VIETNAM: New Criteria Issued for Hi-tech Enterprise Incentive Eligibility

The country has announced additional criteria for determining the investment incentive eligibility of hi-tech manufacturing businesses. This will see companies that derive at least 70% of their total annual net revenue from hi-tech products, while also allocating a specified percentage of their income to R&D, approved for a number of state-backed benefits. 

More specifically, companies with total capital of VND6 trillion (US$260.9 million) or more, and upwards of 3,000 employees will need to allocate a minimum of 0.5% of net revenue to R&D in order to be considered eligible. In the case of businesses with a total capital of VND100 billion (or less) and a minimum of 200 employees, at least 1% of net revenue must be funneled into R&D. Business outwith both of these categories, meanwhile, must commit 2% of their revenue to R&D to be eligible. 

In addition, all such hi-tech enterprises must employ a minimum ratio of R&D-related employees who have graduated from local higher education institutions in order to be eligible. For enterprises with a total capital of VND6 trillion and 3,000 employees or more, this must equate to at least 1% of the total workforce. In the case of enterprises with total capital of VND100 billion and 200 employees or more, the figure must be at least 2.5%. Enterprises not falling into either category must maintain a 5% level. Complicating things still further, employment of such graduate workers is capped at 30% of the total workforce. 

The new arrangements are supplementary to those outlined in the earlier Decree No. 13/2019/ND-CP, which detailed exemptions or reductions from land rental charges; a maximum of four years of full tax exemptions (followed by 50% tax break for the following nine years); concessions on import and export duties; a variety of credit incentives; financial support from national science and technology development funds; and free-of-charge use of National Laboratory equipment. 

Full details of the new arrangements can be found in Decision No.10/2021/QD-TTg, which will become effective from 30 April. At that point, it will be deemed to supersede the currently prevailing Decision No.19/2015/QD-TTg.