Draft Circular Sets Criteria for Vietnam Tax Incentives in Electronics

Vietnam tax incentives are at the core of a newly proposed regulation that could significantly impact the electronics manufacturing sector. The Ministry of Science and Technology (MOST) has released a draft circular outlining specific criteria that companies must meet to benefit from corporate income tax reductions. This regulatory update marks a strategic push to enhance innovation and promote domestic value chains within Vietnam’s rapidly growing digital economy.

New Regulatory Criteria for Preferential Tax Treatment

Under this draft circular, companies operating electronics manufacturing projects in Vietnam may qualify for tax incentives, provided they meet several key criteria:

Minimum Revenue Threshold

• At least 70% of the company’s revenue must come from the production of electronic devices.

R&D Capacity Requirements

• Large enterprises must maintain an R&D department with at least 10 university-educated personnel, including five Vietnamese nationals.

• Small and medium enterprises (SMEs) need at least 3 such personnel, with at least one being Vietnamese.

R&D Spending Ratio

• Companies must allocate a minimum of 3% of their average net revenue over the past three financial years to scientific research, technological development, and innovation activities.

Special Provisions for Foreign-Invested Enterprises

Foreign-invested companies must also meet the above requirements or satisfy alternative criteria, such as:

• Transferring technology to at least one Vietnamese enterprise within five years.

• Ensuring Vietnamese companies contribute 20–30% of the value chain, and account for at least 20% of the product cost.

Compliance and Reporting Obligations

Enterprises are responsible for self-verification and documentation to prove compliance. All relevant data must be submitted to the Ministry’s Department of Information Technology Industry for monitoring and validation.

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Impact Assessment

• Technical Standards? ❌ No

• Type Approval & Market Access? ✅ Yes

• Imports, Customs, Trade, or Market Surveillance? ❌ No

• Spectrum Management? ❌ No