I. Legal basis

• Law on Corporate Income Tax, Law No. 14/2008/QH12 (amended in 2013, 2014, 2020, and 2025);
• Law on Value–Added Tax 2024, Law No. 48/2024/QH15;
• Decree No. 218/2013/ND–CP, as amended by Decree No. 12/2015/ND–CP and Decree No. 57/2021/ND–CP;
• Law on Export and Import Duties 2016, Law No. 107/2016/QH13;
• Decree No. 134/2016/ND–CP, as amended by Decree No. 18/2021/ND–CP;
• Decree No. 70/2025/ND–CP;
• Decree No. 31/2021/NĐ–CP amended by Decree No. 239/2025/NĐ-CP
• Circular No. 32/2025/TT–BTC;
• Land Law 2013 and Decree No. 46/2014/ND–CP on land rent and water surface lease.

II. Types of Tax Incentives for FDI Enterprises

2.1. Corporate Income Tax (CIT)

– Standard tax rate: 20%;

– Preferential tax rates and tax exemptions/reductions:

• 10%, 15%, 17% for the entire duration of operation; depending on investment field, incentives area, types of projects.
• 10% for 15 years (extendable up to 30 years in scope of several majors; 4 years of tax exemption, followed by a 50% reduction of payable tax for the subsequent 9 years; 
• 2 years of tax exemption, followed by a 50% reduction of payable tax for the subsequent 4 years;
• Tax incentives for expansion investment;
• Special investment incentives.

2.2. Value–Added Tax (VAT)

– Application of a 0% tax rate for exported goods and services;

– VAT refund for investment projects meeting the conditions for tax refund;

– FDI enterprises declare and pay taxes in the same manner as domestic enterprises.

2.3. Import Tax Incentives

– Exemption from import tax on fixed assets: machinery and equipment imported to create fixed assets; raw materials and components not yet produced domestically;

– Exemption from import tax on raw materials for 5 years.

2.4. Land Use Fee and Land Rent Incentives

– Exemption from land use fees: Exemption from land use fees when converting land for the construction of worker housing;

– Exemption/reduction of land rent: 11–15 years of exemption, followed by a 50% reduction for 5–7 years depending on investment field, incentives area, types of projects.

– 50% exemption/reduction: 5 years of exemption, followed by a 50% reduction for 10 years.

2.5. Non–Agricultural Land Use Tax Incentives

– Tax exemption: Projects located in particularly difficult areas; especially incentivized sectors;

– Enterprises employing 20–50% of their workforce as war invalids or sick soldiers.

2.6. Foreign Contractor Tax (FCT)

– FDI enterprises withhold and pay Foreign Contractor Tax on behalf of foreign organizations without a permanent establishment in Vietnam.

2.7. Transfer Pricing – Related Transactions

– FDI enterprises are required to declare related–party transactions and comply with the arm’s length principle.

– Prepare transfer pricing documentation and submit a country–by–country profit report if applicable.

– Request the application of an Advance Pricing Agreement (APA) on the method of determining taxable prices.

2.8. Global Minimum Tax (applicable from 2024)

– Apply a minimum tax rate of 15% to multinational corporations with consolidated revenues exceeding EUR 750 million in at least 2 of the 4 consecutive years preceding the fiscal year under review.

–Apply two provisions:

• The Qualified Domestic Minimum Top–Up Tax (QDMTT) applies to multinational corporations with production and business activities in Vietnam;
• The Income Inclusion Rule (IIR) applies to Vietnamese corporations with outbound investments.

2.9.  Double Taxation Avoidance Agreement (DTAA)

FDI enterprises in Vietnam may apply Double Taxation Avoidance Agreements (DTAAs) to obtain tax exemptions, reductions, or refunds (CIT, PIT), provided they meet the conditions stipulated in the Agreements and Vietnamese domestic law.

III. Conditions for FDI Enterprises in Vietnam to qualify for Tax Incentives

Not all FDI enterprises investing in Vietnam automatically qualify for tax incentives. Pursuant to the Investment Law 2020 and its guiding documents (Decree No. 31/2021/ND–CP, Circular No. 78/2014/TT–BTC, Circular No. 96/2015/TT–BTC, etc.), in order to be eligible for tax exemptions, reductions, or preferential tax rates, enterprises must fully satisfy the following conditions:

3.1. Sectors eligible for incentives

The project must fall within the list of preferential or specially incentivized investment sectors, including: high technology, supporting industries, clean energy, software production, environmental protection, high–tech agriculture, and education – healthcare – sports – culture (socialized sectors).

