10 January 2025 Vietnam enacts Decree on establishment, management and use of Investment Support Fund - A new Decree establishes a legal framework for the Government's investment support of enterprises operating in the high-tech sector, as well as those with investment projects in research and development (R&D) centers.
- The Decree takes effect from 31 December 2024 and applies for fiscal years from 2024 onward.
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On 31 December 2024, the Vietnam Government released Decree 182/2024/NÐ-CP (Decree 182) on the establishment, management and use of the Investment Support Fund (ISF) to implement the policy of the Vietnam National Assembly provided in its Resolution No. 110/2023/QH15, dated 19 November 2023. (See EY Global Tax Alert, Vietnam National Assembly passes top-up CIT in accordance with GloBE Model Rules, dated 8 December 2023). Decree 182 stipulates two support methods: (i) Operational cost support and (ii) Initial investment cost support. Enterprises that meet the conditions may choose to apply one of these two methods. Government's operational cost support Enterprises operating in the high-tech sectors and those with investment projects in R&D centers who meet certain regulated conditions are entitled to apply for the applicable cost supports. The detailed conditions are as follows: Type | Applicable enterprises | Specific conditions | I. | High-tech enterprises | Having project investment capital of at least 12,000 billion Vietnamese dong (VND12,000b) (*) or project turnover at least VND20,000b/year Exceptions: - Enterprises in chip industry, semi-conductor integrated circuits, artificial intelligence (AI) data centers: Investment capital of at least VND6,000b billion (*) or turnover of at least VND10,000b/year
- Enterprises in high-tech sectors producing products on the list of breakthrough high-technology products, which are prioritized for R&D as issued by the Prime Minister: No requirement on minimum revenue or capital scale
- Microchip design project:
- No requirement on minimum revenue or capital scale
- Hire at least 300 Vietnamese engineers, managers after five years of operation in Vietnam
- Support Vietnam in training at least 30 high-quality technicians per year in microchip design
| II. | Enterprises having investment project in the field of manufacturing hi-tech products | III. | Enterprises with hi-tech application project | IV. | Enterprises with R&D center investment project | - Project has investment capital of at least VND3,000b
- Complete disbursement of at least VND1,000b within three years after the issuance date of Investment Policy Approval Decision, Investor Approval Decision, Investment Registration Certificate or similar legal documents
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(*) The Decree provides detailed requirements on the capital contribution schedule applicable for different cases of newly established projects and expansion projects registered before or after the effective date of the Decree. The above enterprises are also required to meet these conditions: - Enterprises eligible for support based on revenue conditions must satisfy the revenue conditions for the high-tech sector in the financial year for which support is requested, and the revenue must be accounted for separately.
- Enterprises must have no overdue tax debts or other debts to the state budget at the time of application submission.
The Decree offers five support forms with detailed criteria. Eligible enterprises can apply for any or all of the following support forms if they meet the detailed criteria. The support will be made in cash and will not be subject to taxes. | | 1. Support costs of training development of human resources | 2. Support costs of investment in social infrastructure | Applicable enterprises | Type I, II, III, IV | Support cost base | The project's actual costs incurred and paid for training to/development of Vietnamese workers in a fiscal year | The enterprise's actual costs incurred and paid for investment in social infrastructure in a fiscal year | Level of support | Up to 50% | Up to 25% |
3. Support costs of R&D activities | Applicable enterprises | Type I, II, III, IV | Support cost base | The project's actual costs incurred and paid for R&D activities in a fiscal year | Level of support | The support rate is calculated based on the progressive rate and the amount of R&D costs in a fiscal year. | Level of R&D costs (VND billions) | Support rate (%) | I, III | II | IV | Up to 120 | 20 | 1 | 10 | From 120 to 240 | 25 | 5 | 15 | More than 240 | 30 | 10 | 20 |
4. Support costs of fixed asset investment | Applicable enterprises | Type I, II, III | Support cost base | The enterprise's actual costs of fixed asset investment | Level of support | The annual support level is calculated based on the progressive rate and the increase in the historical costs of the fixed asset in a fiscal year but capped at 0.5% of the total registered investment capital. The applicable fixed assets must be: - Used for high-tech production, application, and business for at least three consecutive years following the first year the asset is used
