Tax Incentives

A company operating in Vietnam may enjoy the following tax incentives:

1. Corporate Income Tax (CIT) Incentives: For encouraged investment sectors or regions, there’s a reduced CIT rate of 5%, 10%, or 15% for a limited time, based on the sector, location, and size of the project  (as opposed to the standard rate of 20%) and in some cases, an exemption for a few initial years.

2. Import Duty Incentives: There are low or zero tariffs for many imports due to its WTO membership and FTAs. Some projects can also get import duty exemptions for five years for goods not made in Vietnam, such as raw materials, machinery, equipment, parts, and components.

3. Value Added Tax (VAT) Incentives: The normal VAT rate is 10%, but some goods and services have a lower rate of 5% or no VAT at all. These include essential goods and services like food, medicine, education, health care, public transportation, agriculture, and renewable energy. Some projects can also get a lower VAT rate of 5% for 10 years if they are in difficult areas or have many workers. Under a new Resolution of the National Assembly the highest VAT rate of 8% (as opposed to 10%) shall be applied until 30 June 2024.

4. Tax Deductions: Vietnam allows investors to deduct expenses for R&D, technology transfer, and employee training from their taxable income. The deduction rate can be from 50% to 200%, depending on the expense.

We note that the incentives are not automatic and may require certain conditions and procedures to be met. Therefore, it is advisable to consult with a professional tax advisor to know the tax incentives available to specific projects.