Vietnam Issues Decision 29 on Special Investment Incentives

Posted by Written by Dezan Shira & Associates Reading Time: 3 minutes

Vietnam issued Decision 29/2021/QD-TTg (Decision 29) on special investment incentives on investment projects as per the Law on Investment. Decision 29 was issued on October 6 by the Prime Minister and covers corporate income tax exemptions as well as land and water surface rent reductions.

Projects eligible for special incentives

We highlight the important aspects below.

Eligible investment projects include:

Group A.) New investment projects, innovation centers, R&D centers with a total investment capital of VND 3 trillion (US$131 million) or more and release at least VND 1 trillion (US$43 million) within three years from the issuance date of the investment registration certificate (IRC),

Group B.)Investment projects in special preferential sectors with total investment capital of VND 30 trillion (US$1.3 billion) or more, and release at least VND 10 trillion (US$439 million) within three years of the IRC issuance date.

Special investment incentives Decree 29

The special investment applies to both new and expansion of investment projects.

Investment projects that are eligible must be defined as per the high-tech criteria specific in Article 20 of Decree No 31/2021/ND-CP (Decree 31).

Decree 29 details the list of criteria in line with Decree 31; these are described below:

  • Level 1 high-tech project are those which are involved in high-tech application, R&D production of high-tech products, and which satisfies the following three conditions:
    • At least 70 percent of total annual net revenue derived from hi-tech products;
    • Total expense for R&D activities over gross revenue less the input expense of every year of the project is at least 0.5 percent; and
    • Ratio of employees directly conducting R&D to the total number of employees in investment projects is 1 percent.
  • Level 2 high project are those that are involved high-tech application R&D and production of high-tech projects, and which satisfies the following conditions:
    • At least 80 percent of total annual net revenue derived from high-tech products;
    • Total expense for R&D activities over gross revenue less the input expense of every year of the project is at least 1 percent; and
    • Ratio of employees involved in R&D compared to the total number of employees in investment projects is 2 percent.

Vietnamese businesses participating in supply chains in Level 1 of the high-tech project need to meet the following two conditions:

  • Out of the total number of businesses participating and involved in contracts for assembly, supply of components, materials, and services to produce products, Vietnamese businesses should account for 30 percent to 40 percent.
  • At least 30 percent of the cost is created by Vietnamese businesses participating in supply chains.

Vietnamese businesses participating in supply chains in Level 2 of the high-tech project need to meet the following two conditions:

  • Out of the total number of businesses participating and involved in contracts for assembly, supply of components, materials, and services to produce products, Vietnamese businesses should account for more than 40 percent.
  • At least 40 percent of the cost is created by Vietnamese businesses participating in supply chains.

As per the Decree, value add is the cost of all goods and services minus expenses paid to foreign parties with a certificate of origin in Vietnam

The Ministry of Planning and Investment (MPI) plans to review the investment scheme after five years of implementation and adjust the program if necessary.

Business upbeat, incentives likely to foster high-tech growth

Businesses seem upbeat and believe the new regulation will help promote investment. In addition, the special investment incentives will help meet commitments under several free trade agreements such as the EU-Vietnam free trade agreement (EVFTA). Investment under the EVFTA is expected to further European high-tech innovation and investment in line with Vietnam’s high-tech push and developing a digital economy.


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Vietnam Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in HanoiHo Chi Minh City, and Da Nang. Readers may write to vietnam@dezshira.com for more support on doing business in Vietnam.

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