Other BriefingsChoosing the Right Investment Structure to Maximize Corporate Tax Incentives in Vietnam
Vietnam’s corporate income tax (CIT) incentives are generally granted to qualifying investment projects rather than to foreign investors themselves. Consequently, decisions made before an investment is licensed — including how the investment enters Vietnam, how the project is structured, and how business activities are organized — can materially influence both incentive eligibility and the project’s long-term tax position. Selecting the appropriate investment structure is not simply a regulatory requirement but one of the earliest commercial decisions foreign investors make when evaluating Vietnam.
Choosing the appropriate investment structure
Greenfield investment or acquisition?
The first structuring decision is whether the commercial benefits of acquiring an existing Vietnamese business outweigh the additional flexibility available through a new investment project. Investors intending to maximise access to Vietnam’s corporate tax incentives may find that a greenfield investment provides greater scope to align the project’s activities, location, implementation schedule, and investment scale with the statutory conditions governing preferential treatment.
An acquisition, however, may generate stronger long-term value where immediate market access, established operations, or strategic assets outweigh the incremental tax benefits potentially available through a newly approved project.
Wholly foreign-owned enterprise or joint venture?
Ownership should be determined by the commercial requirements of the investment as much as by Vietnam’s market access rules. Where full foreign ownership is permitted, a wholly foreign-owned enterprise may provide greater operational control and simplify decision-making. However, where a Vietnamese partner contributes regulated licences, established commercial relationships, sector expertise, or access to strategic assets, the additional governance complexity of a joint venture may be outweighed by the commercial advantages it brings to the investment.
Structuring the investment project for preferential tax treatment
Once the investment structure has been determined, the next decision is whether the proposed project should be designed to qualify for Vietnam’s incentive regime. Investors should assess this question before defining the project’s commercial scope because preferential corporate income tax treatment generally depends on the approved investment project’s activities rather than the investor itself.
Where the proposed operations fall within Vietnam’s encouraged sectors, such as selected manufacturing, high-technology, renewable energy, environmental protection, research and development, education, and healthcare activities. Qualifying projects may benefit from preferential corporate income tax rates below the standard 20 percent rate, together with tax-exemption and tax-reduction periods where the statutory conditions are met.
Project location is the final structuring variable. Vietnam provides different incentive packages for qualifying projects established in high-tech parks, economic zones, industrial parks, and areas classified as having difficult or especially difficult socio-economic conditions. Because location forms part of the approved investment project, investors should evaluate the applicable incentive regime before finalizing the project’s structure rather than treating site selection as a separate operational decision.
Maintaining eligibility for Vietnam’s corporate tax incentives
Securing corporate income tax incentives at the time of investment approval does not eliminate the need to consider them as the business evolves.
Because incentives are generally granted to qualifying investment projects, investors should evaluate whether material changes to the project’s approved activities, scope, location, ownership, or implementation strategy require regulatory review and how those changes may affect the continued application of the incentive regime under Vietnam’s investment framework.
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Dezan Shira & Associates advises foreign investors on investment structuring, market entry, and tax planning in Vietnam. Contact our team to discuss the most effective structure for your investment.
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