Investment incentives and investment support in Vietnam: Key issues for foreign investors

As Vietnam’s investment legal framework continues to evolve toward greater transparency and a more selective approach, understanding the eligible beneficiaries of investment incentives, the principles for applying such incentives, and the available forms of investment support is increasingly important for foreign investors when assessing the feasibility of investment projects in Vietnam.

Keywords: investment incentives, investment support, foreign investors, Investment Support Fund, investment in Vietnam.

1. INVESTMENT INCENTIVES

1.1. Eligible Beneficiaries of Investment Incentives

Article 14.1 of the Law on Investment 2025 identifies three main categories of projects eligible for investment incentives, including: (i) projects operating in incentivized business sectors; (ii) projects implemented in incentivized geographical areas; and (iii) projects with large investment capital, significant employment generation, or projects classified as nationally important projects under Government regulations.

These provisions are further elaborated under Article 19 of Decree No. 96/2026/ND-CP, which provides a more detailed and flexible framework compared to previous regulations.

(i) Projects in incentivized or specially incentivized business sectors

Under Appendix II of Decree No. 96/2026/ND-CP, incentivized sectors are divided into two categories:

• Specially incentivized sectors (16 sectors): These mainly focus on high value-added industries such as high technology, strategic technologies, innovation, research and development (R&D), clean energy, as well as major projects and infrastructure works with significant socio-economic impact.
• Incentivized sectors: These include a broader range of industries such as science and technology, agriculture, environmental protection, infrastructure development, education, healthcare, and culture, reflecting Vietnam’s policy direction toward sustainable development and improving the competitiveness of the economy.

(ii) Projects implemented in incentivized geographical areas

Investors may also qualify for investment incentives when implementing projects in areas with difficult or exceptionally difficult socio-economic conditions in accordance with Article 22 of Decree No. 96/2026/ND-CP.

Notably, instead of applying a centralized list of incentivized areas issued by the Government as in the past, from 31 March 2026 onward, provincial People’s Committees are authorized to determine and publish incentivized investment areas down to the commune level. This reflects a more decentralized and flexible approach, allowing local authorities to tailor investment attraction policies to their actual development conditions.

(iii) Large-scale projects, labor-intensive projects, or nationally important projects

In addition to sector- and location-based incentives, certain projects may qualify for incentives based on their scale or strategic nature.

Under Decree No. 96/2026/ND-CP, this category includes projects with large investment capital (for example, projects with investment capital of VND 6 trillion or more that satisfy the statutory conditions), labor-intensive projects, high-tech enterprises, science and technology enterprises, supporting industry projects, and projects developing industrial clusters or value chains with spillover effects on manufacturing activities and global supply chains.

1.2. Principles for applying Investment Incentive

In addition to identifying whether a project is eligible for investment incentives, investors should note that such incentives are not granted automatically or without conditions. Article 20 of Decree No. 96/2026/ND-CP sets out several important principles governing the practical application of investment incentives.

Principle 1 — Combination of incentive conditions: Large-scale investment projects (with investment capital of VND 6 trillion or more and satisfying the conditions under Article 19 of Decree No. 96/2026/ND-CP) may enjoy incentive levels equivalent to projects implemented in areas with exceptionally difficult socio-economic conditions, even if the projects are not located in such areas.

Principle 2 — Enhanced incentives for projects meeting multiple conditions: Projects operating in incentivized sectors and simultaneously implemented in areas with difficult socio-economic conditions may enjoy incentive levels equivalent to those applicable to exceptionally difficult areas.

Principle 3 — Incentives applied in accordance with specialized laws: The specific incentive rates and incentive periods relating to corporate income tax are determined under the laws on corporate income tax and accounting, while land-related incentives are governed by land laws. Decree No. 96/2026/ND-CP does not itself prescribe specific incentive rates but instead refers to the relevant specialized legislation.

Principle 4 — Incentives are conditional and time-limited: Under Article 14.8 of the Law on Investment 2025, investment incentives apply only for a certain period and based on the actual performance of the project. Investors must continue satisfying the applicable conditions throughout the incentive period and are not automatically entitled to incentives for the entire project duration if those conditions are no longer met.

