Vietnam’s Investment Support Fund is a new initiative aimed at incentivising foreign tech firms to invest in Vietnam. This is inline with tax incentives that were previously in place being vastly diminished by the Organisation for Economic Cooperation and Development’s Global Minimum Tax initiative.
This new support mechanism is codified in Decree 182/2024/ND-CP and applies for the 2024 financial year onward.
This article runs through key details of this decree for foreign firms.
Investment support policy
Cost support methods
The Fund directly disburses cash to cover expense items outlined in the Decree (Article 15).
Categories and subjects of cost support
Supported expenses include (Article 16.1):
- Training and human resource development costs
- Research and development costs
- Investment costs to create fixed assets
- High-tech product manufacturing costs
- Investment in social infrastructure works
- Other cases as decided by the Government.
Eligible beneficiaries include (Article 16.2):
- High-tech enterprises
- Enterprises with investment projects for high-tech products
- High-tech application project enterprises
- Enterprises with research and development centre projects.
Investment projects in high-tech manufacturing
Criteria: High-tech product manufacturing projects must align with guidelines from the Ministry of Science and Technology (Article 17.1).
Certification process: Applications are reviewed and certified by the Ministry of Science and Technology, with specific timelines for dossier review, appraisal, and certification issuance (Article 17.2).
Revocation of certification: Certificates may be revoked for reasons such as non-operation, forgery, legal violations, or failure to comply with project terms (Article 17.2.c).
Validity: Certificates remain effective until the conclusion of the respective investment project (Article 17.4).
Criteria and conditions for cost support
Key eligibility conditions include:
- Minimum capital scale or revenue thresholds (e.g., VND 12,000 billion or VND 20,000 billion a year or US$471.9 million to US$786.5 million) for high-tech enterprises and related projects (Article 18.1).
- Specific thresholds for chip, semiconductor, and AI projects (e.g., VND 6,000 billion or VND 10,000 billion a year or US$235.9 million to US$393.2 million ) (Article 18.1.c).
- Exemptions for enterprises with priority-listed high technologies or microchip design projects, subject to other commitments (Article 18.1.d).
- Disbursement requirements for new or adjusted projects, depending on the timeline and investment amount (Article 18.2).
Revenue requirements: Eligible enterprises must meet fiscal year revenue criteria for high-tech or application projects, with revenues accounted separately (Article 18.3).
Research and development centres: Must be established and registered, focus on prioritised high technologies, and meet specific investment thresholds (Article 18.6).
Support for training and human resource development costs
Support level: Up to 50 percent of incurred and verified costs for training and developing Vietnamese workers (Article 19.1).
Supported expenses include:
- Domestic and international training costs
- Salaries for Vietnamese engineers and managers
- Costs for incubation programmes at universities and innovation centres (Article 19.2).
Support for research and development costs
Eligibility and support level
Enterprises that meet the conditions of Articles 16 and 18 are entitled to annual financial support for research and development activities. The support is calculated progressively based on annual R&D spending as follows (Article 20.1):
| R&D spending (billion VND) | |||
| Criteria | Up to 120 | From 120 to 240 | Over 240 |
| Article 16.2: a, c, | 20 percent | 25 percent | 30 percent |
| Article 16.2: d | 10 percent | 15 percent | 20 percent |
| Article 16.2: b | 1 percent | 5 percent | 10 percent |
Eligible costs
Supported expenses include regular R&D costs, training and funding for institutions in Vietnam, cooperation costs, intellectual property fees, infrastructure depreciation, and data centre rentals (Article 20.3).
Support for investment costs to create fixed assets
Eligibility and support level
Enterprises that qualify under Articles 16 and 18 can receive support for creating fixed assets based on a progressive rate. Support is capped at 0.5 percent of the total investment capital outlined in the project’s approval documents. The progressive rate is as follows (Article 21.4):
| Fixed asset investment (billion VND) | |||
| Criteria | Up to 120 | From 120 to 240 | Over 240 |
| Article 16.2: a, c, | 8 | 9 | 10 |
| Article 16.2: d | 1 | 2 | 3 |
Conditions
Supported fixed assets must be used exclusively for high-tech production for at least three consecutive years and cannot be sold or transferred during this period (Article 21.3).
