Principles for Applying Investment Incentives – Decree 118/2015/ND-CP

1. Legal Basis

The principles for applying investment incentives in Vietnam are stipulated in Clause 2, Article 16 of Decree No. 118/2015/ND-CP, issued by the Government on November 12, 2015, guiding the implementation of the Law on Investment.

Source: National Public Service Portal – dichvucong.gov.vn

2. Principles for Applying Investment Incentives

According to the official guidance published on the National Public Service Portal, the application of investment incentives follows these key principles:

a) Incentives based on socio-economic conditions

• Investment projects specified in Point c, Clause 1, Article 16 are entitled to incentives equivalent to projects located in areas with extremely difficult socio-economic conditions.

• Projects specified in Point d, Clause 1, Article 16 are entitled to incentives equivalent to projects located in areas with difficult socio-economic conditions.

b) Incentives based on investment sectors

If an investment project belongs to an incentivized sector but is implemented in an area with difficult socio-economic conditions, it shall be entitled to incentives equivalent to those applicable in areas with extremely difficult conditions.

c) Application of the highest incentive level

In cases where an investment project qualifies for multiple incentive levels, the highest applicable incentive shall be applied.

d) Corporate income tax incentives in industrial zones

Corporate income tax (CIT) incentives applicable to projects located in industrial parks (IP) or export processing zones (EPZ) shall be implemented in accordance with the current regulations on corporate income tax.

e) Land rental incentives

Land rental incentives based on industrial park or export processing zone locations do not apply to projects located in industrial parks or EPZs within:

• Inner districts of special-class cities,

• Class I cities under central authority,

• Class I cities under provincial authority.

3. Practical Implications for Investors

These principles aim to:

• Ensure fair application of incentives based on sector, location, and investment scale.

• Encourage investment in less-developed and priority regions.

• Promote investment attraction into industrial parks and export processing zones, supporting manufacturing and export-oriented industries.

4. Notes for Investors

• Not all projects in industrial parks are automatically eligible for land rental incentives.

• Investors should carefully assess sector eligibility, project location, and applicable tax regulations to maximize available incentives.

Reference

• National Public Service Portal – Investment Incentive Principles
  dichvucong.gov.vn

• Decree No. 118/2015/ND-CP of the Government of Vietnam