- Not sold, transferred, or conveyed for to the other organizations/enterprises during the three consecutive years following the first year the asset is used
| Value of additional historical costs of the fixed assets (VND billion) | Support rate (%) | I, III | II | Up to 120 | 8 | 1 | From 120 to 240 | 9 | 2 | More than 240 | 10 | 3 |
5. Support costs of manufacturing of high-tech products | Applicable enterprises | Type I, II, III | Support cost base | The added manufacturing value of high-tech products | Level of support | Support rate (%) | I, III | II | One of these: - 1%
- A maximum of 3% if enterprises produce chips, semi-conductor integrated circuits, or AI data centers
- A maximum of 3% if satisfying these conditions:
- Minimum revenue of VND200t
- Minimum workforce of 10,000 people
- Added manufacturing value ratio of high-tech products is at least 30%
| - 0.5%
- 1% if satisfying these conditions:
- Minimum revenue of VND200t
- Minimum workforce of 10,000 people
- Added manufacturing value ratio of high-tech products is at least 30%
| - The added manufacturing value of high-tech products is the value determined by the total cost of goods sold of all high-tech products (excluding royalties fees, technology transfer fees payable to foreign parties) minus the value of imported raw materials (excluding the value of raw materials supplied by export processing enterprises or organizations applying non-tariff policies) in a fiscal year.
- The ratio of the added manufacturing value of high-tech products is the ratio determined by the added manufacturing value of high-tech products to cost of goods sold of all high-tech products.
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Government's support on initial investment cost Enterprises with investment projects in R&D centers in the fields of semiconductor industry and artificial intelligence are entitled to apply for support on initial investment costs. The detailed conditions and support level are as follows: Support cost base | The project's initial investments | Level of support | Up to 50% | Conditions | - The enterprises must have no overdue tax debts or state budget debts at the time of submitting dossier
- The enterprise's R&D center must:
- Be established and registered to operate as a science and technology organization in accordance with the law on science and technology
- Be conducting R&D activities to create high technology/high-tech products on the List of high technologies/high-tech products prioritized for investment and development promulgated by the Prime Minister's Decision
- Have minimum investment capital of VND3,000b and complete the disbursement of at least VND1,000b within three years from the date of issuance of Investor Approval/ Investment Registration Certificate/Investment Policy Approval/similar legal documents
- The investment project in R&D center must having a positive impact on the innovation ecosystem and the development of new technologies and new breakthrough products of the country.
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The application for Government support must be submitted to the Dossier Receiving Authority (DRA) before 10 July of the fiscal year following the year in which the support costs arise. DRA is the Management Board of Industrial Zone/Economic Zone/High-tech Park or Local Department of Planning and Investment, depending on the location of the investment project. For initial investment support application, DRA is the Ministry of Planning and Investment. Some other authorities, including Provincial People's Committee, Fund Management Board and Fund Management Council, also involve in the handling and assessment of the application dossier, before submitting it to the Government for final review and approval. The Decree is effective from 31 December 2024 and applies from the fiscal year 2024 onward. Enterprises operating in the high-tech sector and enterprises with investment projects in an R&D center should review their qualification criteria for the ISF application or explore available opportunities to be included within the scope of the ISF. It is crucial to prepare the application dossier with the comprehensive necessary supporting documents to facilitate the application process. | * * * * * * * * * * | | Contact Information | For additional information concerning this Alert, please contact: EY Consulting Vietnam JSC Ernst & Young LLP (United States), Vietnam Tax Desk, New York Ernst & Young LLP (United States), ASEAN Tax Desk, New York Ernst & Young LLP (United States), Asia Pacific Business Group, New York Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago | | Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor |
Document ID: 2025-0205 |
