Tax Incentives and Grants for Startups in Vietnam: What You Need to Know

Vietnam actively encourages innovation through tax breaks and funding programs. Startups in approved fields (high-tech, R&D, renewable energy, etc.) can qualify for significant benefits. For example, companies in designated high-tech parks may pay as little as 10% corporate income tax (CIT) for up to 15 years, and even 17% for 10 years in certain difficult regions according to taxsummaries.pwc.com. Exceptional “special investment” projects (often major R&D or manufacturing) can get an even more generous deal – 5% CIT for 37 years with up to 6 years tax holiday and 50% reduction for 13 subsequent years. In addition, the government has set targets to boost science & tech spending: by 2025 it aims to invest ~1.5% of GDP in R&D according to vietnam-briefing.com, creating more opportunities for startups in research-heavy fields. This guide covers the key incentives (tax and grants) and how startups can access them, with a focus on leveraging expert advice like LXNA’s financial consulting.

Corporate Income Tax (CIT) Incentives

Reduced Tax Rates: Vietnamese tax law grants preferential CIT rates to encouraged sectors and areas. The most common rates are 10% (for 15 years) and 17% (for 10 years) on qualifying activities according to taxsummaries.pwc.com. For instance, software companies in hi-tech parks or manufacturers of priority tech products often pay 10% CIT instead of the standard 20%. Certain social projects (education, healthcare) even enjoy 10% CIT indefinitely. After the preferential period ends, regular rates resume.

Tax Holidays: Newly established projects in high-tech zones typically get CIT exemption for the first 4 years from profit, followed by a 50% reduction for the next 9 years. Startups in designated “difficult” socio-economic areas can get 4 years free and 9 years 50% cut as well. These incentives are attractive for deep-tech startups or those setting up R&D centers in innovation hubs.

R&D and Innovation Incentives: The government provides additional benefits for research activities:

• R&D Deductions: Businesses may deduct R&D expenses above a certain threshold. Although Vietnam once offered a 150% deduction, the current policy allows companies to allocate up to 10% of pre-tax profit into a tax-deductible R&D fund. This fund, if used for innovation, is deductible from taxable income.
  
  

• Equipment and Import Exemptions: Qualifying tech projects can import machinery, raw materials, and components duty-free if they contribute to R&D or high-tech production.
  
  

• Green/Tech Innovation Incentives: Projects that reduce environmental harm can get extra tax reductions and financial grants. Startups in clean tech or biotech may tap these “green” benefits.

Upcoming Revisions: The Law on SME Support (2018) defined “innovative startups” as an official category, promising CIT incentives for them according to gvw.com. However, Vietnam’s corporate tax laws have not fully codified these yet. A revised CIT law (expected in 2025) aims to introduce reduced rates for small and innovative enterprises. In the meantime, startups use location/sector-based incentives and legal designations (e.g., registering in a Hi-Tech Park) to benefit. A financial consultant from LXNA can help startups classify their activities correctly and apply for any special registrations needed to qualify for lower tax rates.

Investment and Grants Programs

In addition to tax breaks, Vietnam offers direct funding and grants to foster startups:

• Decision 844 Funding (National Startup Ecosystem): Under a government scheme, Vietnam allocated roughly US$42 million to support 800 startup projects through 2025. The program co-finances incubators, accelerators, and venture funds, effectively granting seed money to promising tech businesses. Eligible startups in high-tech or tech-innovation fields can apply for these grants via the Ministry of Science & Technology channels.
  

• National Innovation Center (NIC): Established by Decision 1269 (2019), the NIC provides training, mentoring, and co-working space for high-tech startups. Its partners (Google, Amazon, Samsung) occasionally run funding contests and grant programs for NIC-incubated startups.
  

• National Technology Innovation Fund (NATIF): NATIF (under MOST) offers matching grants for R&D projects and patents. For example, climate-tech startups have received multi-million-dollar grants from NATIF for green innovation according to ondemandint.com. Startups working on science/tech innovations should monitor NATIF’s calls and seek co-financing.

  
  

• NATEC and Techfest Competitions: The National Agency for Tech Entrepreneurship (NATEC) organizes competitions like Techfest, often with prize money and investor matchmaking. Winning Techfest awards or joining NATEC-run mentorship can indirectly help startups access follow-on grants.

  
  

• Local Government Incentives: Some provinces (e.g., Ho Chi Minh City, Da Nang) offer local grants or subsidies for startups, including office space, networking support, or small cash grants. These vary by location and year.
  

• Vietnam Development Bank (VDB) Credit: Decree 95/2014 provides that innovative startups can access subsidized loans from the Vietnam Development Bank. The state covers part of the interest, effectively giving startups cheaper loans to fund technology projects.
  
  

To qualify for many grants, startups must meet criteria (e.g., R&D content, minimum capital, tech field). The application process can be complex, requiring solid business plans and clear technology roadmaps. LXNA Finance’s consultants can assist companies in preparing grant proposals, ensuring all required documentation and evidence of innovation are in order. Their understanding of the regulatory frameworks (like Decree 95/2014) helps startups align their projects with government priorities.

How to Leverage Incentives

• Register in the Right Category: For tax breaks, register your company as a high-tech enterprise or science & tech startup if eligible. For example, incorporating in a Hi-Tech Park or Eco-Zone automatically qualifies you for certain tax holidays. Always mention your R&D activities in tax filings to claim deductions.

  
  

• Maintain Proper Accounting: Document all R&D spending meticulously. Only qualifying expenses count, so keep detailed records (payroll for R&D staff, equipment, trial costs) to maximize deductible funds.

  
  

• Apply for R&D Fund: Each year, decide how much (up to 10% of profit) to allocate to the R&D fund. Use this fund for approved innovation projects. Failing to use the fund or violating fund-use rules can trigger tax penalties.
  

• Stay Informed: Incentive programs can change. For example, tax incentives effective in 2024 might be revised under new laws. Consulting services (like LXNA’s Shield+ regulatory compliance) can alert you to law changes and help re-file if needed.
  

• Seek Matching Grant Opportunities: If your startup is developing a cutting-edge solution, explore co-investment opportunities. Many government grants require a company contribution (e.g., matching R&D spend), so plan your budget accordingly.
  

• Combine Incentives: Don’t rely on a single incentive. For instance, a startup might get R&D tax deductions, plus a government grant, plus a preferential loan, all for the same project. Strategic planning is needed to navigate eligibility and reporting for multiple programs.
  

Vietnam’s incentives aim to reduce financial burdens and spur innovation. By leveraging tax breaks and grants, a startup can conserve cash and invest more in technology. However, compliance is critical: misuse or misreporting can result in fines or losing incentives. Therefore, many startups partner with professional advisors. LXNA Finance offers tax advisory services to ensure startups claim all eligible incentives. Their experts help file correct tax forms, set up R&D funds, and apply for grants, so founders can focus on developing their product.

Sources: Vietnam Briefing (Asia Briefing) (2023) vietnam-briefing.comvietnam-briefing.com; PwC Vietnam (2025) taxsummaries.pwc.comtaxsummaries.pwc.com; GVW (2024) gvw.com; OnDemand International (2023) ondemandint.com.