The technology industry in Vietnam is booming with numerous high-tech startups and innovations all over the country. Thanks to the support of the Government and technology development, many domestic and foreign investors are investing in establishing hi-tech enterprises in Vietnam. This article is intended to provide a brief introduction about hi-tech enterprises establishment in Vietnam.
Definition of hi-tech enterprise
According to Law on High Technologies 2008, hi-tech enterprise means an enterprise producing hi-tech products, providing hi-tech services, conducting hi-tech research and development activities.
Some of the leading hi-tech enterprises in Vietnam includes Intel, LG, Samsung, Viettel, FPT, Thegioididong and many others.
Criteria for determining high-tech enterprises
On 16 March 2021, the Prime Minister issued Decision No. 10/2021/QĐ-TTg detailing the criteria for determining high-tech enterprises. Specifically, high-tech enterprises must meet the following criteria:
(i) Producing hi-tech products which fall under the List of hi-tech products encouraged for development. For example: System, equipment, softwares, identification analysis, forecast and control system based on artificial intelligence, Biomedical processing software and information database, etc.;
(ii) Applying environnmentally-friendly, energy saving measures in production and quality management of products meeting Vietnam’s standards and technical regulations, and standards of specialized international organizations;
(iii) Revenues generated from hi-tech products must account for at least 70% of total annual net revenue of the enterprise;
(iv) Ratio of total expenses on research and development activities of enterprises over total net revenue minus annual input value:
- For enterprises with a total capital of VND 6,000 billion or more and a total number of employees of 3,000 or more (“Group A Enterprises“), this ratio must be at least 0.5%;
- For enterprises other than Group A Enterprises, with a total capital of VND 100 billion or more and a total number of employees of 200 or more (“Group B Enterprises“), this ratio must be at least 1%;
- For enterprises other than Group A Enterprises and Group B Enterprises, this ratio must be at least 2%.
(v) Ratio of employees directly conducting research and development activities having professional qualifications from college or higher in the enterprise (meaning the number of employees who have signed labor contracts with a term of 01 year or more or labor contracts with indefinite term, in which the number of employee having college level education do not exceed 30%) of the total number of employees:
- For Group A Enterprises, this ratio must be at least 1%;
- For Group B Enterprises, this ratio must be at least 2.5%;
- For enterprises other than Group A Enterprises and Group B Enterprises, this ratio must be at least 5%.
Incentives for hi-tech enterprises
Incentives on corporate income tax: According to Circular 78/2014/TT-BTC, hi-tech enterprises will be applied the following incentives for corporate income tax: Tax exemption for the first 04 years, Tax rate of 5% for the next 09 years and Tax rate of 10% in the following 02 years.
Incentives on land rental: According to Circular 333/2016/TT-BTC, hi-tech enterprises are exempt from land rental on the entire land lease term for land for construction of scientific research facilities if they satisfy relevant conditions related to scientific and technological activities (if any).
Incentives on export tax: According to Law on Export Tax and Import Tax 2016, hi-tech enterprises are exempt from import tax for 05 years from the commencement of production for raw materials, supplies and components that cannot be domestically produced and are imported for production.
Registration procedures for hi-tech enterprise
Step 1: Registration for investment project (applicable for Foreign Direct Investment enterprises);
Step 2: Registration for enterprise establishment;
Step 3: Application for issuance of Hi-tech Enterprise Certificate
- Dossier: (i) Application for hi-tech enterprise recognition, made according to a form set by the Ministry of Science and Technology; (ii) A notarized copy of the Enterprise Registration Certificate, Investment Certificate or Science and Technology Enterprise Certificate; (iii) A written explanation about the enterprise’s satisfaction of all conditions specified in Article 18.1 of the Law on High Technologies.
- Licensing authority: Ministry of Science and Technology.
- Timeline: From 35 working days from the date of receipt of the complete dossier.
Note: The content presented above is for reference only. The aforementioned content may no longer be relevant depending on the time and audience. For any detailed consultation requests, please contact LMP Lawyers.