractive:
Eligible projects may receive full tax exemption for several initial years, then benefit from 50% reductions for subsequent periods. Lengths of exemptions and reductions vary by sector, project size, and location.

·         Focus Moves from Zone-Based to Criteria-Based Incentives:
Under the new law, merely being in an industrial zone no longer ensures incentives. Projects must satisfy criteria related to technology, scale, investment capital, export potential, or operating in disadvantaged areas.

·         Location Matters:
Companies investing in difficult or extremely disadvantaged socio-economic areas can access significantly more favourable tax and land-use incentives.

·         Supporting Measures:
Beyond tax, incentives include import duty exemptions for essential fixed assets or inputs not available domestically; land rental fee relief; and special preferential programs for major or cutting-edge investments.

What this means for WTCA members:

·         Enterprises evaluating Vietnam as a site should review whether their project aligns with the incentivised sectors (e.g. high tech, renewable energy, R&D).

·         Projects previously relying on industrial zone status should reassess eligibility under the new law.

·         There’s increased opportunity for strategically locating operations in economically disadvantaged zones for additional benefits.

·         Early engagement with Vietnamese authorities to clarify criteria, application procedures, and durations of incentives will help unlock maximum value.

For members considering investment in Vietnam, these changes present a timely opportunity to leverage improved policy support and carefully structure projects to qualify.

For more details, see: https://www.vietnam-briefing.com/doing-business-guide/vietnam/why-vietnam/incentives-for-doing-business-in-vietnam