Conditions for high-tech enterprise recognition and investment incentives in Vietnam

Over the past decade, Vietnam has firmly established itself as a premier destination for foreign direct investment (FDI), actively transitioning its economic paradigm from labor-intensive assembly to advanced, knowledge-based, and innovation-driven manufacturing. To facilitate this transition, the Vietnamese Government has introduced a comprehensive legal framework aimed at promoting the digital economy, supporting green technologies, and encouraging investment in strategic sectors, including artificial intelligence, advanced energy storage, and semiconductor manufacturing.

This guide provides a comprehensive overview of the statutory requirements for obtaining recognition as a high-tech enterprise under Vietnamese law and the principal investment incentives available to qualifying enterprises. It is based on the latest legislative framework, including the Law on High Technology 2025, the Law on Investment 2025, the Law on Corporate Income Tax 2025, and their implementing regulations, including Decree No. 260/2026/ND-CP and Decree No. 320/2025/ND-CP.

The legal article is intended to assist investors, corporate executives, compliance professionals, and legal practitioners in understanding the legal framework governing high-tech enterprise recognition in Vietnam. It also outlines key considerations for maintaining regulatory compliance and structuring investments to benefit from the incentives available under Vietnamese law

LEGAL CLASSIFICATION OF ENTERPRISES IN THE HIGH-TECH SECTOR

Vietnamese law classifies enterprises operating in the high-technology sector into several categories for the purpose of determining the applicable regulatory framework and investment incentives. As each category is subject to different statutory requirements and incentive regimes, identifying the appropriate classification is an important preliminary step for investors.

1. High-Tech Product Manufacturing Enterprise

A High-Tech Product Manufacturing Enterprise is an enterprise engaged primarily in the manufacture of high-tech products or the provision of high-tech services. This category generally applies to manufacturing enterprises that employ high technologies in their production processes but are not required to undertake substantial research and development (R&D) activities in Vietnam.

2. High-Tech Enterprise

A High-Tech Enterprise is an enterprise that manufactures high-tech products or provides high-tech services while also conducting R&D activities. Under the Law on High Technology 2025 and Decree No. 260/2026/ND-CP, High-Tech Enterprises are classified into two groups based on prescribed quantitative criteria.

(i) High-Tech Enterprise Group 1.

Group 1 applies to enterprises that satisfy the highest statutory thresholds for R&D investment, R&D personnel, and domestic value creation. It includes enterprises principally engaged in R&D activities, as well as manufacturing enterprises that maintain the required localisation ratio.

(ii) High-Tech Enterprise Group 2. Group 2 applies to enterprises that satisfy the statutory requirements for high-tech manufacturing and R&D but are subject to lower thresholds for revenue, R&D expenditure, and R&D personnel than those applicable to Group 1.

3. Strategic Technology Enterprise

A Strategic Technology Enterprise is an enterprise engaged in the manufacture of strategic technology products or the provision of strategic technology services. These technologies are identified by the Government as having significant strategic importance for socio-economic development, national defence and security, or technological self-reliance.

Foreign investors should note that Article 15.6 of the Law on High Technology 2025 requires a Strategic Technology Enterprise to maintain at least 51% Vietnamese ownership. Accordingly, wholly foreign-owned enterprises are generally ineligible for this classification unless otherwise approved by the Prime Minister in exceptional cases involving strategic technologies.

STATUTORY CONDITIONS FOR RECOGNITION

To qualify as a High-Tech Product Manufacturing Enterprise or a High-Tech Enterprise, an enterprise must satisfy a series of statutory conditions prescribed under the Law on High Technology 2025 and its implementing regulations. These conditions comprise both qualitative and quantitative requirements designed to ensure that recognised enterprises make substantive contributions to technological development and innovation in Vietnam.

1. Condition 1: Technological Alignment

The core technology applied by the enterprise must fall within the List of High Technologies Prioritized for Investment and Development, as promulgated by the Prime Minister and currently set out in Appendix I of Decision No. 23/2026/QD-TTg.

The enterprise must demonstrate that its production lines and manufacturing processes involve the integrated application of the relevant high technologies, rather than merely performing conventional assembly activities. As part of the recognition process, the enterprise is required to provide technical documentation demonstrating how the technologies, machinery, and production processes collectively contribute to the manufacture of the relevant high-tech products.

2. Condition 2: Product Alignment

The products manufactured or services provided by the enterprise must be included in the List of High-Tech Products Encouraged for Development under Appendix II to Decision No. 23/2026/QD-TTg.

Compliance with this requirement should be supported by appropriate technical documentation, including product specifications, descriptions of product functions, and intended applications, demonstrating that the enterprise’s products or services fall within the relevant statutory categories.

3. Condition 3: Environmental, Energy, and Quality Standards

Pursuant to Article 15.1(b) of the Law on High Technology 2025, an enterprise must implement environmentally friendly measures, adopt energy-efficient practices, and establish an appropriate quality management system.

Such measures and systems must comply with applicable Vietnamese technical regulations and standards. Where no corresponding domestic standards have been issued, the enterprise should apply internationally recognised standards, such as ISO 9001 for quality management and ISO 14001 for environmental management.