The specific list is stipulated in Appendix II – List of Preferential Investment Sectors attached to Decree No. 31/2021/ND–CP.

3.2. Incentive areas

Tax incentives apply if the investment project is located in:

– High–tech zones or economic zones;

– Areas with difficult or particularly difficult socio–economic conditions.

The list of eligible areas is provided in Appendix III of Decree No. 31/2021/ND–CP.

3.3. Procedure for registering Incentives

– FDI enterprises must register for tax incentives at the time of submitting the Investment Registration Certificate (IRC) application.

– If the registration is not made at the outset, the tax authorities may not recognize the incentives later, even if the project is eligible.

– The dossier for registering tax incentives must clearly specify the sector, location, capital scale, number of employees, etc., to substantiate the eligibility requirements.

3.4. Maintain the conditions throughout the incentive period

After being granted tax incentives, FDI enterprises must maintain the criteria (capital scale, technology, number of employees, revenue) throughout the entire incentive period.

In the event of a violation (e.g., changing the business sector to one no longer included in the list of incentives, failing to meet high–tech criteria, not achieving the required capital scale or disbursement on time, etc.), the incentives shall be revoked, and the enterprise shall be required to pay taxes at the standard rate, together with late payment interest.

Thus, to qualify for FDI tax incentives in Vietnam, enterprises must ensure four key factors: correct sector – correct location – timely registration – continuous compliance. These are often overlooked by many foreign investors, resulting in the loss of tax benefits.

IV. Procedures for registering and applying FDI Tax Incentives

To benefit from tax incentive policies, FDI enterprises must not only meet the sector and location requirements but also fully comply with the legal procedures. The basic process is as follows:

Step 1. Identify the business sector and investment location

Enterprises must verify whether the project falls within the list of preferential or specially incentivized investment sectors (Appendix II of Decree No. 31/2021/ND–CP). At the same time, they must check whether the project location is in a difficult or particularly difficult area (Appendix III of Decree No. 31/2021/ND–CP) or within a high–tech zone or economic zone as prescribed by the Government.

Step 2. Register the incentives in the investment application dossier

When submitting the application for the Investment Registration Certificate (IRC), enterprises must clearly state their request to benefit from tax incentives. If this step is omitted, the opportunity to subsequently claim the incentives after the IRC has been granted will be very limited.

Step 3. File periodic tax declarations

Enterprises must declare tax incentives in their annual tax filings in accordance with the guidelines of the Ministry of Finance. This serves as the basis for the tax authorities to calculate the applicable incentives.

Step 4. Finalization and inspection

Each year, the tax authorities may conduct inspections to determine whether the enterprise continues to meet the conditions for incentives. If violations are detected (e.g., failing to meet high–tech standards, project delays, or misuse of duty–free imported goods), the incentives shall be revoked, and the enterprise may be subject to tax recovery.

This process ensures that only FDI projects aligning with the State’s development orientation are eligible to benefit from the incentive policies.

V. Conclusion

The tax incentive policy for FDI enterprises in Vietnam in 2025 continues to reflect a selective investment attraction strategy, prioritizing high–tech sectors, innovation, and sustainable development. The incentive system is relatively comprehensive, covering corporate income tax (CIT), value–added tax (VAT), import duties, land use fees and land rents, as well as incentives under Double Taxation Avoidance Agreements (DTAAs) and the global minimum tax mechanism. However, to benefit from these incentives, FDI enterprises must fully satisfy the conditions regarding sector, location, registration procedures, and consistently maintain the required criteria throughout their operations.

In practice, many FDI projects lose their entitlement to incentives due to failure to register at the stage of applying for the Investment Registration Certificate (IRC) or inability to demonstrate compliance with the incentive standards as required by tax and investment laws. Therefore, enterprises must meticulously prepare their dossiers, accurately determine the scope of incentives to which they are entitled, and fully comply with all declaration and reporting obligations throughout the operation of the project.

Thorough understanding and proper implementation of tax incentive regulations not only help optimize investment costs but also ensure legal compliance, minimize the risk of tax recovery, and provide a stable foundation for long–term business operations in Vietnam.

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