Tiếng ViệtVietnam is emerging as a premier destination for FDI enterprises thanks to preferential tax policies and an open investment environment. However, to effectively leverage these incentives, enterprises must have a clear understanding of the legal framework, registration procedures, and compliance obligations.
In this article, LexConsult & Partners – a legal service provider for FDI enterprises – will provide an in-depth analysis of the applicable tax incentives, eligibility conditions, and strategic solutions to help foreign investors and FDI enterprises reduce costs, mitigate legal risks, and achieve sustainable growth in Vietnam.
- Tax Incentives for FDI Enterprises in Vietnam are not just short-term benefits but a driving force that builds a foundation for sustainable growth for international investors.
1. Legal Basis for Tax Incentives for FDI Enterprises in Vietnam
Tax incentive policies for FDI enterprises in Vietnam are stipulated across various legal instruments. The primary legal grounds include:
– Law on Corporate Income Tax, Law No. 14/2008/QH12 (as amended in 2013, 2014, 2020, and 2025);
– Law on Value-Added Tax 2024, Law No. 48/2024/QH15;
– Decree No. 218/2013/NĐ-CP, as amended by Decree No. 12/2015/NĐ-CP and Decree No. 57/2021/NĐ-CP;
– Law on Export and Import Duties 2016, Law No. 107/2016/QH13;
– Decree No. 134/2016/NĐ-CP, as amended by Decree No. 18/2021/NĐ-CP;
– Law on Value-Added Tax 2024, Law No. 48/2024/QH15;
– Decree No. 70/2025/NĐ-CP;
– Circular No. 32/2025/TT-BTC;
– Land Law 2013 and Decree No. 46/2014/NĐ-CP on land rental and water surface rental.
These instruments remain in force (with certain provisions having been amended and supplemented) and constitute the legal foundation for applying tax incentives to FDI enterprises in Vietnam.
2. Common Types of Tax Incentives for FDI Enterprises in Vietnam
| Policy | Eligibility Conditions | Practical Benefits | Legal Basis |
|---|---|---|---|
| Corporate Income Tax (CIT) | – General tax rate: 20%; – Preferential rates and exemptions/reductions: 10%, 15%, 17% throughout the operation period; 10% for 15 years (extendable up to 30 years); 4 years’ tax exemption and 50% reduction for the subsequent 9 years; 2 years’ tax exemption and 50% reduction for the subsequent 4 years; Preferential treatment for expansion investments; Special investment incentives. |
– New investment in areas with extreme socio-economic difficulties, high-tech projects; – New projects in the list of incentivized sectors; – Socialization projects, large-scale projects. |
– Reduce tax burden, increase reinvestment capital; – Lower production costs, improve price competitiveness; – Reduce start-up costs. |
| Value-Added Tax (VAT) | – 0% VAT rate for exported goods and services; – VAT refund for investment projects meeting refund conditions; – FDI enterprises declare and pay VAT the same as domestic enterprises. |
– Export, Export Processing Enterprises (EPEs); – Incentivized investment projects; – FDI enterprises with new projects. |
– Enhance international competitiveness of FDI products; – Reduce costs of imported machinery and equipment; – Improve cash flow and increase working capital. |
| Import Duty Incentives | – Exemption of import duties for fixed assets: machinery and equipment imported to form fixed assets; raw materials and components not domestically produced; – Exemption of import duties on raw materials for 5 years. |
– New projects in incentivized sectors; – New projects in incentivized sectors located in difficult areas. |
– Reduce initial investment costs; – Lower production costs, increase competitiveness. |
| Land Use Fees & Land Rent Incentives | – Exemption of land use fees: exemption when changing land use purpose to build housing for workers; – Land rent exemption/reduction: 11–15 years exemption, 50% reduction for 5–7 years; – Incentives for agricultural SMEs: 5 years exemption, 50% reduction for 10 years. |
– Projects building housing for FDI workers; – Agricultural projects with incentivized or special incentives; – Agricultural SMEs. |
– Reduce infrastructure construction costs; – Lower long-term land use costs; – Enhance support for FDI start-ups. |
| Non-Agricultural Land Use Tax Incentives | – Exemption of land use tax: projects in areas with extreme socio-economic difficulties; specially incentivized sectors; – Enterprises employing 20–50% of their workforce as war invalids or sick soldiers. |
– Specially incentivized projects; – Enterprises with a high proportion of policy beneficiaries in their workforce. |
– Reduce long-term operating costs; – Support HR policies, reduce tax obligations. |
3. Conditions to Qualify for Tax Incentives for FDI Enterprises in Vietnam
Not all FDI enterprises investing in Vietnam are automatically entitled to tax incentives. Pursuant to the Law on Investment 2020 and its implementing instruments (Decree No. 31/2021/NĐ-CP, Circular No. 78/2014/TT-BTC, Circular No. 96/2015/TT-BTC, etc.), in order to benefit from tax exemptions, reductions, or preferential rates, enterprises must fully satisfy the following conditions:
3.1. Incentivized Sectors under Tax Incentives for FDI Enterprises in Vietnam
The project must fall within the list of incentivized or specially incentivized sectors. These include: high technology, supporting industries, clean energy, software production, environmental protection, high-tech agriculture, and socialized projects in education, healthcare, sports, and culture.
