At present, Vietnam has four hi-tech parks, including: Hoa Lac Hi-tech Park (Ha Noi), Ho Chi Minh City Hi-tech Park, Da Nang Hi-tech Park, and Biotechnology Hi-tech Park. Among them, the three hi-tech parks in Ha Noi, Da Nang, and Ho Chi Minh City are currently attracing the attention of many domestic and international investors and are still available for many more investors. Because of its nature as a special investment operation, investors need to research carefully before investing in hi-tech parks in order to make efficient use of the preferential treatment that Vietnam has dedicated to these areas.
1. What is a hi-tech park?
According to Clause 1 Article 31 of the Hi-tech Law 2008, a hi-tech park is a place where hi-tech research, application and development; hi-tech incubation or hi-tech enterprise incubation; hi-tech human resource training; hi-tech product manufacturing and trading; and hi-tech services are concentrated and connected.
2. Criteria for determining whether a project is eligible for investing in hi-tech parks
On 18 December 2006, the Ministry of Science and Technology of Vietnam issued the Decision No. 27/2006/QĐ-BKHCN on the issue of “Regulations on criteria for determining project for manufacturing hi-tech products” which applies to investment in Hoa Lac Hi-tech Park and Ho Chi Minh City Hi-tech Park, in that, these projects selected for investment in hi-tech parks must meet the following criteria:
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No. |
Criteria |
Content |
|---|---|---|
|
1 |
Field of project |
Must belong to the hi-tech fields eligible for investment incentives. Currently, the Prime Minister’s Decision No. 38/2020/QĐ-TTg dated 30 December 2020 provides a list of hi-tech fields for which investments incentive are granted and a list of hi-tech products for which development incentive are granted (“Decision 38/2020/QĐ-TTg”), in which the project’s field operation must belong to the list of hi-tech fields for which investment incentives are granted in this Decision. |
|
2 |
Products of project |
The products of the project to be manufactured in hi-tech parks must belong to the list of hi-tech products that are to be encouraged to be manufactured. The products of the project must belong to the list of hi-tech products for which development incentives are granted in Decision 38/2020/QĐ-TTg. |
|
3 |
R&D budget of the project |
The total budget for R&D conducted in Vietnam must be not less than 5% the total annual revenue or the amount spent on R&D operations in Vietnam must be not less than 1% of the total annual revenue. The content of total budget on R&D and the contents of the amount spent on R&D operations are regulated in Annex 1 attached to Decision 38/2020/QĐ-TTg. |
|
4 |
Labor force directly involved in the project |
At least 5% of the total number of employees in the project must have a higher education and be directly involved in R&D. |
|
5 |
Technical line of the project |
The technical of the project line must reach advanced levels, ensuring these conditions: specialization in line production and organized for automation, with at least 1/3 (one third) of the number of automated devices controlled by programs; set up in a working environment that meets the standards of industrial hygiene according to Vietnamese law. |
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6 |
Quality control system of the project |
The project’s quality control system must meet specialized international standrads (such as ISO 9000/2001, CMM, GMP, etc); it must use a computerise quality control system. |
|
7 |
Technical environmental standards and regulations |
The project must comply with Vietnamese laws on environmental technical standards and regulations in the project's area of operation. Encourage projects to comply with international environmental standards such as ISO 14000 or equivalent. |
Note: For projects investing in Da Nang Hi-tech Park, the criteria for these projects are set out in the list of criteria for investment projects attached to Decision No. 58/QĐ-BQL dated 26 February 2019 of the Chief of Da Nang Hi-tech Park and Industrial Zones Authority[1].
3. Preferential treatment for projects in hi-tech parks
Currently, investment in hi-tech parks is considered to be an investmen in areas with particurlaly difficult socio-economic conditions[2]. Therefore, when investing in hi-tech parks, investors may enjoy these preferences:
3.1 Preferential land lease
Pursuant to Decree No. 35/2017/NĐ-CP, dated 03 April 2017, on the collection of payment for the use of land, rent, rent for the water surface in economic zones, hi-tech parks (“Decree 35/2017/NĐ-CP”), investors in projects investing in hi-tech parks may be exempted from or reduce the rent as follows[3]:
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Full duration rental exemption |
|
|
1 |
Land for transport and technical infrastructure, land with trees, land with water surfaces, and public parks, according to approved general zoning plans and territorial zoning plans. |
|
2 |
Land for the construction of career projects of public non-business entities. |
|
3 |
Land for the construction of training facilities for hi-tech workforce according to regulations of the Hi-tech Law. |
|
4 |
Land for housing projects for experts, leased employees when working in hi-tech parks in accordance with zoning plans approved by the relevant of the State authorities. |
|
5 |
Projects included in the List of Special Preferential Investment Fields (excluding investment hi-tech parks, infrastructure construction, business projects) |
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Exemption from rent during basic building duration |
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|
1 |
Exemption from rent during basic building duration but not exceeding the total of 03 years since the issue of the approval of land renting decision (excluding restoration investment building and expansion of manufacturing, business facilities) |
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Exemption from rent after the period of exemption from rent during basic building duration |
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|
1 |
15 years with investment projects not belonging to the List of special preferential investment fields; investment projects building, business of hi-tech parks infrstructure. |
|
2 |
19 years with investment projects belonging to the List of special preferential investment fields. |
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If organizations, individuals renting land for manufacture and business temporarily shut down investment projects because of force majeure, then they are exempt from rent in the duration of temporary shutdown |
|
3.2 Preferential treatment of corporate income tax
When investing in hi-tech parks, investors may enjoy preference on corporate income tax as followed[4]:
|
No. |
Forms of preference |
Content |
|
1 |
Preferential tax rate |
Preferential tax rate of 10% for fifteen years |
|
2 |
Tax exemption |
Tax exemption for four years |
|
3 |
Tax reduction |
Reduce 50% of the amount of tax in the next nine years |
3.3 Preferential treatment of import tax
According to Decree 134/2016/NĐ-CP dated 01 September 2016, detailed provisions on some provisons and execuation of the Law on Export, Import tax (“Decree 134/2016/NĐ-CP”), when investing in hi-tech parks, investors can enjoy preference on goods import tax as followed[5]:
|
No. |
Content |
|
1 |
Exemption from import tax on goods for the creation of fixed assets |
|
2 |
Exemption from import tax on ingredients, materials, parts for 05 years |
3.4 Preference on the exit of investors, entry of a country
Foreign investors, individuals or legal representatives of foreign organizations, investing in Vietnam will be issued a DDT1 visa when investing in hi-tech parks, which is currently one of the longest-term visa (maximum of not more than 05 years). In addition, according to Clause 1 Article 6 Decision 53/2004/QĐ-TTg date 05 April 2004 of the Prime Minister, the visa issued to investors can be used many times over.
