Vietnam Corporate Tax Incentives & Decree 31: 2026 Manufacturing Guide
Vietnam’s statutory investment incentives—governed by the Law on Investment (Law No. 61/2020/QH14) and Decree No. 31/2021/ND-CP—have served as the fiscal foundation for billions in foreign direct investment. However, effective tax planning requires navigating complex qualification criteria, tax holiday trigger timelines, and the newly implemented 15% OECD Global Minimum Tax (GMT / QDMTT).
This guide details statutory Corporate Income Tax (CIT) brackets, tax holiday calculation rules, import duty exemptions, and evaluates how Vietnam’s 15-year statutory incentive ceiling compares to the Philippine CREATE MORE Act (up to 27-year lifecycle + 0% domestic VAT).
Vietnam Manufacturing Tax Incentive Categories (Decree 31)
| Investment Category | Qualifying Criteria | 100% ITH Exemption | 50% Reduction Period | Preferential Rate |
|---|---|---|---|---|
| High-Tech & R&D Projects | Semiconductor, clean energy, bio-tech, advanced electronics | 4 Years | 9 Years (5% eff.) | 10% for 15 Years |
| Extreme Socio-Economic Zones | Remote provinces (Region IV, mountainous areas) | 4 Years | 9 Years (5% eff.) | 10% for 15 Years |
| Standard Industrial Parks | Tier-1 provincial parks (Bac Ninh, Binh Duong) | 2 Years | 4 Years (8.5% eff.) | 17% for 10 Years |
| Large-Scale Mega FDI | CAPEX > $250M (12,000B VND) or 3,000+ jobs | Up to 6 Years | Up to 13 Years | Special Negotiated |
Tax Teardown: Critical Execution & Compliance Realities
Trigger Timing
The 3-Year Grace Period Rule
Vietnam’s Income Tax Holiday clock starts from the first year of taxable profit. Crucially, if an enterprise has not achieved taxable profit by the 3rd year of revenue generation, the ITH automatically commences in Year 4 regardless of profitability, requiring accurate operational ramp-up forecasting.
VAT Cash Lock-Up
Domestic Input VAT Refund Friction
While finished export goods exit at 0% VAT, domestic supply chain procurement incurs 8%–10% VAT upfront. Foreign manufacturers routinely encounter 6-to-18-month audit delays from local tax departments before receiving refunds, creating significant cash flow friction.
OECD Pillar Two
15% Global Minimum Tax Compliance
With Vietnam enacting the 15% Qualified Domestic Minimum Top-up Tax (QDMTT), multinationals with group turnover >€750M see sub-15% effective rates topped up domestically. The Vietnamese government is introducing direct investment support funds to offset the impact.
Strategic Alternative
CREATE MORE: 27 Years & 0% VAT
For companies seeking longer fiscal predictability, the Philippine CREATE MORE Act delivers up to 27 years of incentives (up to 7-year ITH + 20-year 5% SCIT) and statutory 0% VAT on local supply chains, eliminating cash lock-up entirely.
Explore Related Site Selection & Cost Intelligence
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- Vietnam Manufacturing Labor Costs, Minimum Wages & Talent Availability: 2026 Report
- Vietnam Industrial Land Lease Rates & Ready-Built Factory Rents: 2026 Index
Request an ASEAN Manufacturing Tax & Incentive Optimization Model
Evaluate statutory tax holiday schedules, QDMTT top-up liabilities, and effective tax rates across Vietnam and Philippine PEZA ecozones tailored to your capital investment scale.