On 31 December 2024, the Vietnamese Government issued Decree No. 182/2024/ND-CP (“Decree 182”) on establishment, management, and utilisation of the Investment Support Fund (“ISF”), to provide financial support to high-tech enterprises and investment projects. This, along with other incentive policies, has demonstrated Vietnam’s strong commitment to attracting strategic investments, accelerating digital transformation, and positioning itself as a leading hub for cutting-edge industries.
Decree 182 takes effect on 31 December 2024 and applies from the 2024 fiscal year onward.
Some key highlights of Decree 182 are as below:
1. Principles for ISF support application
The provision of ISF support under Decree 182 must be conducted in alignment with the following core principles:
- The ISF offers two types of financial support: support for annual costs, and support for initial investment costs. Eligible enterprises may select only one of these options.
- Enterprises with investment projects lawfully established both before and after the effective date of Decree 182 are eligible to apply for cost support under the ISF.
- Enterprises may receive ISF support for various annual cost items, provided that the relevant conditions for each cost item are met. However, if an enterprise qualifies for both ISF support and other government funds or supports for a specific cost item, it may only choose one source of support, unless otherwise stipulated by the Government or determined by the Prime Minister.
- Cost support is provided in Vietnamese Dong and is available for a maximum of five years, unless an extension is granted by the Prime Minister.
- Funds received from the ISF are not subject to corporate income tax.
- Enterprises must self-declare and take full responsibility for the legality, accuracy, and truthfulness of all data, information, and content in their applications for cost support.
- Enterprises must reimburse cost support received from the ISF, together with interest and a 10% penalty if they (i) fail to meet the conditions prescribed under the laws, (ii) have received other funds or supports from the Government for the same cost item, or (iii) fabricate documents, use illegal documents, or provide inaccurate declarations that result in receiving a higher support amount than their actual entitlement.
2. Method of cost supportThe ISF provides cost support in the form of direct cash grants for eligible items, including:
- Human resource (HR) training and development costs;
- Research and development (R&D) costs;
- Fixed asset investment costs;
- High-tech product manufacturing costs;
- Social infrastructure investment costs; and
- Other costs as determined by the Government.
3. Eligible enterprisesThe ISF extends financial support to the following types of enterprises:
- High-tech enterprises;
- Enterprises with investment projects for manufacturing high-tech products;
- Enterprises with high-tech application projects; and
- Enterprises with investment projects for R&D centers.
4. Support for annual costs
Conditions for receiving annual cost support
List of breakthrough high technologies and high-tech products prioritised for research and development
As mentioned above, enterprises investing in technologies or products that fall within the List of breakthrough high technologies and high-tech products prioritised for research and development (“Breakthrough List”) shall not be subject to minimum investment capital and revenue thresholds for annual cost support. This Breakthrough List, however, has not yet been issued by the Prime Minister, and is highly anticipated in the near future.In the meantime, enterprises may refer to Decision No. 38/2020/QD-TTg dated 30 December 2020 (“Decision 38”), which outlines the lists of high technologies and high-tech products prioritised for investment and development, as a useful reference to have a general understanding of the types of high technologies and high-tech products that may be included in the Breakthrough List. For example, Decision 38 prioritises technologies and products related to AI, IoT, big data, blockchain, cloud computing, etc.
Support level
5. Support for initial investment costs
R&D center investment projects within the semiconductor and AI industries may qualify for financial support covering up to 50% of their initial investment costs, provided the conditions set forth under Decree 182 are met.
6. Timeline for application submissionEnterprises seeking financial support from the ISF must submit their applications before 10 July of the year following the fiscal year for which support is requested.
Key takeaways for investors
Timeline for application submission: To receive financial support for the fiscal year of 2024, enterprises must submit applications before 10 July 2025.
Eligibility and types of cost support: Enterprises should assess their eligibility under Decree 182 and identify the types of cost support available to them. For annual cost support, since each cost item can receive funding from only one source, enterprises should carefully review their current incentive policies (if any), and evaluate the benefits of ISF support under Decree 182 in comparison to other government support programs.
Stay updated on regulations: Given Vietnam's ambitions to position itself as a leader in high-tech development, relevant regulations may be further developed. Investors are well advised to promptly monitor legislative updates to ensure streamlined compliance and make informed investment decisions.
Disclaimer: This Legal Update is intended to provide updates on the Laws for information purposes only, and should not be used or interpreted as our advice for business purposes. LNT & Partners shall not be liable for any use or application of the information for any business purpose. For further clarification or advice from the Legal Update, please consult our lawyers: Ms Ho My Ky Tan at kytan.ho@lntpartners.com
List of breakthrough high technologies and high-tech products prioritised for research and development
As mentioned above, enterprises investing in technologies or products that fall within the List of breakthrough high technologies and high-tech products prioritised for research and development (“Breakthrough List”) shall not be subject to minimum investment capital and revenue thresholds for annual cost support. This Breakthrough List, however, has not yet been issued by the Prime Minister, and is highly anticipated in the near future.In the meantime, enterprises may refer to Decision No. 38/2020/QD-TTg dated 30 December 2020 (“Decision 38”), which outlines the lists of high technologies and high-tech products prioritised for investment and development, as a useful reference to have a general understanding of the types of high technologies and high-tech products that may be included in the Breakthrough List. For example, Decision 38 prioritises technologies and products related to AI, IoT, big data, blockchain, cloud computing, etc.
Support level
5. Support for initial investment costs
R&D center investment projects within the semiconductor and AI industries may qualify for financial support covering up to 50% of their initial investment costs, provided the conditions set forth under Decree 182 are met.
6. Timeline for application submissionEnterprises seeking financial support from the ISF must submit their applications before 10 July of the year following the fiscal year for which support is requested.
Key takeaways for investors
Timeline for application submission: To receive financial support for the fiscal year of 2024, enterprises must submit applications before 10 July 2025.
Eligibility and types of cost support: Enterprises should assess their eligibility under Decree 182 and identify the types of cost support available to them. For annual cost support, since each cost item can receive funding from only one source, enterprises should carefully review their current incentive policies (if any), and evaluate the benefits of ISF support under Decree 182 in comparison to other government support programs.
Stay updated on regulations: Given Vietnam's ambitions to position itself as a leader in high-tech development, relevant regulations may be further developed. Investors are well advised to promptly monitor legislative updates to ensure streamlined compliance and make informed investment decisions.
Disclaimer: This Legal Update is intended to provide updates on the Laws for information purposes only, and should not be used or interpreted as our advice for business purposes. LNT & Partners shall not be liable for any use or application of the information for any business purpose. For further clarification or advice from the Legal Update, please consult our lawyers: Ms Ho My Ky Tan at kytan.ho@lntpartners.com
