CEO Bloggers - Markus Patrick Chan

Ph.D(Mgt) MBA(BankMgt) BBus(Finance) FChFP CICFP

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Head of Academy

VNHK Academy of Leadership and Management



Publish Date: 08/04/2018

Planning to slash corporate income tax rates from the current 22% to 15% in an effort to make Vietnam as one of the most tax-competitive economies in South East Asia.


Foreign investors considering the Vietnamese market are often drawn by its competitive costs. Vietnam’s low wages have traditionally provided these cost savings; however, the country has also quietly developed one of the most competitive tax regimes throughout Southeast Asia. Vietnam’s tax incentives are a standout feature of the tax regime and are applied to a variety of industries and projects throughout the country.


Vietnamese government continues to improve business conditions through reform and have included tax incentives in recent legislative updates – most notably Vietnam’s Law on Investment – to lower the cost of doing business within the country. Foreign investors, particularly those involved in slightly higher value-add production, should be able to use incentives to offset their temporary costs until regulatory reforms take hold, and to position themselves ahead of their competitors in the years ahead.

Tax Incentives for Foreign Investment

Vietnam’s Law on Investment specifies three forms of incentives that are available to companies operating within the country.


The following incentives are listed under Section 1, Article 15.1:

  • Application of a lower rate of corporate income tax for a certain period of time or throughout the project execution;

  • Exemption or reduction of import tax on goods imported as fixed assets on raw materials, supplies, and parts used for the project;

  • An exemption, reduction of land rents and land levy.

  • Preferential rates :  The different preferential rates include:

10 percent for the lifetime of the entire project;

10 percent for 15 years from the first year of income generation;

17 percent for the lifetime of the entire project;

17 percent for 10 years from the first year of income generation.

Tax holidays


Tax holidays and tax exemptions include:

  • Tax exemption for 4 years, 50 percent reduction of payable tax amounts for 9 subsequent years;

  • Tax exemption for 4 years, 50 percent reduction of payable tax amounts for 5 subsequent years;

  • Tax exemption for 2 years, 50 percent reduction of payable tax amount for 4 subsequent years.

Vietnam’s Law on Investment, as well as its subsequent decrees and circulars, specify in the types of projects that qualify for incentives and the nature of incentives that these projects qualify for. The most common incentives are those available for investments made in specialized locations, industries, or investment zones in the country.

Tax-Incentives for prioritized industries

Vietnam extends investment incentives to a number of industries and projects that it has identified to be of strategic importance for the country. Vietnamese policy in recent years has broadly promoted projects in high tech industries, large capital, or labor-intensive investments, and projects that are expected to have a tangible impact on social conditions, such as education or healthcare.

Tax-Incentives in economic zones


Vietnam has encouraged the establishment of economic zones throughout the country. These zones provide increased access to infrastructure, pools of talent, and networks of suppliers. Foreign investors in these zones also benefit from tax incentives extended by the Vietnamese government.


Most economic zones will qualify an investor for tax holiday incentives. In limited cases, where the zone is located in a disadvantaged area, a preferential rate of corporate income tax will also apply. Foreign investors must set up their operations inside of a zone that offers incentives in order to qualify for preferential treatment or tax holidays.

Vietnam’s economic zones are a common entry point for a variety of firms. Firms in need of specialized labor, easy access to ports, and good business conditions should strongly consider setting their operations up within one of Vietnam’s industrial zones.


By quoting the words of Mr. Nguyen Xuan Phuc , the Prime Minister of Vietnam


The Prime Minister announced the plans of Tax-cut & Tax-incentive in a speech at the GMS Business Summit held in Hanoi last week.


He reiterated Vietnam’s commitment to an action-oriented government working in the interest of the people and businesses, for which tax reform is one of the crucial undertakings in its efforts to enhance the country’s competitiveness.


Also said that his government would focus on creating a favourable business environment by fine-tuning the institutions and legal frameworks, improving the administration capacity to bring equal opportunities for all economic sectors.


He also affirmed Vietnam’s commitment to protect intellectual property rights and innovative ideas during the start-up process.


The Prime Minister stated that these improvements have boosted the confidence of foreign investors and businesses in the Government’s reform efforts and inspired the Government to continue its reform programme.


Conclusion and we can help you.


In Vietnam, whether you are venturing into new markets, services or product lines, understanding trends, market potential and the socio-political climate are key to the success of your business. The challenge, however, lies in making sense of the information available and the impact of evolving developments on your business.We speak your language and appreciate your business challenges. Our professionals bring to every engagement with you their breadth of experience and depth of expertise.


By leveraging our knowledge, skills and experience,

  • you gain insights and access to resources that can help transform your business - whether driving revenue growth, redefining customer service or achieving cost efficiencies

  • you can more effectively manage and develop your business plans , investment plans, trading plans and M&A plans we develop for you.

  • tapping into our wealth of industry and market insights, we cut through complexity to home in on the real issues.


We develop plans not just to support your business needs today, but where you want to be in the future.

Should there be any questions , please freely contact Dr. Markus Chan 

Tax Incentive in Vietnam ( 2018 Feb Version ) researched by VNHK Academy

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