Tax incentives for enterprises investing in priority sectors constitute an important policy instrument aimed at attracting capital and promoting the development of key industries. However, the application of such incentives must strictly comply with statutory conditions and prescribed time limits in order to avoid legal risks and potential tax reassessment.

I. Current situation regarding tax incentives for enterprises investing in priority sectors

At present, tax incentives for enterprises investing in priority sectors have attracted significant attention due to their direct impact on investment costs and efficiency.

In practice, however, many enterprises encounter difficulties in correctly identifying priority sectors, determining eligibility conditions, and properly applying tax incentives in accordance with the law. As a result, enterprises may face risks of tax arrears, retroactive tax collection, or revocation of incentives already applied.

II. Concept of Tax Incentives for businesses investing in priority sectors

Tax incentives for enterprises investing in priority sectors represent one of the State’s key policies aimed at encouraging investment in industries and sectors that play an important role in promoting socio-economic development, technological innovation, and sustainable growth.

1. What are tax incentives for enterprises investing in priority sectors?

Tax incentives for enterprises investing in priority sectors are special tax policies promulgated by the State to encourage enterprises to invest in sectors, industries, and projects designated as development priorities. Pursuant to Article 12 of the Corporate Income Tax Law 2025 (“CIT Law 2025”), enterprises implementing investment projects in such sectors and satisfying statutory conditions may be entitled to corporate income tax exemptions or reductions, preferential tax rates, or other tax incentives for a specified period, which are more favorable than ordinary tax regulations.

Under Clause 2, Article 12 of the CIT Law 2025 (as amended and supplemented by Clause 7, Article 25 of the High Technology Law 2025), tax incentives are commonly applied to projects such as high-technology investment, research and development, production of prioritized products, clean energy, and other industries classified as priority sectors under investment and tax laws. The objective is to promote investment in sectors with substantial impacts on socio-economic development and national technological advancement.

2. What forms of tax incentives are available to enterprises investing in priority sectors?

Pursuant to Clause 2, Article 14 of the Investment Law 2025 (effective from 1 March 2026), businesses investing in priority sectors may be entitled to the following tax-related investment incentives:

  • Corporate income tax incentives, including the application of preferential tax rates lower than the standard rate for a certain period or throughout the project’s duration; tax exemptions, tax reductions, and other incentives in accordance with corporate income tax regulations.
  • Import duty exemptions for goods imported to form fixed assets; raw materials, supplies, and components imported for production in accordance with export and import duty laws.
  • Exemptions or reductions of land use fees, land rental fees, and land use tax in accordance with land law and relevant tax regulations.
  • Accelerated depreciation and increased deductible expenses when determining taxable income, thereby reducing tax liabilities during the initial investment and operation phases.

Accordingly, current law recognizes four (04) principal forms of tax-related investment incentives aimed at reducing costs and encouraging enterprises to invest in sectors prioritized by the State.

3. Objectives of tax incentive policies for priority sectors

Tax incentive policies for priority sectors are promulgated to encourage business to invest in industries and sectors aligned with State development orientations, thereby promoting sustainable economic growth. Specifically, these policies aim to:

  • Attract and direct investment capital into key sectors essential to socio-economic development, science and technology, environmental protection, and social welfare.
  • Reduce initial investment costs and tax burdens, enabling enterprises to stabilize operations and enhance investment efficiency.
  • Encourage technological innovation, enhance competitiveness, promote clean production, high-tech manufacturing, and sustainable development.
  • Create employment, increase income for workers, and contribute to the development of disadvantaged regions through selective incentive policies.

In conclusion, tax incentives serve as an important economic regulatory tool of the State, supporting business while ensuring the achievement of long-term economic development objectives.

III. Legal Provisions governing tax incentives for enterprises investing in priority sectors

The current legal framework provides relatively comprehensive and detailed regulations on eligibility conditions, scope, and methods for applying tax incentives to enterprises investing in priority sectors, ensuring that such policies are implemented for the correct beneficiaries and in line with policy objectives.

1. Which sectors are classified as priority investment sectors under current law?

Current legislation specifies priority investment sectors in Appendix II of the List of Investment Incentive Industries and Trades promulgated together with Decree No. 31/2021/NĐ-CP, as amended and supplemented by Decree No. 239/2025/NĐ-CP and related decrees (effective from 3 September 2025).

Priority investment sectors are categorized into two main groups: sectors entitled to special investment incentives and sectors entitled to investment incentives, including the following representative groups:

  • High technology, digital technology, and supporting industrie
    e.g: Application of high technology; production of high-tech products and semiconductor chips; production of software and key digital technology products.
  • Agriculture
    e.g: Cultivation and processing of agricultural, forestry, and aquatic products; breeding and development of plant and animal varieties; large timber plantation forestry and development of non-timber forest products.
  • Environmental protection and infrastructure development
    e.g: Waste collection, treatment, and recycling; renewable and clean energy production; investment in and operation of industrial parks and high-tech parks.
  • Culture, social affairs, healthcare, education, and sports
    e.g: Construction of social housing; production of pharmaceuticals, vaccines, and medical biological products; investment in educational institutions, vocational training, and high-tech human resource development.
  • Science and technology, materials production, and manufacturing industries (investment incentive group)
    e.g: Research and development (R&D); production of energy-saving products; production of non-fired construction materials and environmentally friendly materials.
  • Other incentive sectors under socio-economic development policies
    e.g: Innovative start-up investment; activities of people’s credit funds; investment in distribution chains and support facilities for small and medium-sized enterprises.

Accordingly, enterprises investing in the above-listed sectors are eligible for consideration for tax incentives and other investment incentives in accordance with law.

