Vietnam: New Incentives for Science and Technology Firms
The Vietnamese government issued Decree No.13/2019/ND-CP (“Decree 13”), which provides preferential treatment such as corporate tax cuts and exemptions, credit incentives, and exemption or reduction in land and water surface lease fees for science and technology enterprises.
Decree 13 will take effect on March 20, 2019.
Scientific and technological enterprises
Currently, Vietnam has more than 380 firms certified as science and technology enterprises, along with 43 firms considered as high-tech ones.
Several firms have met the requirements of being a science and technological enterprise but are yet to receive their certificates.
The certificates act as a basis for incentives and other support policies.
Scientific and technological results
Scientific and technological results can be defined as:
- Inventions, utility solutions, industrial designs, integrated circuits designs, or varieties of semiconductor plant that are protected in accordance with the law on intellectual property or are registered internationally in accordance with the international treaties signed by Vietnam. For computer programs, they need to register the copyright (copyright registration certificate);
- New livestock breeds, new plant varieties, new aquatic breeds, and any other technological advancement recognized by the Ministry of Agriculture and Rural Development;
- Results of any tasks that have received awards of science and technology presided over by the competent state agencies;
- Results certified and recognized by competent agencies; and
- Transferred technology is certified by a competent agency.
Income generated from the development or sale of products derived from research and development (R&D) conducted by scientific and technological firms, will get corporate tax reduction and exemption, similar to new investment projects engaged in R&D.
Enterprises will be exempted from corporate tax for four years and get a reduction of 50 percent for the following nine years.
However, to be entitled to tax incentives for the fiscal year, enterprises need to ensure that their scientific and technological projects account for at least 30 percent of the total turnover.
Land and water surface fees
According to Decree 13, scientific and technological firms are entitled to an exemption or reduction in their land and water surface lease fees, which will be determined by the Department of Science and Technology.
Projects investing in products derived from a firm’s scientific R&D will be provided with State investment credit.
Scientific and technological companies with mortgages will now have access to preferential loans with a maximum reduction of 50 percent in interest rates from commercial banks.
Projects funded by the National Technological Innovation Fund and Science and Technology Development Fund of the ministries and government agencies are entitled to loans with preferential interest rates or guarantees to borrow capital from commercial banks.
For feasible scientific and technological development projects, enterprises will get preferential loans from the National Fund for Technological Renewal and the fund for scientific and technological development of the Ministry of Science and Technology and other relevant ministries.
Import and export taxes
Scientific and technological firms are also entitled to import/export tax incentives for R&D, production, and other business activities.
In addition to incentives, scientific and technological enterprises will also get priority and will not be charged any fees for using equipment and facilities at the national laboratories, government-owned research and technology facilities, and technology incubators. They only need to pay for the raw materials purchased required to carry out the R&D activities.
During the registration of land use rights and house ownership rights, the enterprises are exempted from the registration fees as well.