4. Special preferential policies for each hi-tech park
In addition to the incentives provided for in the legal documents, each high-tech park offers different incentives to its investors.
4.1 Ho Chi Minh City Hi-tech Park
Investors enjoy a 0% tax rate of tax on import and value-added tax on hi-tech products and soft preferences such as priority in cooperation, ordering, usage of research equipment and personnel of the Hi-tech Park research and development center; training courses on technical English, soft skills, technical skills with preferential fees at the Hi-tech Parks training center; assitance in the accessing of preferential loans for the development of science and technology in Ho Chi Minh City[6].
4.2 Da Nang Hi-tech Park
For Da Nang Hi-tech Park, in addition to the preferential treatment for infrastructure use payment regulated in Article 10 of Decree 04/2018/NĐ-CP dated 04 January 2018 provisions on the mechanism, preferential policy for Da Nang Hi-tech Park. Investors also enjoy the import tax exemption on materials, scientific documents directly used for scientific research, technology development, technology incubation, science and technology enterprise incubation, technology reform in hi-tech parks[7]. In addition, new investment projects in Da Nang Hi-tech Park with a capital of at least VND 3.000 billion will enjoin a preferential tax rate of 10% for 30 years. This is one of the special preferences of Da Nang Hi-tech Park compared to the general provisions of hi-tech parks.
4.3 Hoa Lac Hi-tech Park
Meanwhile, Hoa Lac Hi-tech Park has preferences focused on tax and policy for employees. In particular, the Ha Noi People’s Committee prioritizes the distribution of land funds for housing for employees working in hi-tech parks. The State provides incentivizes and supports organizations, individuals who invest in the building and development of houses (including technical infrastructure, social infrastructure, and houses)[8]. Hoa Lac Hi-tech Park also intends to allow the use of the APEC business card byVietnamese businessmen/businesswomen working in enterprises established in accordance with the Law on Enterprise and the Law on Investment and operating in hi-tech parks; to issue work permits through an expedited procedure to Vietnameses living abroad, foreign experts working in hi-tech parks, as approved by the Ministry of Labor – War Invalids and Social Affairs. If the income of enterprises from new investment projects in Hoa Lac Hi-tech Park reaches the scale of investment capital of at least VND 4.000 billion, then a tax rate of 10% will be applied for 30 years. This is one of the special preferences of Hoa Lac Hi-tech Park compared to the general provisions of hi-tech parks. In addition, many other special preferences are regulated in Decree 74/2017/NĐ-CP dated 20 June 2017, provisions on the mechanism, special policy of Hoa Lac Hi-tech Park.
In conclusion, it can be said that investment in hi-tech parks is currently receiving much attention and preference from both the State as well as the local government of each municipality with hi-tech parks. However, as there are differences, in the preferences of investors as well as the forms of preferences of each hi-tech park, investors should carefully research before deciding to invest in hi-tech parks to ensure the maximum of utilization of the advantages brought forth by hi-tech parks. In the near future, the Government plans to issue a Decree on hi-tech parks, which will guide the Hi-tech Law 2008 and replace Decree 99/2003/NĐ-CP date 28 August 2003 on the issue of provisions on hi-tech parks, will usher in the unification of regulations on hi-tech parks, as well as, create clearer mechanisms for investment in hi-tech parks.
[1] Refer to https://dhpiza.danang.gov.vn/chi-tiet-tin-tuc?dinhdanh=7201&cat=401, access date 14 June 2023.
[2] Clause 2, Clause 3 Article 16 Law on Investment 2020; Annex III on List of preferential invest territories attached to Decree 31/2021/NĐ-CP date 26 March 2021, detailed provisions and guidance on the execution of some provisions of Law on Investment.
[3] Clause 2, Clause 3 Article 14 Decree 35/2017/NĐ-CP.
[4] Point a Clause 1 Article 19, Point a Clause 1 Article 20 Circular 78/2014/TT-BTC date 18/6/2014 guidance on the execution of Decree No. 218/2013/NĐ-CP date 26/12/2013 of the Government provision and guidance on the execution of Law on Corporate income tax.
[5] Article 14, Article 15 Decree 134/2016/NĐ-CP, amended by Decree 18/2021/NĐ-CP date 11/3/2021.
[6] http://www.shtp.hochiminhcity.gov.vn/TinTuc/dautuvaokcnc/Pages/uudaivaloiich.aspx, last access 09/6/2023.
[7] Clause 3 Article 8 Decree 04/2018/NĐ-CP.
[8] Article 12 Decree 74/2017/NĐ-CP.