Principle 5 — Application of the highest available incentive level: Article 14.9 of the Law on Investment 2025 provides that where a project qualifies for multiple incentive schemes — including special investment incentives under Article 17 — the investor may choose and apply the most favorable incentive level. This principle is further reaffirmed under Article 20 of Decree No. 96/2026/ND-CP.

1.3. Forms of Investment Incentives

Article 14.2 of the Law on Investment 2025 provides several main forms of investment incentives that investors may enjoy when satisfying the statutory conditions, including:

(i) Corporate income tax incentives

This is the most common and practically significant form of investment incentive. Investors may benefit from preferential corporate income tax rates lower than the standard rate, as well as tax exemptions or tax reductions for a certain period in accordance with the laws on corporate income tax.

(ii) Import duty exemptions

Investors may be exempt from import duties on imported goods used for the creation of fixed assets, raw materials, supplies, or other eligible goods in accordance with the laws on export and import duties.

(iii) Exemptions or reductions of land-related payments

Depending on the investment sector and project location, investors may be entitled to exemptions or reductions of land use fees, land rental, or water surface rental for a certain period, thereby reducing initial investment costs and operational expenses.

(iv) Accelerated depreciation and increased deductible expenses

Through accounting and tax mechanisms, enterprises may apply accelerated depreciation methods or benefit from higher deductible expense thresholds when calculating taxable income, helping investors recover investment capital more quickly.

In addition to the ordinary investment incentives above, Article 17 of the Law on Investment 2025 also introduces a special investment incentive and support mechanism applicable to strategically important projects such as innovation centers, large-scale research and development (R&D) centers, and key digital technology projects. Under Article 21 of Decree No. 96/2026/ND-CP, these projects must satisfy certain conditions relating to investment capital and disbursement progress in order to qualify for higher levels of incentives under the applicable tax and land laws.

2. INVESTMENT SUPPORT

Under Article 14.3 of the Law on Investment 2025, forms of investment support include: (i) support for the development of technical and social infrastructure; (ii) support for training and workforce development, as well as credit support; and (iii) support for access to investment locations, science and technology support, and other support measures as provided by the Government.

Notably, the Law on Investment 2025 introduces the “Investment Support Fund” under Article 16 as a long-term and strategic support mechanism. The Fund is intended to help maintain a stable investment environment, enhance Vietnam’s competitiveness in attracting multinational corporations, strategic investors, and high-tech projects, while also supporting domestic enterprises in participating more deeply in global value chains. Matters relating to the Fund’s operational model, funding sources, and implementation mechanisms will be further regulated by the Government.

In addition, projects eligible for special investment incentives and support under Article 17 of the Law on Investment 2025 may receive investment support measures on a higher-priority basis, particularly in sectors such as innovation, research and development (R&D), strategic technologies, and digital technology.

Vietnamese law also provides investment protection mechanisms in cases where incentive policies are changed. Under Article 4 of Decree No. 96/2026/ND-CP, if a newly issued legal document adversely affects the investment incentives currently enjoyed by an investor, the investor may continue applying the previous incentives or request the application of investment guarantee measures under Article 12 of the Law on Investment 2025. This mechanism plays an important role in strengthening investor confidence and maintaining the stability of Vietnam’s investment environment.

3. CONCLUSION

Vietnam’s investment incentive and support policies are no longer aimed solely at attracting capital, but also reflect a policy direction focused on high value-added projects, technology development, innovation, and sustainable growth. With the introduction of broader incentive mechanisms under the Law on Investment 2025 and Decree No. 96/2026/ND-CP, investors now have greater opportunities to develop long-term investment strategies and optimize project efficiency in Vietnam.

In practice, however, entitlement to investment incentives is not automatic. It depends on the investor’s ability to satisfy the applicable conditions, complete the required procedures, and maintain compliance throughout the project lifecycle. Therefore, when considering investment in Vietnam, investors should:

✅ Determine whether the proposed project falls within incentivized sectors or investment incentive areas.

✅ Carefully review the conditions for applying investment incentives and investment support under the relevant laws.

✅ Assess the project’s ability to satisfy requirements relating to investment capital, disbursement progress, and operational conditions.

✅ Establish an internal compliance mechanism to ensure continued eligibility for incentives throughout the project lifecycle.

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The article is written by experts from Asia Legal – a law firm with many years of experience in mergers and acquisitions (M&A), capital markets, foreign investment, mining and energy, real estate, labor, personal data protection, and dispute resolution.

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