The Vietnamese Government has issued a decree creating more favourable conditions for the development of businesses operating in the field of science and technology.
Under the decree which takes effect from March 20, these businesses will enjoy preferential treatment such as corporate tax cuts and exemptions, cuts in land and water surface lease fees and credit incentives, the Government news portal baochinhphu.vn reported on Wednesday.
Incentives for science and technology businesses
Income generated from the development or sale of products derived from research and development (R&D) conducted by scientific and technological firms, will get corporate tax reduction and exemption, similar to new investment projects engaged in R&D.
Enterprises will be exempted from corporate tax for four years and get a reduction of 50 percent for the following nine years. However, to be entitled to tax incentives for the fiscal year, enterprises need to ensure that their scientific and technological projects account for at least 30 percent of the total turnover.
Land and water surface fees
According to Decree 13, scientific and technological firms are entitled to an exemption or reduction in their land and water surface lease fees, which will be determined by the Department of Science and Technology.
Projects investing in products derived from a firm’s scientific R&D will be provided with State investment credit.
Scientific and technological companies with mortgages will now have access to preferential loans with a maximum reduction of 50 percent in interest rates from commercial banks.
Projects funded by the National Technological Innovation Fund and Science and Technology Development Fund of the ministries and government agencies are entitled to loans with preferential interest rates or guarantees to borrow capital from commercial banks.
For feasible scientific and technological development projects, enterprises will get preferential loans from the National Fund for Technological Renewal and the fund for scientific and technological development of the Ministry of Science and Technology and other relevant ministries.
Import and export taxes
Scientific and technological firms are also entitled to import/export tax incentives for R&D, production, and other business activities.
Additional government support
In addition to incentives, scientific and technological enterprises will also get priority and will not be charged any fees for using equipment and facilities at the national laboratories, government-owned research and technology facilities, and technology incubators.
They only need to pay for the raw materials purchased required to carry out the R&D activities. During the registration of land use rights and house ownership rights, the enterprises are exempted from the registration fees as well.
Decree 13 provides detailed instructions on the process for obtaining a s “Scientific/Technology Enterprise Certification.” With this certification businesses can take advantage of the strong government incentives in Vietnam.
The new decree enters into effect on March 20, 2019. Decree 13 should encourage high-tech companies to consider relocating not only their manufacturing activities to Vietnam, but more research and development functions also.