Brian Jeffrey
The Ministry of Finance has suggested tax breaks for corporate income across 14 income categories, targeting crucial areas such as research, technological advancement, vocational training, and social services.
A draft decree for implementing Vietnam’s Corporate Income Tax Law is currently available for public review. This draft specifies the types of income that can receive tax exemptions, highlighting critical sectors like agriculture, innovation, education, and public welfare projects.
According to the proposal, earnings derived from scientific research, technology development, innovation, and digital transformation activities may qualify for corporate income tax exemptions for a duration of up to three years. This includes revenue from products created with newly introduced technologies in Vietnam and from products in experimental production stages, both regulated and unregulated, per existing laws.
More precisely, income from contracts involving scientific research, technological improvement, and digital innovation—aligned with applicable science and technology laws—is eligible for exemptions during the contract period, limited to three years from the initial taxable income occurrence.
To be eligible for these tax exemptions, certain criteria must be satisfied: a registered certification for research, innovation, and digital transformation activities, and endorsement of the contract by an authorized body to confirm the involvement in these designated activities.
Income from sales of products made with newly introduced technologies in Vietnam will also be tax-exempt for up to three years, starting from when revenue is first recorded. The recognized technologies must be validated as novel applications within Vietnam by a relevant authority.
Furthermore, income from the sales of products produced in experimental stages—whether in controlled or uncontrolled environments—can qualify for a tax exemption for up to three years, provided these experimental products receive the necessary certifications from relevant authorities.
The draft additionally suggests tax exemptions for donations or grants aimed at supporting education, culture, arts, charity, humanitarian activities, and other social projects in Vietnam. This encompasses funding from both local and international businesses, as well as individuals, dedicated to research, technology development, innovation, and digital transition initiatives.
Grants received directly from the state budget or from government-established investment support funds will also be exempt from taxes, as will compensations issued by the state under applicable legal frameworks.
Organizations eligible to receive these benefits must be legally registered and comply with Vietnamese regulations. Related enterprises are required to adhere to the regulations set by the Tax Administration Law.
Grants for scientific research, innovation, and digital transformation must follow the relevant laws concerning science and technology, innovation, and the digital sector. State budget support must be aligned with Vietnam’s budgetary regulations, and state compensation is governed by the Law on State Compensation Liability.
The investment support funds mentioned in the draft are those created and managed pursuant to Decree No. 182, issued on December 31, 2024.
If any business misappropriates tax-exempt donations or grants, they will face retroactive tax collection and penalties in accordance with legal provisions.
