Foreign investment incentives in Vietnam

After 02 years since coming into force, the Law on Investment 2014 has been playing an important role in investment trend in Vietnam, especially foreign investment. In order to attract foreign investment flows, the laws of Vietnam has granted many investment incentives including business sectors in the incentive list, areas for investment incentives, large capital projects (from 6000 billion VND), projects operated in rural areas, hi-tech enterprises, science and technology enterprises. Among them, business sectors in the incentive list get strong attention from foreign investors. Those sectors are stipulated in Annex I Decree No. 118/2015/NĐ-CP. Generally, this list records many potential business sectors bringing benefits to the society as well as investors themselves; for example, hi-techs, information technology, agriculture… These are also encouraged and supported by the State. Viet An Law Firm provides some basic information about foreign investment incentives in Vietnam as follows:

When foreign investors invest in these sectors, they shall get:

• Low corporate income tax rate or corporate income tax exemption, corporate income tax reduction;
• Import tax exemption for imported goods used for fixed assets; raw materials, supplies, parts used for the project;
• Exemption or reduction for land rents, land levy.

1.  Business sectors eligible for special investment incentives:

 Hi-techs, information technology, ancillary industries:

• Application of high technologies on the List of high technologies given priority under the Prime Minister’s decisions.
• Production of products on the list of hi-tech products given priority under the Prime Minister’s decisions.
• Production of ancillary industry products under the Prime Minister’s decisions.
• Development of high technologies and high technology enterprises; venture investment in high technology development; application, research and development of high technology according to regulations of law on high technology; manufacturing of biotechnology products.
• Production of software products, digital products, key information technology products, software service, information security services, information protection service according to regulations of law on information technology.
• Production of renewable energy, clean energy, and waste-to-energy production.
• Manufacture of composite materials, light building materials, and rare materials.

Agriculture:

• Cultivation, protection, and development of forests.
• Farming, processing, preserving agriculture, forestry, and aquaculture products.
• Production, breeding, cross-breeding plant varieties, animal breeds, and aquatic breeds.
• Salt production, extraction, and refinement.
• Offshore fishing combined with advanced fishing methods; fishing logistics services; construction of shipyards and ship-building.
• Rescue services at sea.

Environmental protection, infrastructure construction:

• Concentrated waste collection, treatment, recycling, and reuse.
• Construction, operation of infrastructure of industrial parks, export-processing zones, hi-tech zones, and specialized areas in economic zones.
• Development of water plants, power plants, water supply and drainage system; bridges, roads, railroads, airports, seaports, river ports; airfields, train stations, and other particularly important infrastructural works decided by the Prime Minister.
• Development of public transportation in urban areas.
• Construction, management, and operation of rural markets.

Culture, society, sports, healthcare:

• Construction of social houses and relocation housing.
• Investment in epidemic prevention facilities.
• Research and development of preparation technology and biotechnology for production of new medicines.
• Production of medicines ingredients and essential medicines, medicines for prevention and treatment of sexually transmitted diseases, vaccines, biological, herbal medicines, oriental medicines; medicines whose patents are about to expire or relevant proprietary medicines; application of advanced technology and biotechnology to production of medicines for humans according to international GMP standards; production of primary packages of medicines.
• Investment in manufacture of methadone.
• Investment in centers for high-performance sports, sports training centers for the disabled; construction of sports facilities having training and competition equipment suitable for used at international competitions; professional sports training facilities.
• Investment in geriatric centers, psychiatry centers, centers for treatment of dioxin patients, centers for caring elders, the disabled, orphans, and homeless children.
• Investment in Social Treatment – Education – Labor centers; rehabilitation centers smoking cessation centers; HIV/AIDS treatment centers.
• Investment in national museums, ethnic culture centers; traditional theatre groups; theatres, film studios, film production facilities, film development facilities; fine art – photography exhibition centers; production, repair of traditional musical instruments, maintenance of ethnic museums and art schools; facilities and trade villages for introduction and development of traditional trades.

2.  Business sectors eligible for investment incentives:

Science and technology, electronics, mechanics, material production, information technology:

• Production of products on the list of key mechanical products under the Prime Minister’s decisions.
• Investment in research and development.
• Production of steel billets from iron ore, high-grade steel, alloys.
• Production of coke and activated carbon.
• Production of energy-saving products.
• Production of petrochemical products, pharmaceutical-chemical products, technical plastic – rubber components.
• Production of products with at least 30% added value (according to instructions of the Ministry of Planning and Investment).
• Production of automobiles, automobile parts, ship-building.
• Production of electronic components and electronic clusters other than those eligible for special investment incentives mentioned above.
• Production of farming machines, equipment, components, machines serving agriculture, forestry, aquaculture, salt production, food processing machines, and irrigation equipment other than those eligible for special investment incentives mentioned above.
• Production of materials to replace asbestos.

Agriculture:

• Cultivating, gathering, processing herbs; protection of genetic resources, rare and special herbs.
• Production, processing of animal feeds.
• Technological services related to cultivation, breeding, aquaculture, protection of plants and animals.
• Construction, upgrade or slaughterhouses; industrial preservation and processing poultry and livestock.
• Development of material areas serving processing industry.

Environmental protection, infrastructure construction:

• Construction and development of infrastructure of industrial complexes.
• Construction of apartment buildings for workers in industrial parks, export-processing zones, hi-tech zones, economic zones; construction of dormitories for students and houses for beneficiaries of incentive policies; construction of urban areas (including kindergartens, schools, hospitals) serving workers.
• Recovery of oil spill, landslide, dyke, riverbank, seashore, dam, reservoir erosion, and other environmental emergencies; application of technology to minimization of greenhouse gas emission.
• Investment in operation of exhibition centers, logistics centers, warehouses, supermarkets, shopping malls.

Education, culture, society, sports, healthcare:

• Investment in operation of infrastructure of educational institutions, development of non-public educational institutions, including preschool education, compulsory education, and vocational education,
• Production of medical equipment, construction of warehouses for preservation of pharmaceuticals and reserve of medicines for humans in case of disasters, epidemics.
• Manufacture of ingredients of medicines and pesticides; drugs for animals and aquatic organisms.
• Investment in biological testing facilities, bioavailability assessment, pharmaceutical facilities that meet good practice standards for manufacturing, preservation, testing, clinical trial of medicines.
• Investment in research into scientific foundation of traditional medicines and establishment of standards for testing traditional medicines
• Investment in sports centers, stadiums, swimming pools; facilities for production, repair sports equipment.
• Investment in public libraries and cinemas.
• Investment in construction of cemeteries, crematories.

Other sectors: People’s credit funds and microfinance institutions.

Besides that, if investors perform sectors eligible to special investment incentives or investment incentives along with other conditions such as operating the project in disadvantaged areas or extremely disadvantaged areas, the investment project shall get many investment incentives and may choose the best choice. When registering investment certificate, investors shall rely on regulations to determine investment incentives they can take.

Legal consulting services on enterprises and investment in Vietnam:

• Consult about regulations on enterprises and investment in Vietnam;
• Consult about process, procedures for Investment Registration Certificate, Business Registration Certificate, sublicense…;
• Consult about tax, foreign investment incentives in Vietnam;
• Consult about conditional business sectors and detailed conditions apply to foreign investors in Vietnam;
• Draft, submit the application and work with state-authorized agencies when Clients authorize;
• Consult about after-establishing issues such as: contracts, tax, Vietnamese labor, foreign labor working in Vietnam, intellectual property, commercial franchise…

If you are looking for legal advice about enterprises, commerce and investment in Vietnam, please feel free to contact Viet An Law Firm for more information!