The detailed list is provided in Appendix II – List of Incentivized Investment Sectors attached to Decree No. 31/2021/NĐ-CP.
3.2. Incentivized Locations for Tax Incentives for FDI Enterprises in Vietnam
Tax incentives apply if the investment project is located in:
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High-tech zones or economic zones;
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Areas with difficult or extremely difficult socio-economic conditions.
The list of incentivized locations is provided in Appendix III – Decree No. 31/2021/NĐ-CP.
3.3. Registration Procedures to Access Tax Incentives for FDI Enterprises in Vietnam
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FDI enterprises must register for tax incentives at the time of filing the application for an Investment Registration Certificate (IRC);
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If registration is not made from the outset, the tax authorities may refuse to grant the incentives later, even if the project would otherwise qualify;
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The application dossier must specify: sector, location, capital scale, workforce, etc., to substantiate eligibility.
3.4. Maintaining Conditions to Retain Tax Incentives for FDI Enterprises in Vietnam
Once incentives are granted, FDI enterprises must maintain the required criteria (capital scale, technology, workforce, revenue) throughout the entire incentive period.
In case of violations (e.g., changing the sector to one not on the incentive list, failing to meet high-tech criteria, not achieving the required capital scale/disbursement on time), the incentives will be revoked and the enterprise will be liable to pay tax at the standard rate, together with late payment interest.
In summary, to enjoy FDI tax incentives in Vietnam, enterprises must ensure four factors: correct sector – correct location – registration at the outset – continuous compliance. These are critical requirements that many foreign investors often overlook, resulting in the loss of tax benefits.
4. Procedures for Registering and Applying Tax Incentives for FDI Enterprises in Vietnam
To qualify for tax incentive policies, FDI enterprises must not only satisfy the requirements relating to incentivized sectors and locations but also duly complete the prescribed legal procedures. The basic process is as follows:
Step 1. Identify the Investment Sector and Location
Enterprises must verify whether their project falls within the list of incentivized or specially incentivized sectors (Appendix II of Decree No. 31/2021/NĐ-CP). At the same time, they must confirm whether the project site is located in an area with difficult or extremely difficult socio-economic conditions (Appendix III of Decree No. 31/2021/NĐ-CP), or within high-tech zones or economic zones designated by the Government.
Step 2. Register Incentives in the Investment Application
When submitting the application for an Investment Registration Certificate (IRC), enterprises must clearly state the request for tax incentives. If this step is omitted, once the IRC is issued, the opportunity to amend or supplement the application to enjoy incentives will be severely limited.
Step 3. Periodic Tax Declaration
Enterprises are required to declare the applicable tax incentives in their annual tax filings in accordance with the guidance of the Ministry of Finance. This declaration serves as the basis for the tax authorities to calculate the level of incentives granted.
Step 4. Finalization and Inspection
On an annual basis, the tax authorities may conduct inspections to verify whether the enterprise has maintained the conditions for incentives. If violations are detected (e.g., failure to meet high-tech standards, project delays, or misuse of duty-free imports), the incentives will be revoked and the enterprise may be subject to tax arrears.
This process ensures that only FDI projects aligned with the State’s development orientation are entitled to benefit from preferential policies.
5. Benefits of Leveraging Tax Incentive Policies for FDI
Tax incentive policies bring tangible benefits to foreign-invested enterprises, including:
– Operational cost savings: Corporate Income Tax (CIT) incentives, import duty exemptions, and reductions in land rent significantly lower business expenses. The capital saved can be reinvested into production and operations, thereby enhancing cash flow efficiency.
