Legal Guide | Educational investments in Vietnam
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With more than 40% of the population aged under 24 years old, Vietnam offers a young age group that is very attractive to investments in the education sector. This situation is also enhanced by the recent ease of the regulations covering educational investment
Education and development of the Vietnamese workforce is now a top priority of the government to improve skills and boost productivity.
In this Legal guide, we would like to share the requirements, incentives, and processes when investing in Vietnam’s education and training sector.
1. Overview of Educational investment
Since August 2018, Vietnamese and foreign organizations as well as individuals who cooperate and invest in education and training projects in Vietnam must comply with Decree No. 86/2018/ND-CP on Foreign Cooperation and Investment in Education, which came into force on the 1st of August 2018 to replace Decree No. 73/2012/ND-CP.
Pre-schools and compulsory schools can now welcome up to 49.9% of Vietnamese students per foreign program as the limit for local students in foreign-invested schools has been raised by the new Decree. Previously, pre-schools could only welcome foreign students, and elementary/junior schools and high schools could only have 10% and 20% of Vietnamese students, respectively.
However, it is still necessary to obtain education licenses and prepare supporting documents.
2. Preschools incorporation process
Preschools incorporation process
2.1 Requirements under Decree No. 86/2018/ND-CP on foreign cooperation and investment in education
- A project of investment in establishing a pre-school educational institution shall have an investment of at least 30 million VND per kid (exclusive of the expense incurred from land tenancy).
- As for the foreign-invested educational institutions of which the facilities are not newly built but are leased or contributed by the Vietnamese partner, the capital shall reach at least 70% of the capital of 30 million VND.
- The school has to be located in a good environment (safe water supply, food safety and hygiene, playground, surrounding walls, trees). it shall have appropriate equipment and materials for taking care of and teaching children.
- All the constructions, equipment, materials, and toys of the school shall ensure absolute safety for the kids.
2.2 Investment incentives for preschool educational institutions
- A 10% corporate income tax (CIT) rate will be applied to the investment incomes, as specified in article 13.2.a of the law on corporate income tax (CIT).
- CIT exemption for undistributed incomes that are retained for investment in their development, according to article 4.10 of the law on cit.
- Vat incentives on most goods and services related to education, in accordance with the law on value-added tax.
3. Compulsory schools incorporation process
Compulsory schools incorporation process
3.1 Requirements under Decree No. 86/2018/ND-CP on foreign cooperation and investment in education
- An investment project of establishing a pre-school institution must have an investment of at least 50 million VND per student, exclusive of the expense incurred from land tenancy.
- For foreign-invested educational institutions where the facilities are not newly built but are leased or contributed by a Vietnamese partner, the capital must reach at least 70% of the capital of 50 million VND.
- The school shall have areas for learning and teaching of at least 2.5m2 per student. There must be specialized classes for middle schools and high schools as well as multi-purpose gyms, art rooms, computer labs, etc. Playground, training ground, and parking lot have to account for at least 30% of the total area of the school.
3.2 Investment Incentives for Compulsory Schools Institutions
- A 10% CIT rate shall be applied to the investment incomes (Art.13.2.a of the Law on CIT).
- CIT exemption for undistributed incomes retained for investment in their development (Art.4.10 of the Law on CIT).
- VAT incentives on most goods and services related to education in accordance with the Law on Value-added Tax.
4. University & Academies incorporate process
University & Academies incorporate process
4.1 Requirements under Decree No. 86/2018/ND-CP on foreign cooperation and investment in education
- An investment project of establishing a pre-school educational institution shall have an investment of at least 1000 billion VND, exclusive of the expense incurred from land tenancy.
- For foreign-invested educational institutions where the facilities are not newly built but are leased or contributed by a Vietnamese partner, the capital must reach at least 70% of the capital of 1000 billion VND.
- The average area for building the school shall reach at least 09m2 per student. The institution shall have lecture halls, classrooms, and functional rooms satisfying the training requirements. Other facilities required include libraries, testing labs, conference rooms, canteens, parking lots, etc.
4.2 Investment incentives for higher educational institutions
- A 10% CIT (Corporate Income Tax) rate shall be applied to the investment incomes, as specified in Article 13.2.a of the Law on CIT.
- CIT exemption for undistributed incomes that are retained for investment in their development, in accordance with Article 4.10 of the Law on CIT.
- VAT (Value-Added Tax) incentives on most goods and services related to education, in accordance with the Law on Value-Added Tax.
5. Short-term training centers incorporation process
Short-term training centers incorporation process
5.1 Requirements under Decree No. 86/2018/ND-CP on foreign cooperation and investment in education
- An investment project of establishing a pre-school educational institution shall have an investment of at least 20 million VND per student, exclusive of the expense incurred from land tenancy.
- For foreign-invested educational institutions where the facilities are not newly built but are leased or contributed by a Vietnamese partner, the capital must reach at least 70% of the capital of 20 million VND.
- Classes shall have appropriate equipment and materials for teaching and for students. The minimum average area for teaching shall be 2.5m2 per student. Additionally, some functional rooms are required, such as offices for the board of directors and teachers or libraries.
5.2 Investment incentives for short-term training centers
- A 10% CIT (Corporate Income Tax) rate will be applied to the investment incomes, as outlined in Article 13.2.a of the Law on CIT.
- CIT exemption for undistributed incomes that are retained for investment in their development, in accordance with Article 4.10 of the Law on CIT.
- VAT (Value-Added Tax) incentives on most goods and services related to education, in accordance with the Law on Value-Added Tax.
6. Colleges, Vocational schools & Training centers incorporation process
Colleges, Vocational schools & Training centers incorporation process
7. Case study: Conditions for acquisition of preschool institutions
The acquisition of an existing preschool can be an easier way for foreign investors wishing to access the Vietnamese education market compared to establishing a foreign-owned educational project to avoid the need for obtaining all the licenses. There is no foreign ownership limit and foreign investors can own up to 100% of educational institutions.
The acquisition process for an already established pre-school institution (transfer of capital contribution or shares) can be as follows:
Case study: Conditions for acquisition of preschool institutions
