Concept

Foreign investor means an individual with foreign nationality, an organization established under foreign law, carrying out business investment activities in accordance with the law of Vietnam. Thus, foreign investment in Vietnam is the abandonment of assets or investment capital in Vietnam by overseas investors (enterprises or individuals) in the forms set forth by law.

Rights of foreign investors when investing in Vietnam

Foreign investors, when investing directly in Vietnam, can choose different forms of investment such as establishing enterprises or contributing capital, buying shares, buying contributed capital… Therefore, when foreign investors take control of an enterprise in Vietnam, they will enjoy basic benefits for enterprises as prescribed in Article 7 of the Enterprise Law 2020.

In addition, foreign investors are also entitled to the following benefits:

• The right to recognize and protect the right to own assets, investment capital, income and other lawful rights and interests.
• The right to be guaranteed property ownership. The investor’s lawful assets shall not be nationalized or confiscated by administrative measures. Where the State purchases or requisitiones assets for reasons of national defense and security or for national interests, emergencies, natural disaster prevention and control, investors shall be paid and compensated in accordance with the provisions of law on asset requisition and requisition and other relevant laws.
• The right to transfer their assets abroad after fulfilling their financial obligations to the Vietnamese State.
• The right to equal treatment among investors; adopt policies to create favorable conditions to help investors do business and develop sustainably.
• Be granted a temporary residence card valid from three years to ten years depending on the amount invested in Vietnam.

Foreign investor obligations

• Comply with Vietnamese laws in the process of business investment.
• Ensure financial ability and investment capital contribution in accordance with the registered project schedule.
• Meet the conditions for industries requiring business investment conditions throughout the investment process.
• Declare and pay all types of financial and rental obligations as prescribed.

Investment incentives of foreign investors when investing in Vietnam

When investing in Vietnam, foreign investors will enjoy the following incentives:

Corporate income tax incentives

Apply the tax rate of 10% for 15 years, of which corporate income tax exemption for the first 4 years and 50% reduction of payable tax in the next 9 years for:

• Income of enterprises from implementing new investment projects in areas with extremely difficult socio-economic conditions, economic zones and hi-tech parks.
• Enterprise income from the implementation of investment projects in the fields of environmental protection; high technology, hi-tech agriculture; in the field of production with extremely large capital scale, turnover and employing a large number of employees in accordance with the provisions of law; belongs to the field of manufacturing supporting industrial products for high-tech industries and textile and garment industries, footwear, electronics – informatics, automobile assembly, mechanical engineering that cannot be produced domestically.
• Apply the tax rate of 10% for the entire duration of the project to the enterprise’s income from the implementation of socialization activities in the fields of education – training, vocational training, health, culture, sports, environment, judicial assessment; publishing and printing activities; income from the implementation of social housing investment – business projects for sale, lease, lease and purchase;
• For enterprises implementing new investment projects in areas with difficult socio-economic conditions; steel production, production of energy-saving products, machinery and equipment for agricultural-forestry-fishery-salt production, production and refining of animal feed, poultry and aquatic products; Development of traditional industries and implementation of new investment projects in industrial parks will enjoy a tax rate of 17% for 10 years, of which 2 years will be exempt from tax and the next 4 years will be reduced by 50% of payable tax.

Investment incentives on export and import duties

Duty exemption for goods temporarily imported, re-exported or temporarily exported or re-imported in cases prescribed by law.

Tax exemption for certain types of goods imported to create fixed assets of investment projects in domains entitled to import tax incentives or geographical areas entitled to import tax incentives, investment projects with official development assistance (ODA) capital.

In addition, foreign-invested enterprises are also considered for tax refunds and tax reductions in statutory cases.

Incentives for foreign investors in land

Incentives such as exemption from land rent, water surface lease for both lease term and land rent exemption, water surface lease for a term after the basic construction period.

Investment incentives for foreign investors for industrial parks and economic zones

Industrial parks and economic zones are 2 areas receiving investment incentives according to Article 22, Decree 35/2022/ND-CP, specifically as follows:

• Industrial parks will enjoy investment incentives when they are located in areas with difficult socio-economic conditions.
• Economic zones will enjoy investment incentives when they are located in areas with extremely difficult socio-economic conditions.
• Investors will be entitled to deduct investment costs for construction, operation, purchase and rental of houses, service works and public utilities for employees when determining taxable income.
• For investment projects on the construction of houses, service works and public utilities for employees, investors will be entitled to incentives in accordance with the law on social housing construction and other relevant regulations.

For investors having investment projects in industrial parks or economic zones supported by competent state agencies to carry out administrative procedures on investment, enterprises, land, construction, environment, labor and trade under the mechanism of “one-stop, on-site”, support on labor recruitment and other related issues during the implementation of the project.

Benefits of foreign investors when investing in Vietnam market

Foreign investors, when investing in the Vietnamese market, not only enjoy legitimate rights and benefits from the Vietnamese State but also enjoy incentives that not all markets can do. One of the reasons why Vietnam has gradually become the leading foreign investment market in Southeast Asia is because it is a country with a stable and dynamic economy and politics. 

With a favorable location along with open policies for foreign investors, it has created a young and constantly developing business environment. From the above reasons, it can be seen that Vietnam is a market that can completely meet the needs and interests of foreign investors.

Above is the content of KALF’s advice on issues related to foreign investors in Vietnam. All of our above advice opinions are based on applicable legal provisions. If you have any questions or requests about legal issues, please contact us for timely answers.