– Enhanced competitiveness: FDI enterprises benefiting from tax incentives often enjoy a substantial advantage in attracting additional capital from parent companies and international investment funds. Lower production costs also make their products more price-competitive in the market.
– Long-term stability: Certain socialized sectors (education, healthcare, environment, culture, sports) are entitled to tax incentives throughout their operational period, ensuring long-term stability for investment strategies.
– Encouragement of investment expansion: Major corporations such as Samsung, Intel, and LG have chosen Vietnam not only for its affordable labor force but also for its favorable tax policies, which create strong incentives for production scale expansion.
6. Legal Solutions & Recommendations from LexConsult & Partners
To maximize the benefits of tax incentives and mitigate legal risks, FDI enterprises should consider the following measures:
6.1. Thoroughly review policies from the outset
Before applying for an Investment Registration Certificate (IRC), enterprises should review Appendices II and III of Decree No. 31/2021/NĐ-CP to determine whether the sector and location qualify for incentives. Tax planning should be developed in parallel with investment planning to ensure long-term eligibility.
6.2. Register incentives at the appropriate time
Enterprises must specify tax incentive requests in their IRC application. Avoid overlooking this step or registering later, which may result in losing entitlement to incentives.
6.3. Transparent tax declaration and finalization
– Establish a professional accounting and tax management system;
– Fully declare incentives in annual tax filings to avoid errors that could result in penalties or tax arrears;
– Ensure proper record-keeping and documentation to provide explanations to tax authorities when required.
6.4. Maintain eligibility conditions throughout the incentive period
– If the incentive is granted on the basis of high technology, the enterprise must continuously maintain technology and R&D standards;
– If granted based on labor usage, the enterprise must ensure the required minimum workforce levels;
– Failure to maintain conditions will result in revocation of incentives and potential tax arrears.
6.5. Regularly update on new legal instruments
Tax and investment policies are frequently amended. Enterprises must stay updated or establish a dedicated legal/compliance department, or engage professional advisors, to avoid misapplication risks.
6.6. Utilize professional advisory services
For large-scale projects, enterprises should engage law firms specializing in legal services for FDI enterprises or reputable tax advisory firms for support in:
– Accurately identifying applicable incentives;
– Drafting and finalizing registration dossiers;
– Representing the enterprise in dealings with tax authorities to safeguard maximum benefits.
In conclusion, an effective tax strategy enables FDI enterprises to save costs, minimize legal risks, and enhance competitiveness. Enterprises should regard the utilization of tax incentives not merely as “short-term benefits” but as an integral component of their long-term investment strategy in Vietnam.
7. FAQ – Frequently Asked Questions on Tax Incentives for FDI Enterprises in Vietnam
What types of tax incentives are available for FDI enterprises?
→ Corporate Income Tax (CIT), import duty exemptions, exemptions and reductions of land rent and land use fees, and non-agricultural land use tax incentives.
How long do CIT incentives last?
→ 10% for 15 years or throughout the operation period (for socialized sectors); 17% for 10 years; 2–4 years’ tax exemption, followed by a 50% reduction for the next 4–9 years.
Which goods are exempt from import duties for FDI enterprises in Vietnam?
→ Goods forming fixed assets; raw materials and components imported within 5 years if they are not domestically produced.
In which cases do land-related tax incentives apply?
→ Incentivized, encouraged, or specially incentivized agricultural projects; projects building housing for workers; agricultural SMEs.
How can FDI enterprises obtain tax incentives?
→ Register for incentives in the IRC application, file tax returns on time, and maintain legal conditions continuously.
Tax incentive policies for FDI enterprises not only provide short-term financial benefits but also serve as a foundation for long-term development in Vietnam. However, accessing these incentives requires enterprises to register properly, maintain conditions consistently, and keep updated with the latest regulations.
This is why many investors choose to engage the FDI legal services of LexConsult & Partners. We not only assist with tax procedures and dossier review but also provide comprehensive strategic solutions for FDI company formation, risk management, and legal compliance.
Contact us today to receive detailed legal advice for your FDI enterprise, helping your business fully leverage tax incentives while ensuring legal safety in Vietnam.
Lexconsult & Partners – Your Trusted Legal Partner for FDI Enterprises in Vietnam.
**Related articles:**
– Investment Registration Certificate (IRC) in Vietnam 2025: Requirements & Application Guide
📧 Email: info@lexconsult.com.vn
