30 April, 2018
With technology playing an increasingly crucial role in modern life, many countries are turning to the high-tech park model to promote science and technology and attract domestic and overseas investment. High-tech parks are strategically planned hubs connecting research and development activities with high-tech manufacturing and information-based services like software development, and often provide additional amenities like training centers and housing. These parks typically offer many incentives to companies to attract investment projects.
Vietnam established its first high-tech park, Hoa Lac Hi-Tech Park, in Hanoi in 1998, followed by Saigon Hi-Tech Park in Ho Chi Minh City in 2002. To push the development of science and technology in the Central region, a third high-tech park was established in Da Nang in 2010. Earlier this year, the Government of Vietnam issued Decree No. 04/2018/ND-CP on incentive regulations and policies for Da Nang Hi-Tech Park, which took effect on February 20, 2018. The new decree provides the following incentives, among others:
- Incentives on corporate income tax (CIT): Companies operating new projects will be exempt from CIT for the first four years, then will enjoy a 50% reduction of the payable tax for the next nine years. A CIT rate of 10% will be applicable for 15 years (the normal CIT rate for outside enterprises is 20%); large projects valued at more than VND 3 trillion (USD 133 million) will enjoy such 10% CIT rate for 30 years.
- Incentives on import duty: An exemption from import duty will be applied for the first five years for raw materials and accessories that cannot be domestically produced.
- Incentives on land rental: Many high-tech projects are eligible for free land rental for the entire term of the investment project, and will only be required to pay construction costs, utilities, and other disbursements. For other projects, such as those related to training and logistics, the land rental exemption will be applied for an initial infrastructure construction period of up to three years. After such time, the projects may continue enjoying land-rent exemption for the next 15 or 19 years. In addition, Danang Hi-Tech Park will offer certain special projects an exemption from or a 50% reduction of the infrastructure use fee for the first two years of operation.
- Other incentives: Companies with projects in the park will be given assistance in immigration procedures, housing for foreign expats, connecting with high-quality labor resources from top universities in Vietnam, and loan funding from local banks. The management board also provides a transparent one-stop administrative procedure to the projects located in the park.
Currently, there are 10 projects operating in Da Nang Hi-Tech Park, three of which are Japanese wholly invested projects and seven of which are projects of domestic investors.
The new decree is expected to attract both domestic and overseas investors in high-tech industries, aiming to improve the economic development in Central Vietnam as well as to promote the efficiency and competiveness of high-tech goods and services in Vietnam.
For further information, please contact:
Thomas J. Treutler, Partner, Tilleke & Gibbins