Corporate Income Tax Incentives for FDI Enterprises in 2024

In recent years, Southeast Asia, including Vietnam, has seen an increase in foreign direct investment (FDI) due to incentive policies like tax incentives. However, accessing these incentives can be challenging for foreign investors. Vietnam's corporate income tax (CIT) rate is currently 20%, but there are various industries and sectors that qualify for CIT incentives. These incentives include a reduced CIT rate of 10% for enterprises involved in education, social housing, forestry, agriculture, and more. New investment projects in certain areas can enjoy a CIT rate of 10% for 15 years. There are also other cases where the CIT rate is reduced to 17%, such as for enterprises in difficult socioeconomic conditions or those involved in steel production, energy-saving products, and traditional trades. In recent years, with the global supply chain shifts, FDI inflows into Southeast Asia, including Vietnam, have tended to increase sharply. The driving force behind attracting FDI includes incentive policies, particularly tax incentives, which help Vietnam attract more foreign investors. However, accessing these tax incentives is not easy for foreign investors. In this article, we will briefly summarize the highlights of Vietnam's corporate income tax, CIT, incentives. According to Vietnam's tax laws, the current standard CIT rate is 20 percent, which may vary depending on the industry, sector, and business area. Article 18 of Circular 78-2014-TTBTC stipulates several industries, sectors, or investment projects in specific areas are entitled to CIT incentives. It should be noted that enterprises are only entitled to preferential tax rates when they implement accounting regimes, invoices, vouchers, and payment of CIT according to declarations. Apply the CIT rate of 10 percent during the operation period to the income of enterprises in the following areas. Conducting socialization activities in education, vocational training, culture, sports, environment, and healthcare, selling, leasing, and lease purchasing social housing, planting, caring for, and protecting forests, aquaculture and processing agricultural and aquatic products in areas with difficult socioeconomic conditions, cultivating forest products in areas with difficult socioeconomic conditions, producing, multiplying, and breeding plants and animals, producing, extracting, and refining salt, except for salt production under the cooperative law, cooperatives operating in agriculture, forestry, fishery, and salt industries, not in areas with difficult or extremely difficult socioeconomic conditions, investing in the preservation of agricultural products post-harvest, preserving agricultural products, fisheries, and foodstuffs. Apply the CIT rate of 10 percent for 15 years to the income of enterprises implementing new investment projects under the following conditions. In areas with extremely difficult economic conditions, economic zones, and high-tech parks, including concentrated information technology parks established under the Prime Minister's decision, in fields such as scientific research and technological development, application of high technologies on the list of high technologies prioritized for development investment under the law on high technologies, high-tech incubation, high-tech business incubation, high-tech venture capital for high-tech development on the list of high technologies prioritized for development under the high technology law, investment in constructing and operating high-tech incubation facilities, high-tech business incubation facilities, investment in the development of water plants, power plants, and water supply and drainage systems, roads, bridges, railways, airports, seaports, river ports, airports, terminals, and other particularly important infrastructure projects decided by the Prime Minister, software production, production of composite materials, light construction materials, and rare materials, production of renewable energy, clean energy, and energy from waste destruction, biotechnology development, environmental protection projects, including the production of environmental pollution treatment equipment, environmental monitoring and analysis equipment, pollution treatment and environmental protection, wastewater, gas, solid waste collection and treatment, waste recycling and reuse, high-tech enterprises, high-tech application agricultural enterprises under the law on high technology, new investment projects in manufacturing, except projects producing goods subject to special consumption tax, mineral exploitation projects, meeting the scale of investment capital and the number of employees, new investment projects producing products on the list. Of prioritized supporting industry products, please note that a new investment project is one implemented for the first time or a project operating independently from the ongoing business investment activities. Application of a 17% CIT rate for 10 years for the income of enterprises. Implementing new investment projects in areas with difficult socioeconomic conditions, implementing new investment projects in high-grade steel production, production of energy-saving products, manufacturing machinery and equipment for agriculture, forestry, fishery, and salt production, manufacturing irrigation equipment, producing and refining animal feed, poultry, and aquatic products, development of traditional trades, including constructing and developing traditional trades in handicraft production, agricultural and food product processing, and cultural products, microfinance institutions established and operating under the law on credit institutions, applying a preferential CIT rate of 17% throughout the operation period. Other tax reduction cases.