In 2004, the New Tax Law was passed in Vietnam stipulating that the income tax rates are combined into 28% for both foreign and domestic enterprises, and then Vietnam Detailed Provisions Amendment Act on Implementation of Enterprise Income Tax No. 24/ 2007/ ND-CP was implemented on 1st March, 2007. The new law stipulates: enterprises who invest in Encouraged Industrial Projects, Special Encouraged Industrial Projects, Areas with specially difficult socio-economic conditions (National Special Economic Zone included), and Areas with difficult socio-economic conditions (National Industrial Zone included) will enjoy income tax for 10 to 15 years with the tax rates of 10-20% (at the rate of 28% after preferential period), and the tax incentives of two years exempt & three years half and four years exempt & nine years half. Also the incentive tax rates set according to export ratio and mainland purchasing are abolished.
The company set up on 22 September, 2006 should adopt the new law, while the company set up before this date should be imposed on the tax rate of 28%. Therefore, the tax incentives for enterprises in Vietnam have been changed from area-based tax incentives to the tax incentives based on both industry and area, which has great influences on foreign-funded enterprises set up in National Industrial Zone or invested in the Non-National Encouraged Zone. For example, the tax rate of the export companies in the industrial zone is 10%, but it will be levied at the rate of 20% according to the new law if the products do not belong to the encouraged kind.
Foreign-funded companies are free from withholding tax when their profits are remitted overseas. Now foreign investors can set up factories in the company modes of WFOE, Incorporation Factory and Joint-Venture factory with the minimum registered capital of 100,000US$. As for the non-production company, it can be operated under the forms of Representative Office, Branch Company or Joint-Venture Company.
| Tax rate | Tax incentive period | Applicable requirements | Tax-exempt period |
| 20% | First 10 years | 1. Partnership (no area & industry restriction) | No |
| 2. Invest in National Encouraged Industrial Project (whole nation) | 2yrs exempt 6yrs reduction | ||
| 3.WFOE set up in Areas with difficult socio-economic conditions (no industry restriction, National Industrial Zone included) | 2yrs exempt 6yrs reduction | ||
| 15% | First 12 years | 1. Partnership set up in Areas with difficult socio-economic conditions (National Industrial Zone included) | No |
| 2.WFOE set up in Areas with difficult socio-economic conditions (National Industrial Zone included), belongs to National Encouraged | 3yrs exempt 7yrs reduction | ||
| 10% | First 15 years | 1. Partnership set up in Areas with specially difficult socio-economic conditions (National Export Processing Zone/ Open Economic Zone/ Port Economic Zone/ High-tech Development Zone included) | No |
| 2.WFOE set up in Areas with specially difficult socio-economic conditions (National Export Processing Zone/ Open Economic Zone | No | ||
| 3. Invest in National Encouraged Industrial Project | 4yrs exempt 9yrs reduction |
| Tax rate | Applicable areas | Locations or requirements | Exemption period |
| 10% | State Port Economic Zone |
Tay Ninh(Moc Bai)/ Quang Ninh(Mong Cai)/ Cao Bang(Da Long)/ Lang Son(Dong Dang)/ Lao Cai(Lao Cai) (5 in total) | 4yrs exempt & 9yrs reduction |
| State Open Economic Zone |
Lai Chau/Dung Cat/Nhon Hoi/Chan Mi/Quang Ngai/Van Kieu/Van Phong/Do Luong/ Nghi Son/Van Don (10 in total) | ||
| High-tech Development Zone |
Ho Chi Minh/ HaNoi(Hoa Lac)/Sai Gon (3 in total) | ||
| State Export Processing Zone |
Ho Chi Minh(Tan Thuan,Linh Trung I, Linh Trung II)/ Tay Ninh(Linh Trung III/ Hai Phong(96 Hai Phong) (5 in total) | ||
| 15% or 20% |
State Industrial Zone | Ho Chi Minh (Vinh Loc,Le Minh Xuan,Tan Binh,Tan Thoi Hiep,Tan Tao, Tay Bac, Cu Chi,Binh Chieu,Hiep Phu,Cat Lai,Phong Phu)/ Ha Noi(Sai Dong A,Sai Dong B,Dai Tu,Noi Bai,Thang Long)/ Hai Phong (Dinh Vu)/ HaiDuong (NamSach)/Bac Ninh (Tien Son,Yen Phong)/ Vinh Phuc (Kim Hoa,Thai NguYen,Tung Cong)/ Quang Ninh(Mong Cai)/ Thanh Hoa (Le Mon,Nghi An,Bac Lai)/ Thua Thien Hue (Phu Bai)/ Da Nang (HoaKhanh,LienChieu)/ Quang Nam(Dien Nam-Dien Ngoc)/ Quang Ngai (Phu Tai,Phu An, Hoa Hiep)/ Khanh Hoa (Suoi Dau)/ Binh Thuan (Phan Thiet)/ Binh Duong (Viet Huong I,Viet Huong II, Dong An,Binh Duong,Song Than I,Song Than II ,Tan Dong Hiep,Vietnam –Singapore, Tan Dong Hiep B,Tan Dong Hiep A)/ Dong Nai (Bien Hoa I,Bien Hoa II,LOTECO,Nhon Trach I,Nhon Trach II,Nhon Trach V,Nhon Trach VI,AMATA,Ho Nai,Song May,Tam Phuoc,Long Thanh,Dinh Quan,Nga Dau)/ Tay Ninh(Trang Bom)/ Ba RiaVung Tau( Phu Mi I,Dong XuYen,Mi Xu An A,MiXuAn BI)/ Long An,Cai Met (Duc Hoa I,Duc Hoa II)/ Tien Giang (Mi Tho)/ Dong Thap (Dac Lac)/ Vinh Long (Vinh Long)/ Can Tho (Tra Vinh,Hung Phu)/ Hau Giang (Bac Giang , Quang Chau) (74 in total) | 2yrs exempt 3yrs reduction & 3exempt 7yrs reduction |
Foreign own co. established before March 22, 2006 can continue to enjoy prior tax incentives until the end of preferential period, the further tax rate is 28%. (Since Jan.1, 2009, corporate income tax will be decreased from 28% to 25%)
Foreign own co. established before Jan.11, 2007, which have always enjoyed tax incentive according to export ratio, are allowed to enjoy that tax incentives continuously before 2011; after preferential period they will adopt to No.24/ 2007/ ND-CP Notice.
The preferential period of corporate income tax is divided into 10years (20%), 12 years (15%), 15 years (10%); after that the tax rate will be back to 28%.