2. How are corporate income tax incentives applied to business investing in priority sectors?

Enterprises investing in priority sectors are entitled to corporate income tax incentives pursuant to Article 18 of the CIT Law 2025 and Article 23 of Decree No. 320/2025/NĐ-CP, as follows:

  • Conditions for application: Enterprises must satisfy incentive conditions based on incentive sectors, incentive locations, or new investment projects. Where enterprises engage in multiple business activities, they must separately account for incentivized and non-incentivized income; otherwise, incentivized income shall be determined based on the proportion of corresponding revenue or costs.
  • Incentive rates and forms: Enterprises may enjoy preferential tax rates (15% or 17%), tax exemptions, or tax reductions for specified periods depending on project type, sector, and location. If the same income qualifies for multiple incentives, enterprises may select the most favorable incentive but may not change the incentive criteria during the remaining incentive period.
  • Location-based incentives: Enterprises with projects in incentive locations may enjoy incentives for income derived from products manufactured outside such locations, except for commercial and service activities, which are incentivized only for income generated within the incentive location.
  • Commencement and inheritance of incentives: Enterprises may apply incentives in accordance with regulations effective at the time of investment approval or may opt for newly issued incentives (if more favorable) for the remaining incentive period from the 2025 tax year. In cases of merger, consolidation, division, separation, or conversion, tax incentives may be inherited if eligibility conditions continue to be satisfied.
  • Scope of incentivized income: Income eligible for tax exemption or reduction in agriculture, forestry, fisheries, and salt production includes income from liquidation of products, scraps, and by-products. Income from capital transfer, real estate transfer, mineral extraction, oil and gas exploitation, online gaming, and goods subject to special consumption tax is not eligible for preferential tax rates.
  • Compliance throughout the incentive period: If an enterprise fails to satisfy incentive conditions in any tax period, it shall not be entitled to incentives for that period and shall apply the standard corporate income tax rate of 20%.

Accordingly, enterprises investing in priority sectors are not only entitled to preferential corporate income tax rates but may also enjoy tax exemptions and reductions over extended periods; however, they must strictly satisfy the statutory conditions regarding business lines, incentive locations, investment projects, and accounting obligations in accordance with applicable law.

3. Duration of tax incentives for enterprises investing in priority sectors

The duration of tax incentives is mainly governed by Articles 13 and 14 of the CIT Law 2025, as guided by Decree No. 320/2025/NĐ-CP, with the following key provisions:

  • Preferential tax rates:
    + 10% for 15 years for income from new investment projects in specially incentivized sectors, projects in highly incentivized locations, high-tech parks, high-tech agricultural zones, and economic zones.
    + 17% for 10 years for new investment projects in incentivized sectors or locations.
    + Certain special cases may apply stable tax rates of 10% or 15% throughout the project’s operational period.
  • Commencement of incentive period: The preferential tax rate period commences from the first year in which the new investment project generates revenue. Where incentive certificates are granted after revenue generation, the incentive period commences from the year of certification.
  • Tax exemption and reduction periods:
    + Up to 4 years of tax exemption and up to 9 subsequent years of 50% tax reduction for projects subject to the 10% rate.
    + Up to 2 years of tax exemption and up to 4 subsequent years of 50% tax reduction for projects subject to the 17% rate.
  • Extension of incentive period: For large-scale projects with significant socio-economic impact, the Prime Minister may decide to extend the preferential tax rate period, provided that the total extension does not exceed 15 years and does not exceed the project duration.
  • Expanded investment projects: Additional income from expanded investment may enjoy incentives for the remaining period of the existing project or be treated as a new investment project if statutory conditions are met.

4. Cases of termination or revocation of tax incentives

Pursuant to Clause 5, Article 18 of the CIT Law 2025 and Article 23 of Decree No. 320/2025/NĐ-CP, tax incentives shall be terminated or revoked if enterprises no longer fully satisfy statutory incentive conditions. In such cases, competent authorities shall retrospectively collect the incentivized tax amounts and impose penalties in accordance with tax laws.

IV. Questions regarding Tax Incentives for Enterprises Investing in Priority Sectors

In practice, businesses often face difficulties in applying tax incentive policies due to complex and frequently updated regulations. The following are common issues of concern:

1. Legal risks when applying tax incentives

Enterprises must be cautious of failing to meet incentive conditions related to sectors, locations, or investment criteria, which may result in tax reassessment and penalties. Other risks include improper accounting, incorrect tax rates, incorrect incentive periods, or improper incentive selection.

2. Application of incentives for businesses operating in multiple sectors

Tax incentives apply only to income derived from priority sectors. Enterprises must separately account for incentivized and non-incentivized income or determine incentivized income based on proportional revenue or costs.

3. Requirement to register with tax authorities

Enterprises may be required to register with tax authorities to determine the commencement of the incentive period, particularly when revenue is generated in the first year for less than 12 months.

4. Effect of changes in business lines

Changes in business lines do not automatically terminate tax incentives, provided that eligibility conditions remain satisfied. Otherwise, incentives shall cease for non-compliant tax periods.

5. Effect of changes in production technology

Changes in technology do not automatically result in the loss of tax incentives unless such changes cause the enterprise to no longer satisfy statutory incentive conditions.

V. Why should Enterprises seek Legal Advice from NPLaw when facing issues related to Tax Incentives for Investment in Priority Sectors?

Tax incentives for priority sector investments are governed by multiple laws and guiding regulations with stringent eligibility requirements. NPLaw’s experienced tax and investment lawyers assist enterprises in accurately identifying eligibility conditions, assessing project compliance, guiding accounting and tax declarations, and resolving issues with tax authorities. Early legal consultation enables enterprises to fully and lawfully benefit from tax incentives while minimizing risks of reassessment, penalties, or revocation.

The above information is provided for reference purposes only. For detailed advice on specific cases, please contact NPLaw for professional consultation.