Vietnam government FDI incentives

Disclaimer: This page is for general information only and is not tax or legal advice. Rules change frequently. Verify every detail with a licensed Vietnamese tax adviser and a local law firm before acting.

Vietnam FDI incentive framework

Vietnam's investment incentive system is set out primarily in the Law on Investment (2020) and the Law on Corporate Income Tax, with implementing decrees updated periodically. The framework rewards projects that channel capital into sectors or locations the government considers strategically important — high technology, manufacturing, infrastructure, and underdeveloped provinces.

Incentives generally come in three forms: reduced corporate income tax (CIT) rates, temporary CIT exemptions, and reductions in land-related fees. A project typically needs an Investment Registration Certificate (IRC) before any incentive applies. The IRC is issued by the relevant provincial authority or, for certain large or complex projects, by the Ministry of Planning and Investment (MPI).

Most incentives are not automatic. Investors are expected to declare eligibility when applying and, in practice, the actual benefit depends on how the project is classified, how the application is worded, and whether local authorities agree with the investor's interpretation.

Tax holidays

The standard corporate income tax rate in Vietnam is 20 percent. Incentive rates and holidays reduce this burden in two ways.

Preferential tax rates apply for a set number of years from the first year of revenue. Common rates for eligible projects are 10 percent for up to 15 years or, in the most favoured categories, for the entire project life.

Tax exemption and reduction periods stack on top of preferential rates. A typical incentive package for a qualifying project in a priority sector might look like:

• Four years of full CIT exemption from the first year of taxable income
• Nine subsequent years at 50 percent of the applicable preferential rate
• The preferential rate for the remainder of the licence period

Less favoured but still incentivised projects may receive two years of full exemption followed by four years at half rate. The exact combination depends on the sector, the investment scale, and the location.

These figures are indicative based on publicly available policy as of early 2026. Verify with a qualified Vietnamese tax adviser before relying on them for financial modelling.

Land-use exemptions

Foreign investors acquiring land-use rights through lease from the state or through an industrial park operator typically pay an annual land-use fee or a lump-sum rent. Incentivised projects can receive full exemption from land rent for an initial period, commonly ranging from three to fifteen years, followed by a 50 percent reduction for a further period.

Projects in mountainous or economically disadvantaged areas tend to receive longer exemption windows. Projects in industrial parks may have the land component bundled into the park operator's fee structure, so the practical benefit can look different from a greenfield lease.

Land-use rights in Vietnam remain a complex topic because investors do not own land outright — they hold long-term leasehold rights. The duration, renewal conditions, and transferability of these rights are separate considerations from the fee exemptions described here.

Sector preferences

The Law on Investment identifies sectors that receive the highest level of incentive, including:

• High technology and supporting industries for the high-tech sector
• Scientific research and technology development
• Software production, digital content, and IT infrastructure
• Renewable energy and new materials
• Education, vocational training, and healthcare
• Manufacturing in provinces with difficult socioeconomic conditions

A second tier of preferred sectors includes large-scale manufacturing, logistics, and agriculture processing. Standard sectors receive no special incentive unless they are located in a preferred zone.

FDI and manufacturing has historically attracted the largest share of foreign capital, and the incentive structure reflects that, particularly for electronics assembly and component supply chains.

Priority locations

Location is as important as sector for determining which incentive band applies. Vietnam designates areas with difficult socioeconomic conditions and areas with especially difficult conditions, listed in annexes to the investment decree. Provinces such as Ha Giang, Cao Bang, and Kon Tum typically appear in the highest-priority tier, while coastal industrial provinces such as Binh Duong, Dong Nai, and Hanoi and Ho Chi Minh City themselves receive no location-based uplift for most projects.

Investing in a priority location can move a project from the standard CIT rate to a 10 percent rate even in a non-priority sector, so the site decision carries real financial weight.

SEZs and industrial parks

Special economic zones and designated industrial parks often offer a streamlined version of the incentive framework with a single administrative contact point. Some zones have negotiated specific additional benefits — faster customs clearance, dedicated infrastructure, or co-investment in utilities.

Industrial parks managed by established developers (both state-owned and private) typically offer ready-built factory shells, which can shorten setup time significantly compared with a greenfield site. The trade-off is that investors have less flexibility over land use and building specifications.

How to apply

The standard path is:

1. Prepare a project proposal covering investment scale, sector, employment projections, and technology used.
2. Submit an application for an IRC to the provincial Department of Planning and Investment (DPI) or, for projects requiring national-level approval, to MPI.
3. Declare the applicable incentive category in the application. The issuing authority reviews this claim.
4. Once the IRC is issued, register the enterprise with the business registration authority to receive an Enterprise Registration Certificate (ERC).
5. File for tax registration with the local tax authority, which will record the incentive status.

Ongoing compliance requires annual CIT declarations confirming that conditions for the preferential rate are still met.

Indicative timelines

For a standard project in a provincial industrial park, investors should budget approximately 30 to 60 working days from submission to IRC issuance, assuming documentation is complete. Projects requiring additional ministerial sign-off or environmental impact assessment can take considerably longer — six months to over a year in complex cases.

These are estimates only. Timelines vary by province, project size, and the quality of the application package.

Common pitfalls

Misclassifying the sector. The boundary between a qualifying high-tech activity and a standard manufacturing activity is not always obvious. Tax authorities may reclassify on audit.

Missing the revenue start date. The exemption clock typically starts from the first year in which the project earns taxable income, not from the IRC date. Poor planning can waste part of the exemption window.

Not documenting technology transfer. Projects claiming high-tech status must maintain records proving the technology criteria are met throughout the incentive period.

Overlooking transfer pricing rules. Vietnam applies OECD-aligned transfer pricing rules. Related-party transactions need to be documented at arm's length or the tax authority may adjust the taxable base, reducing the practical value of any CIT holiday.

Assuming renewal. Land-use rights and investment licences have fixed terms. Renewal is not guaranteed and may come with renegotiated conditions.

Always verify requirements with a licensed adviser before committing capital. The Vietnamese regulatory environment changes regularly, and advice based on last year's rules may not reflect the current position.

Related

• Foreign direct investment licensing
• Special economic zones
• FDI and manufacturing
• Vietnamese tax deductions for SMEs
• Setting up a business in Vietnam