4. Condition 4: Technology Ownership or Lawful Right of Use

This condition applies to both Group 1 and Group 2 High-Tech Enterprises. The enterprise must own, co-own, or have a lawful right to use the relevant high technology.¹

In practice, multinational enterprises operating under a contract manufacturing model often rely on technology owned by a foreign parent company or an affiliated entity. In such cases, the Vietnamese entity should establish its lawful right to use the technology through an appropriate technology transfer agreement or licensing arrangement.

Under the Law on Technology Transfer 2017 (as amended in 2025), certain technology transfers from overseas into Vietnam are subject to registration with the competent science and technology authorities.² Where registration is required, the technology transfer agreement becomes legally effective upon the issuance of a Certificate of Technology Transfer Registration.³ Accordingly, enterprises should complete the applicable technology transfer procedures before applying for high-tech enterprise recognition, as the application dossier must include documentation demonstrating compliance with the technology transfer requirements.

5. Condition 5: Quantitative Requirements (Revenue, R&D Expenditure, and R&D Personnel)

The quantitative requirements applicable to High-Tech Enterprises vary depending on the enterprise’s classification and, in certain cases, its charter capital:⁴

Revenue Ratio. Revenue generated from high-tech products must account for at least 40% of total annual net revenue for Group 1 (Research), 80% for Group 1 (Manufacturing), and 70% for Group 2. The enterprise should maintain appropriate accounting records, including its income statement (Form B02-DN), to substantiate the revenue derived from high-tech products.
R&D Expenditure Ratio. For Group 1 High-Tech Enterprises, the minimum R&D expenditure ratio is 5% for enterprises engaged in research activities and 1% for enterprises engaged in manufacturing activities. For Group 2 High-Tech Enterprises, the applicable minimum ratio depends on the enterprise’s total capital as prescribed under Decree No. 260/2026/ND-CP. Specifically, enterprises with total capital of VND 6,000 billion or more must maintain an R&D expenditure ratio of at least 0.5%, while those with total capital of VND 100 billion or more but less than VND 6,000 billion must maintain a minimum ratio of 1%.
R&D Personnel Ratio. A prescribed proportion of the enterprise’s workforce must be engaged in R&D activities, namely 50% for Group 1 (Research), 10% for Group 1 (Manufacturing), and 2.5% for Group 2. R&D personnel must hold at least a college degree, provided that employees holding only a college degree do not exceed 30% of the total R&D workforce. In addition, they must be employed under either indefinite-term employment contracts or fixed-term contracts with a minimum term of one year.

6. Condition 6: Direct R&D Activities

For certain categories of High-Tech Enterprises, particularly Group 1 enterprises engaged in research activities, the enterprise must directly conduct R&D activities in Vietnam.

In practice, contract manufacturers that primarily undertake assembly activities based on technology developed by overseas affiliates may not satisfy this requirement if they do not independently conduct substantive R&D in Vietnam. To meet this condition, the enterprise should maintain local R&D capabilities, including personnel responsible for applied research, technology decoding, testing, and continuous product improvement.

7. Condition 7: Localisation Ratio (Domestic Value Added – DVA)

To qualify as a Group 1 High-Tech Enterprise engaged in manufacturing, the enterprise must satisfy the prescribed localisation ratio, which is generally 40%, unless a higher threshold is prescribed for specific industries.

The localisation ratio is measured by the Domestic Value Added (DVA), calculated in accordance with the formula prescribed under Appendix of Decree No. 260/2026/ND-CP:

DVA = [(VR&D + VLD + VND + VKH + VIP) / GSP] × 100%

Where:

VR&D represents R&D expenditure incurred in Vietnam, including personnel, testing, certification, and technical consultancy costs directly supporting R&D activities. It excludes overseas R&D, technology acquisition costs, and R&D expenditure already recognised as intellectual property value.

VLD represents labour costs incurred in Vietnam, including salaries, mandatory insurance contributions, and training expenses, excluding costs already included in VR&D.

VND represents the value of components, materials, and technical services procured from domestic producers. Imported goods, including those purchased through domestic intermediaries, are excluded.

VKH represents depreciation of fixed assets used in Vietnam, including machinery, equipment, laboratories, and IT infrastructure.

VIP represents the value of intellectual property created and protected in Vietnam. Such value is determined based on either the cost of creation or valuation under the applicable pricing regulations and is generally capped at 15% of GSP, unless otherwise prescribed for specific high-tech or strategic technology products.

GSP represents the ex-factory value of the relevant high-tech products, excluding value-added tax and commercial discounts.

Each cost or value component may be included only once in calculating the DVA. Where a cost qualifies for more than one component, it must be allocated in accordance with the priority rules prescribed by law.

8. Condition 8: Minimum Annual R&D Expenditure

For Group 1 High-Tech Enterprises engaged in manufacturing, annual R&D expenditure incurred in Vietnam must be at least 1% of the enterprise’s net revenue after deducting the value of annual inputs, including imported and domestically procured raw materials and components used for manufacturing.⁵

INVESTMENT INCENTIVES

Upon obtaining official recognition as a High-Tech Product Manufacturing Enterprise or a High-Tech Enterprise, an enterprise may become eligible for a range of investment incentives under Vietnamese law, including preferential corporate income tax treatment, import duty exemptions, and land-related incentives.

