Duration of Corporate Income Tax Incentives in Vietnam

What Are Corporate Income Tax Incentives?

Corporate income tax (CIT) incentives are policies introduced by the Vietnamese government to encourage investment in prioritized industries, sectors, and locations.

Common forms of tax incentives include:

• Preferential corporate income tax rates
• Tax exemptions during initial years
• 50% tax reductions for subsequent years

Vietnam’s standard corporate income tax rate is currently 20%, but eligible investment projects may enjoy significantly lower tax rates and long-term tax benefits.

How Long Do CIT Incentives Apply?

The duration of corporate income tax incentives depends on:

• The type of investment project
• Business sector
• Investment location
• Scale and strategic importance of the project

Under current regulations, tax incentives generally include:

• Preferential tax rate periods
• Tax exemption periods
• Tax reduction periods

These incentive policies are regulated under the Investment Law 2020, Decree 31/2021/ND-CP, and Decision 29/2021/QD-TTg.

Common Corporate Income Tax Incentive Periods

1. Preferential 10% Tax Rate for 15 Years

This is one of the most common incentive schemes applied to:

• High-tech projects
• Research and development (R&D) projects
• Software production projects
• Projects located in areas with especially difficult socio-economic conditions
• Certain infrastructure projects

Businesses may also receive:

• 4 years of tax exemption
• 50% tax reduction for the following 9 years

The tax exemption period starts from the first year the project generates taxable income.

2. Preferential 17% Tax Rate for 10 Years

This incentive is commonly applied to:

• Projects located in disadvantaged areas
• Supporting industry projects
• Certain incentivized sectors

Businesses may receive:

• 2 years of tax exemption
• 50% tax reduction for the following 4 years

3. Special Investment Incentives – Longest Incentive Periods

For projects eligible for special investment incentives, tax incentive periods can be significantly longer.

According to Decision 29/2021/QD-TTg:

• 9% tax rate for up to 30 years
• 7% tax rate for up to 33 years
• 5% tax rate for up to 37 years

In addition, businesses may receive:

• Up to 6 years of tax exemption
• 50% tax reduction for up to 13 additional years

These are currently the longest corporate income tax incentives available in Vietnam and mainly apply to high-tech, innovation, semiconductor, and large-scale strategic investment projects.

When Does the Tax Incentive Period Begin?

Generally, tax exemption and reduction periods begin from:

• The first year the project generates taxable income

If the project does not generate taxable income within the first three years after revenue generation, the incentive period begins from the fourth year.

Which Projects Receive Long-Term Tax Incentives?

Projects commonly eligible for long-term incentives include:

• High-tech projects
• Semiconductor and AI industries
• Data centers
• Innovation centers
• Green energy projects
• Supporting industries
• Large-scale investment projects
• Projects in especially disadvantaged areas

Many FDI companies currently choose high-tech parks and economic zones to maximize long-term tax benefits.

Important Notes for Businesses

Businesses Must Maintain Incentive Conditions

During the incentive period, businesses must:

• Maintain approved business sectors
• Follow committed investment schedules
• Comply with investment commitments

Failure to meet the conditions may result in adjustment or withdrawal of incentives.

Not All Income Is Eligible for Tax Incentives

CIT incentives only apply to income generated from activities that qualify under the investment incentive regulations.

Conclusion

The duration of corporate income tax incentives in Vietnam currently ranges from several years to a maximum of 37 years, depending on the project type and investment incentive category.

To fully benefit from these incentives, businesses should carefully assess eligibility conditions, prepare proper investment documentation, and comply with Vietnamese regulations throughout the project lifecycle.

References

• Investment Law 2020
  https://thuvienphapluat.vn/van-ban/Dau-tu/Luat-Dau-tu-2020-427301.aspx
• Decree 31/2021/ND-CP
  https://thuvienphapluat.vn/van-ban/Dau-tu/Nghi-dinh-31-2021-ND-CP-huong-dan-Luat-Dau-tu-462291.aspx
• Decision 29/2021/QD-TTg on Special Investment Incentives
  https://thuviennhadat.vn/van-ban-phap-luat-viet-nam/quyet-dinh-29-2021-qd-ttg-uu-dai-dau-tu-dac-biet-490496.html
• Ministry of Planning and Investment of Vietnam
  https://www.mpi.gov.vn