Government support policies & tax incentives for FDI
enterprises

Vietnam is increasingly becoming an attractive destination for FDI enterprises due to the support policies and tax incentives provided by the government. Specifically, tax, land, and financial incentives help businesses reduce investment costs and maximize profits. If you are looking for a factory in Vietnam to expand production, understanding these policies will help you make the right decision and maximize investment benefits. Let’s dive into the details with Kizuna right now!

1. Why should FDI enterprises pay attention to support policies & tax incentives?

Support policies and tax incentives play an important role in attracting foreign direct investment (FDI). Specifically, when selecting factories in Vietnam to expand production, FDI enterprises can leverage these preferential policies to enhance competitiveness and ensure sustainable growth. The key benefits that FDI enterprises gain from support policies and tax incentives include: 

● Reduction of initial investment costs: Tax exemptions, reductions and financial support help enterprises save significantly on costs when establishing and operating in Vietnam.
● Profit Optimization: Thanks to policies on exemption and reduction of corporate income tax (CIT), import tax, and value-added tax (VAT), enterprises can allocate capital more effectively.
● Increase in competitive advantage: Enterprises can reinvest in technology, green manufacturing and scale sustainably.
● Support with infrastructure and human resources: The Vietnamese government facilitates by developing transportation, electricity, water systems and providing a high-quality labor force that meets enterprises’ needs.

Tax incentives play an important role in attracting foreign investment.

2. Policy to support foreign enterprises investing in Vietnam

Vietnam is increasingly affirming its position as an attractive destination for FDI enterprises thanks to comprehensive support policies from the Government. These incentives not only help enterprises save on initial investment costs but also create a favorable business environment, enabling enterprises expand production sustainably.

If enterprises are looking for factories in Vietnam, understanding these policies will help them maximize the benefits of investing.

2.1. Support for land and infrastructure

The Government has had numerous support policies when FDI enterprises decide to expand production in Vietnam such as:

Land rent exemption and reduction

Enterprises investing in industrial parks and export processing zones may be exempted or have their land rent reduced for a certain period of time. Specifically, the Ministry of Finance has proposed exempting land rent for investment projects in agriculture and rural areas for 5 to 15 years; then continuing to reduce land rent for the following years, helping enterprises save on operating costs.

Support for infrastructure development

The government is investing heavily in transport, electricity, water and telecommunications systems to ensure that enterprises have all the conditions to operate smoothly. According to the plan, Vietnam plans to invest about USD 43 to 65 billion in transport infrastructure in the 2021-2030 period, with the aim of improving the quality and connectivity of the national transport system.

2.2. Financial and credit policy

The Vietnamese Government provides numerous financial support programs for FDI enterprises, including:

Preferential loan program

FDI enterprises can access low-interest loan packages from the State Bank of Vietnam, helping to reduce the initial financial burden. Specifically, in 2025, Agribank will offer a short-term preferential credit package of VND 5,000 billion and USD 100 million to support the short-term loan needs of FDI enterprises. The interest rates for VND loans will be reduced to 1.8% per year,

Financial support for high-tech projects, green production

Enterprises investing in high technology, renewable energy or environmentally friendly production enjoy many special support mechanisms. For example, the Green Credit Trust Fund supports up to USD 500,000 for Vietnamese industrial enterprises applying cleaner production technology, aiming at environmental protection.

The Vietnamese government offers numerous financial support programs for FDI enterprises.

2.3. Support for technology transfer and innovation

To encourage FDI enterprises to invest in advanced technology, the Vietnamese Government has introduced many attractive policies such as:

Special offers for enterprises applying high technology

Enterprises applying automation, artificial intelligence and advanced manufacturing technologies enjoy tax incentives and technical support. Specifically, Vietnam is considering applying incentives such as reducing land rental rates, corporate income tax and import-export duties for high-tech industries such as semiconductor manufacturing, AI and green energy.

Support for investment in processing and manufacturing industry

The processing and manufacturing industry continues to lead in attracting FDI capital, with total investment capital reaching nearly USD 2.54 billion in the first two months of 2024, accounting for 59.1% of total registered investment capital and increasing by 16.8% over the same period. In addition, the government also offers many tax, financial and infrastructure incentives to support FDI enterprises in this sector.

2.4. Support for human resource training and development

To assist FDI enterprises in recruiting and developing their workforce, the Vietnamese Government has introduced several support programs, including:

● Labor training program: The State cooperates with vocational schools and training centers to provide highly qualified human resources to meet the requirements of foreign enterprises.
● Support for labor recruitment: Enterprises can easily access highly skilled labor through jobplacement centers, training linkage programs or recruitment incentives.

3. Government tax incentives for FDI enterprises

Tax incentives are a key factor that allows FDI enterprises to optimize costs and boost profits when investing in factories in Vietnam. The Vietnamese government has introduced various appealing tax policies to encourage foreign companies to invest in priority sectors, supporting both production and export activities.

3.1. Corporate income tax (CIT) incentives

Corporate income tax (CIT) is one of the major expenses that enterprises must take into account when investing. In order to support FDI enterprises, the Vietnamese Government offers many incentives on tax rates and tax exemption and reduction periods:

● Preferential tax rate: According to Article 19 of Circular 96/2015/TT-BTC, FDI enterprises implementing new investment projects in areas with particularly difficult socio-economic conditions or in the high-tech sector are subject to a tax rate of 10% for 15 years.
● Tax exemption and reduction over time: Pursuant to Article 20 of Circular 78/2014/TT-BTC, amended by Circular 96/2015/TT-BTC, FDI enterprises may be exempted from corporate income tax for 4 years and have 50% of the tax payable reduced for the next 9 years for income from implementing new investment projects in areas with particularly difficult socio-economic conditions or in the high-tech sector.

The Vietnamese government offers many tax incentives and tax exemption and reduction periods for FDI enterprises.

3.2. Import tax exemption and reduction

In order to support enterprises in the process of building production facilities and engaging export activities,
the Vietnamese Government applies a policy of exempting and reducing import taxes on several key items:

● Import tax exemption for machinery and equipment: FDI enterprises importing machinery an dequipment for production in Vietnam factories are eligible for import tax exemptions.
● Tax incentives for imported raw materials: Imported raw materials and components for the production of export goods may be exempted from or have reduced import duties.

3.3. Value Added Tax (VAT) Policy

In order to facilitate FDI enterprises, the Vietnamese Government has introduced the following preferential VAT policies:

● VAT refund for exported goods: According to Article 16 of Circular 219/2013/TT-BTC, FDI enterprises exporting goods and services are refunded VAT paid for raw materials and services purchased for export activities. This policy helps enterprises reduce costs and enhance the competitiveness of products in the international market.
● Preferential VAT rates for some manufacturing industries: According to Article 10 of Circular 219/2013/TT-BTC, products in the fields of high technology, agriculture, aquaculture and some supporting industries are subject to a VAT rate of 5%, lower than the common tax rate of 10%. This policy aims to encourage FDI enterprises to invest in priority development areas of Vietnam.

The above are the support policies and tax incentives of the Vietnamese Government for FDI enterprises. These policies enable foreign companies to optimize investment costs, capitalize on growth opportunities, and expand production activities in a favorable business environment.

If you are seeking a factory in Vietnam with modern infrastructure, comprehensive utilities, and a strategic  location, Kizuna is the perfect choice. We offer high-quality pre-built factories designed to meet the needs of FDI enterprises, featuring flexible spaces, swift legal support, and professional services. Contact Kizuna now via Hotline 0272 3900 191 for detailed advice and to explore the ideal production space for your enterprise!