Incentive Policies for the Development of Supporting Industries

Policies on incentives for the development of supporting industries are promulgated by the State to promote the production of supporting industry products, enhance the competitiveness of domestic enterprises, and attract investment while facilitating deeper integration into global supply chains.

Tax Incentives

Preferential Corporate Income Tax rate

• New investment projects in supporting industries listed in the List of prioritized supporting industry products are entitled to a preferential Corporate Income Tax rate of 10% for a period of 15 years.
• The incentive period is calculated from the first year the project generates revenue or from the year the Certificate of Incentives is granted, if such certificate is issued after revenue is generated.

Corporate Income Tax exemption and reduction

• Corporate Income Tax exemption for up to 04 years and a 50% reduction of payable tax for up to the following 09 years.
• The exemption and reduction period is calculated from the first year of revenue generation or from the year the Certificate of Incentives is granted, if issued after revenue is generated.

Import duty incentives

• Exemption from import duties on goods imported to create fixed assets, applicable to both new and expansion investment projects.
• Exemption from import duties on raw materials, supplies, and components for 05 years from the commencement of production.

Land Incentives

Exemption from land and water surface rental

• Exemption from land rental during the construction period (maximum of 03 years from the date of the land lease decision).
• Continued exemption after the construction period as follows:

+ Projects outside Economic Zones and High-Tech Parks:

11-year exemption: Projects in sectors classified as specially investment-incentivized industries.

15-year exemption: Projects in specially incentivized industries located in areas with difficult socio-economic conditions.

Full exemption for the entire lease term: Projects in specially incentivized industries located in areas with extremely difficult socio-economic conditions.

+ Projects in Economic Zones:

Full exemption for the entire lease term for projects in specially incentivized sectors within economic zones.

Exceptions (for infrastructure development projects in functional zones):

11-year exemption: Projects in areas not classified as incentivized locations.

15-year exemption: Projects in areas with difficult socio-economic conditions.

Full exemption: Projects in areas with extremely difficult socio-economic conditions.

+ Projects in High-Tech Parks: Full exemption of land rental for the entire lease term for projects in specially incentivized sectors (except infrastructure development projects in high-tech parks).

Reduction of land and water surface rental

• 50% reduction of annual land rent for PPP projects in incentivized sectors or locations (including difficult and extremely difficult socio-economic areas).
• For one-off land rental payments:

Reduced land rental amount

=

Lump-sum land rental for the entire lease term

x

Land rental reduction rate (50%)

Other Investment Incentives

Accelerated depreciation and increased deductible expenses

• Enterprises are allowed to apply accelerated depreciation for fixed assets and increase deductible expenses when calculating taxable income.
• Enterprises may choose appropriate depreciation methods:

+ Straight-line depreciation: Allocates a consistent annual depreciation expense over the asset’s useful life.

+ High-performing enterprises may apply accelerated depreciation, but not exceeding 2 times the rate under the straight-line method, to facilitate rapid technological renewal.

+ Eligible assets for accelerated depreciation include machinery, equipment, measuring and testing tools, transport equipment, management tools, livestock, and perennial plants.

+ Enterprises must remain profitable when applying accelerated depreciation. Any depreciation exceeding twice the prescribed level will not be treated as deductible expenses for tax purposes.

Credit incentives

• Projects in supporting industry production listed under eligible state investment credit programs may access preferential loans if conditions are met.
• State investment credit loans may cover up to 70% of the total investment capital of a project (excluding working capital), including PPP projects.
• Lending interest rates are determined by the Vietnam Development Bank, ensuring cost recovery and risk provisioning, but not lower than 85% of the average lending rate of domestic commercial banks during the same period (applicable to loan agreements signed from December 22, 2023).