According to the latest draft of Law on Telecommunications 2023: “Data center means a complex system of technical infrastructure, information infrastructure, and auxiliary equipment installed in it to carry out data storage, processing, exchange and management activities of one or more organizations or individuals.”
1. Overview of Data Centers
As defined by Techopedia:
“A data center is a centralized facility equipped with computing and networking equipment that efficiently stores, manages, processes, and disseminates large volumes of data required for various digital operations, services, and applications.”
Taking into account its critical role, Vietnamese legal frameworks, however, still lack specific regulations for foreign investors seeking to establish and manage data centers.
It’s worth noting that data center services are not specifically listed in Vietnam’s WTO Commitments. Nonetheless, they are categorized as conditional business sectors as outlined in Appendix IV of the Law on Investment 2020.
Since Feb 1, 2023, any enterprises designing, building, and operating data centers to provide data services and relevant assessment and certification organizations must comply with the standards and technical regulations stated in Circular 03/2013/TT-BTTTT as amended by Circular 23/2022/TT-BTTTT.
As of today, more than 50 projects have been registered primarily led by domestic investors. The participation of foreign investors commonly engages through Business Cooperation Contracts and Joint-ventures.
- Did you know? Data centers’ activities are sometimes classified as data processing or computer and programming services. In certain instances, projects are even registered as real estate services aimed at leasing data storage infrastructure and equipment.
2. Draft on Law of Data Centers
The National Assembly is developing a new draft Law on Telecommunications which creates a clearer framework for data center and cloud computing services in Vietnam.
According to the latest draft Law on Telecommunications 2023:
“Data center means a complex system of technical infrastructure, information infrastructure, and auxiliary equipment installed in it to carry out data storage, processing, exchange, and management activities of one or more organizations or individuals”
Under the draft Article 72: Types of data center services:
- Data center services include:
- data center space rental: is a service that provides space for customers to design and install servers and/or other storage devices by themselves;
- server rental: is a service that provides customers with a server together with available equipment and information infrastructure of a data center for their own use;
- data storage space rental service: means a service to provide storage space for organizations and individuals.
- Cloud computing services include:
- Services of providing server resources, storage capacity (storage), networks (networks)… ;
- Software delivery services including applications.
- Services that provide the ability to create, develop, manage, and operate… software including applications;
3. Data Centers incorporation process
Vietnam Data Center Procedure
4. Tax incentive
Besides offering tax free rates when importing equipment required by data centers, Vietnam has two main types of corporate income tax (“CIT”) incentives:
- Preferential tax rate: Lower tax rates compared to the standard CIT rate (20%);
- Tax holiday: Tax exemption for a period of time or throughout the project.
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Criteria |
Conditions |
CIT incentives |
|
|
Preferential tax rates |
Tax holidays |
||
| By location
|
|
10% for 15 years |
|
| In difficult socio-economic conditions | 17% for 10 years |
|
|
| In Industrial Parks (which are not located in favorable
socio-economic locations |
Not applicable
|
|
|
| By sector
|
|
10% for 15 years |
|
|
By investment scale
|
|
10% for 15 years
|
|
Read the full guidance for valuable insights on Data Center establishment in Vietnam: [Link]
