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Notable modifications include: (i) additional entities eligible for investment incentives, (ii) additional forms of incentives and (iii) new provisions of special incentives and support.

1. Complementing and explaining more clearly entities eligible for investment incentives

Beside entities prescribed in the 2014 Law on Investment, the 2020 Law on Investment and Decree No.31/2021/ND-CP have imposed conditions to enjoy investment incentives and detailed explanation for such entities as follows:

• In addition to the regulation that investment projects which have a capital of at least VND 6,000 billion investment projects and disburse at least VND 6,000 billion within 03 years from the date of issuance of the investment registration certificate (“IRC”) or the approval for investment guidelines, in the new Law on Investment, such investment projects must also satisfy any of the following criteria: (i) the total revenue is at least VND 10,000 billion per year within 03 years from the year in which the revenue was first earned or (ii) the project has more than 3,000 employees;
• Social housing construction projects; investment projects located in rural areas which have at least 500 employees (excluding part-time employees and employees with labor contracts of less than 12 months) or investment projects that employ the disabled (each from 30% of regular employees of annual average or more);
• High-tech enterprises, science and technology enterprises; science and technology organizations, projects involving technologies transfer on the List of technologies encouraged to transfer, technology incubators, science and technology business incubators, and enterprises manufacturing and providing technologies, equipment, products and services for environmental protection requirements;
• Start-up projects, innovation centers, research and development centers;
• Business investment in product distribution chain in small and medium-sized enterprises (at least 80% of attending enterprises are small and medium-sized enterprises (“SME”); have at least 10 locations to distribute goods to customers, and at least 50% of chain’s revenue is generated by participating  SMEs in the chain), business investment in technical facilities supporting SMEs, SME incubators, business investment in co-working spaces supporting SMEs to start up prescribed in the Law on Small and Medium-Sized Enterprises.

Besides, based on the socio-economic development conditions, demands for investment attraction in each period and proposals that ministries, ministerial agencies, provincial People’s Committees, Ministry of Planning and Investment submitted to the Government, some business lines eligible for investment incentives were complemented as follows:

• Higher education;
• Manufacturing of goods, provision of services for the purpose of creating or participating in value chains, and industrial clusters;
• Manufacturing products of science and technology in accordance with regulations of Law on Science and Technology.
• Manufacturing products on the ‘List of products of support industries prioritized for development’;
• Storage of drug and manufacturing of medical equipment.

Complement forms of incentives: accelerated depreciation, increasing the deductible expenses upon calculation of taxable income prescribed in Article 15(1)(d) of the 2020 Law on Investment.

2. Complementary provisions of special investment incentives and support

Heretofore, the 2014 Law on Investment and other relevant documents had not regulated special investment incentives and support. Hence, a notable point in the new law is the decision of the Government to apply special investment incentives and support for the purpose of developing some investment projects having great impact on socio-economic development as follows:

• Projects on establishment (including the expansion of such establishment project) of innovation centers, research and development centers with a total investment capital of at least VND 3,000 billion and disbursement of at least VND 1,000 billion within 03 years from the date issuance of the IRC or the approval for investment guidelines;
• the National Innovation Center which was/is established under the Prime Minister’s decision;
• Investment projects pertaining to business lines eligible for special investment incentives with investment capital of at least VND 30,000 billion and disbursement of at least VND 10,000 billion within 03 years from the date of issuance of the IRC or the date of approval for investment guidelines.

Level and duration of special incentives are prescribed in the Law on Enterprise Income Tax and land law. Forms of special investment support are performed as those of other investment support.

Principle of applying incentives:

(i) Level and duration of applying special incentives of enterprise income tax, land rental and surface rental are in accordance with regulations of the ‘Law on Enterprise Income Tax’ and land law;

(ii) Special investment incentives and support are applied to the National Innovation Center established by the Prime Minister’s decision and  establishments located outside the headquarter of the Center;

• Investors proposing to apply special investment incentives are obliged to commit to meeting conditions of investment business lines, total registered investment capital, disbursed capital, duration of disbursement and other conditions specified in the IRC. Decision on approval of investment guidelines or written agreement(s) lies with competent state agencies in accordance with the Prime Minister’s decision.

The Prime Minister decides the level and duration of special investment incentives according to the criteria of high technology, technology transfer, Vietnamese enterprises participating in the chain and domestic production value of the investment projects mentioned above.

Enjoying investment incentives is being considered as a special advantage that investors aim at for reducing financial costs, helping them stabilize the business activities in Vietnam. For such reasons, at the time of planning investment projects in Vietnam, aspects such as business lines, investment capital, location(s) of operating projects in Vietnam need to be carefully evaluated based on the general provisions of law, and policies of each locality and area so that investors can identify appropriate incentives that they may enjoy when investing in Vietnam.