How Can Foreign Investors in Industrial Zones Benefit From Corporate Income Tax Incentives?

May 14

On Corporate Income Tax Exemption and Reduction:

(1) For foreign investors investing in industrial parks in the socialized sectors:

According to Point b, Clause 1, Article 16 of Decree No. 218/2013/ND-CP: tax exemption for 4 years and a 50% tax reduction for the following 9 years from:

The first year the project generates taxable income; or
The fourth year from the first year the project has revenue, if there is no taxable income for the previous 3 years.

(2) For foreign investors investing in industrial parks (excluding those located in areas with favorable socio-economic conditions) in other sectors:

According to Clause 3, Article 16 of Decree No. 218/2013/ND-CP as amended by Clause 6, Article 1 of Decree No. 91/2014/ND-CP: tax exemption for 2 years and a 50% tax reduction for the following 4 years from:

The first year the project generates taxable income; or
The fourth year from the first year the project has revenue, if there is no taxable income for the previous 3 years.

Note: According to Clause 4, Article 22 of Decree No. 35/2022/ND-CP:

Investment expenses for construction, operation or purchase, lease-purchase, or lease of housing, service works, and public utilities for workers in industrial zones and economic zones; infrastructure works connecting with industrial zones; and investment projects for constructing and operating infrastructure in industrial zones or functional areas in economic zones are deductible expenses when determining taxable income in accordance with the law on corporate income tax.

In addition, foreign investors investing in industrial parks may enjoy several other incentives:

(i) Land Rent Incentives

As analyzed above, when investing in industrial parks, foreign investors are entitled to policies similar to those applied in areas with difficult socio-economic conditions.

Therefore, enterprises shall be exempt from or receive reductions in land rental fees according to Clause 1, Article 110 of the 2013 Land Law.

(ii) Support in Carrying Out Administrative Procedures

According to Clause 6, Article 22 of Decree No. 35/2022/ND-CP:

Investors with investment projects in industrial zones and economic zones are supported by competent state authorities in implementing administrative procedures on investment, enterprises, land, construction, environment, labor, and trade through a "one-stop, on-site" mechanism, as well as in labor recruitment and other related matters during the implementation of the project.

(iii) Authority of the Industrial Park Management Board to Issue Investment Registration Certificates

The Industrial Park Management Board has the authority to issue, amend, and revoke Investment Registration Certificates for investment projects in industrial parks, except for cases specified in Clause 3, Article 39 of the 2020 Investment Law.

It can be seen that if a foreign investor chooses to invest in Vietnam by establishing an economic organization, the investor must first have an investment project and apply for an Investment Registration Certificate.

The fact that the Industrial Park Management Board has the authority to issue, amend, and revoke such certificates (except in the case under Clause 3, Article 39 of the Investment Law 2020) facilitates foreign investors in shortening the time required for related legal procedures.

This, in turn, can help investors save a significant amount of cost.

(iv) Enjoyment of Utility Services within the Industrial Park

Currently, utility services in industrial parks represent a promising area.

With the trend toward building a closed ecosystem within industrial parks, most industrial park developers aim to integrate production activities with utility services, fully meeting the living and convenience needs of employees and experts of enterprises.

This facilitates investors, especially foreign investors, by helping them minimize costs related to setting up utilities, while also attracting a skilled and high-quality workforce.

On What Basis Can Investors Determine and Apply Investment Incentives?

According to Article 17 of the 2020 Investment Law, investors determine and apply for investment incentives at tax authorities, financial authorities, customs authorities, and other competent agencies corresponding to the specific type of incentive, based on:

The eligible entities specified in Clause 2, Article 15 of the Investment Law 2020;
The Investment Policy Approval document (if applicable);
The Investment Registration Certificate (if applicable);
Other relevant legal provisions.

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