1. Corporate Income Tax (CIT) Incentives:

Under the Law on Corporate Income Tax 2025 and Decree No. 320/2025/ND-CP, the standard corporate income tax (CIT) rate in Vietnam is 20%. Recognised high-tech enterprises may benefit from the following preferential tax regime:

High-Tech Product Manufacturing Enterprises: A preferential CIT rate of 17% for 10 years, together with a 2-year tax exemption followed by a 50% tax reduction for the subsequent 4 years, applicable to income derived from new investment projects.

Group 2 High-Tech Enterprises: A preferential CIT rate of 10% for 15 years, together with a 4-year tax exemption followed by a 50% tax reduction for the subsequent 9 years, applicable to income derived from new investment projects.

Group 1 High-Tech Enterprises: A preferential CIT rate of 10% for 25 years, together with a 4-year tax exemption followed by a 50% tax reduction for the subsequent 9 years, applicable to income derived from new investment projects.

To qualify for these incentives, the enterprise must maintain separate accounting records for income derived from the incentivised activities. Where separate accounting is not maintained, the incentivised income will be determined on a pro rata basis in accordance with the applicable tax regulations.

2. Import Duty Incentives

Under the Law on Export and Import Duties 2016 and Decree No. 134/2016/ND-CP (as amended), recognised high-tech enterprises may be eligible for import duty exemptions in the following cases:

Imported Fixed Assets: Goods imported to create fixed assets for a high-tech investment project, including machinery, equipment, production line components, and construction materials that cannot be manufactured domestically, are exempt from import duties.

Raw Materials and Components: Raw materials, supplies, and components imported for production that cannot be manufactured domestically are exempt from import duties for five years from the commencement of production.

3. Land-Related Incentives

For projects leasing land directly from the State, the Land Law 2024, the Law on Non-Agricultural Land Use Tax 2010 and Decree No. 103/2024/ND-CP provide various land-related incentives, including:

Construction Period Exemption: Enterprises are exempt from land rental during the construction period for up to three years. This incentive does not apply to expansion projects implemented on land already leased by the State.

Post-Construction Exemption: Depending on the project’s location and investment sector, land rental may continue to be exempt for a specified period. For example, projects located in areas with difficult socio-economic conditions may qualify for a 15-year exemption. Projects located in designated high-tech parks may be eligible for exemptions of 15 years, 19 years, or the entire land lease term, depending on the applicable investment incentive category.

Non-Agricultural Land Use Tax: Projects eligible for special investment incentives may be exempt from non-agricultural land use tax or entitled to a 50% reduction, subject to the applicable statutory conditions.

4. Financial, R&D incentives and Risk Acceptance Mechanism

Recognised high-tech enterprises may also benefit from a range of financial incentives designed to encourage innovation and technological development. These include:

Accelerated Depreciation: Eligible enterprises may apply accelerated depreciation to fixed assets in accordance with the applicable tax regulations.

Enhanced R&D Deduction: Eligible R&D expenditure may be deducted at up to 200% of the actual amount incurred when calculating taxable income, subject to the applicable statutory conditions.⁶

Risk Acceptance Mechanism: Under the Law on Science, Technology, and Innovation 2025, organisations conducting scientific research and experimental development may, in certain circumstances, be exempt from administrative and civil liability for financial losses or unsuccessful research outcomes, provided they have complied with the approved procedures, adhered to professional standards, and committed no intentional violations of law.

CONCLUSION

Vietnam’s legal framework provides a comprehensive regime for recognising and supporting high-tech enterprises through a range of regulatory and investment incentives. However, access to these incentives depends on an enterprise’s ability to satisfy the applicable statutory conditions and maintain ongoing compliance with the relevant legal requirements.

In particular, enterprises should ensure that their technologies and products fall within the applicable government-designated lists, maintain adequate documentation and separate accounting records where required, and comply with the applicable technology transfer requirements. Careful planning of future investments, including the distinction between new investment projects and expansion projects, is also essential to maximise the incentives available under Vietnamese law.

Given the evolving regulatory framework governing high-tech activities in Vietnam, enterprises should regularly review their compliance status and investment structure to ensure continued eligibility for the incentives available under the applicable legislation.

^{(1) Article 15.2(a) of the Law on High Technology 2025.}

^{(2) Article 31.1 of the Law on Technology Transfer 2017, as amended in 2025.}

^{(3) Article 24.3 of the Law on Technology Transfer 2017, as amended in 2025.}

^{(4) Articles 14 and 15 of Decree No. 260/2026/ND-CP.}

^{(5) Article 15.2(b) of Decree No. 260/2026/ND-CP.}

Submission date: July 20 2026

Author: Thanh Dang, Trang Pham, Nhi Nguyen

Disclaimers:

This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.

For issues related to the content or intellectual property rights of the article, please email cs@apolatlegal.vn.

Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Business and Investment and contact our team of lawyers in Vietnam via email info@apolatlegal.com.

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