Identifying Investment Incentive Areas in Vietnam

What Is an Investment Incentive Area?

An investment incentive area refers to locations where the Vietnamese government provides preferential policies to encourage investment, economic development, and job creation.

Projects located in these areas may enjoy various benefits, including:

• Preferential corporate income tax rates
• Land rental exemptions or reductions
• Import tax exemptions
• Infrastructure and investment support

Identifying whether a project is located in an investment incentive area is essential for optimizing investment costs and tax benefits.

Legal Basis for Determining Investment Incentive Areas

The determination of investment incentive areas in Vietnam is mainly based on:

• Investment Law 2020
• Decree 31/2021/ND-CP guiding the Investment Law
• Appendix III attached to Decree 31/2021/ND-CP

Under the regulations, investment incentive areas are classified into:

• Areas with difficult socio-economic conditions
• Areas with especially difficult socio-economic conditions

In addition, certain industrial parks, economic zones, and high-tech zones are also eligible for investment incentives.

How to Determine Whether a Project Qualifies for Investment Incentives

1. Verify the Project Location

Businesses should first identify:

• Province or city
• District or town
• Industrial park or economic zone

Then compare the location with the official list of investment incentive areas provided in Appendix III of Decree 31/2021/ND-CP.

For example:

• Mountainous or remote districts may qualify as especially difficult areas
• Some industrial parks in priority development regions may also receive incentives

2. Identify the Type of Industrial Park or Economic Zone

Not all industrial parks receive the same level of incentives.

The incentive level depends on:

• Geographic location
• Local socio-economic conditions
• Type of industrial park
• Local investment attraction policies

Industrial parks located in disadvantaged areas usually receive higher tax and land incentives.

3. Check Whether the Industry Is Also Incentivized

In many cases, a project may qualify for incentives based on both:

• Investment location
• Priority investment industry

This allows businesses to access higher levels of incentives under Vietnamese law.

Examples include:

• High-tech projects in high-tech parks
• Supporting industry projects in economic zones
• Logistics projects in disadvantaged areas

Types of Incentives Available

Corporate Income Tax Incentives

Qualified projects may receive:

• Preferential tax rates
• Corporate income tax exemptions
• 50% tax reductions for certain periods

Land Incentives

Businesses may also receive:

• Land rental exemptions
• Reduced land rental fees
• Infrastructure support

Import Tax Incentives

Machinery, equipment, and materials imported for eligible projects may qualify for import duty exemptions.

Important Notes for Investors

Not Every Project in an Industrial Park Receives Incentives

Many investors assume that all projects in industrial parks automatically receive tax incentives. However, incentives depend on:

• Specific project location
• Business sector
• Project scale
• Local policies

Investment Incentives Should Be Reviewed Early

Businesses should carefully review:

• Project legal documents
• Investment location
• Applicable incentive conditions
• Industrial park planning

during the early investment stage to avoid losing potential benefits.

Current Investment Incentive Trends in Vietnam

Many FDI companies are currently prioritizing:

• Northern industrial parks
• High-tech zones
• Coastal economic zones
• Locations with strong logistics infrastructure

to maximize both investment incentives and supply chain advantages.

Conclusion

Determining whether an investment project is located in an investment incentive area requires reviewing the actual project location, the official incentive area list, and the project’s business sector.

Businesses are advised to consult investment experts or legal advisors to ensure full compliance and maximize available incentives.

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-470262.aspx
• Vietnam Ministry of Justice
  https://moj.gov.vn