Support for production costs of high-tech products
Eligibility and support level
Annual support is based on the added production value of high-tech products:
- Enterprises under Points a and c of Article 16.2 receive 1 percent support, which may increase to 3 percent if conditions on revenue (VND 200,000 billion or US$7.9 billion), human resources (10,000 people), and added production value (30 percent) are met.
- Enterprises under Point b of Article 16.2 receive 0.5 percent, increasing to 1 percent if they meet the same conditions (Article 22.1).
Scope
Support applies to products listed as high-tech by relevant legislation (Article 22.2).
Support for investment in social infrastructure works
Eligibility and support level
Enterprises that meet the criteria of Articles 16 and 18 may receive up to 25 percent of actual expenses for constructing social infrastructure directly benefiting their employees (Article 23.1).
Scope
Supported infrastructure includes worker housing, schools, kindergartens, medical facilities, and recreational spaces (Article 23.2).
Support for initial investment costs
Subjects of support
Enterprises with investment projects for research and development centres in the semiconductor and artificial intelligence industries are eligible for support (Article 24).
Criteria and conditions
- Enterprises must have no overdue tax or state budget debts at the time of application and must meet conditions specified in Article 18.6(a, b, c) (Article 25.1).
- The project must positively impact the innovation ecosystem and foster the development of new technologies and breakthrough products (Article 25.2).
Support level
- The maximum support covers 50 percent of the project’s initial investment costs, in compliance with Article 27 principles (Article 26.1).
- The Government may decide on a different level of support based on specific circumstances (Article 26.2).
Terms of implementation
Responsibilities of central ministries, branches, and local agencies
Ministry of Planning and Investment
- Oversees the integration of support expenditure estimates into annual central budget plans for approval.
- Coordinates with other ministries to evaluate support rates and propose adjustments when needed.
- Provides guidance on fund contributions, aid, and sponsorships.
- Evaluates the Fund’s performance, efficiency, and management operations.
- Issues detailed instructions on documents and procedures outlined in the Decree (Article 43.1).
Ministry of Finance
- Manages the financial aspects of the Fund, including financial reporting and disclosures.
- Provides corporate income tax data for estimating annual Fund support expenditure.
- Allocates central budget expenditure estimates for the Fund’s activities, based on Ministry of Planning and Investment proposals (Article 43.2).
Ministry of Science and Technology
- Develops and updates lists of high technologies and breakthrough high-tech products prioritised for development.
- Specifies detailed tasks assigned in the Decree (Article 43.3).
Provincial People’s Committees
- Appraises cost support applications and ensures adherence to criteria.
- Monitors investment support commitments of local enterprises and addresses violations, reporting to the Fund Management Agency (Article 43.4).
Other agencies and local governments
- Evaluate and provide feedback on cost support procedures and oversee support implementation within their jurisdiction (Article 43.5).
Responsibilities of enterprises receiving support
- Use Fund resources according to legal regulations.
- Fulfil project commitments after receiving support.
- Submit reports on prior-year commitments by 31 January of the following year.
- Provide accurate, timely, and honest information about Fund-supported activities and bear legal responsibility for their validity (Article 44).
Entry into force
This Decree is effective from the signing and promulgation date and applies starting from the fiscal year 2024 (Article 45).
What’s next?
Vietnam’s Investment Support Fund is very new and untested. With this in mind there may be some teething problems and firms should be aware that the process may not be entirely smooth in the first instance. That said, foreign firms looking to access Vietnam’s Investment Support Fund can best keep abreast of its implementation and effectiveness by making sure to subscribe to the-shiv.