Understanding Vietnam’s Decree No. 13/2019/ND-CP: A Boost for Science and Technology Enterprises
The Vietnamese government introduced Decree No. 13/2019/ND-CP (“Decree 13”), which targets the promotion and support of scientific and technological enterprises. This legislation provides a range of incentives including corporate tax cuts, credit incentives, and reductions in land and water surface lease fees. Effective as of March 20, 2019, this decree aims to foster innovation and development within the country’s tech landscape.
The Landscape of Scientific and Technological Enterprises
As of now, Vietnam boasts over 380 certified science and technology enterprises, with an additional 43 considered high-tech. There are numerous other firms that qualify as scientific and technological enterprises but have yet to receive their official certifications. These certificates not only validate their status but also lay the groundwork for accessing various incentives and supportive policies.
Defining Scientific and Technological Results
The results of scientific and technological activities can encompass a variety of outputs, including:
- Inventions and Utility Solutions: This includes industrial designs, integrated circuit designs, and specific plant varieties that are protected under Vietnam’s intellectual property laws or recognized through international agreements.
- Agricultural Innovations: New livestock breeds, plant varieties, and aquatic species recognized by the Ministry of Agriculture and Rural Development also fall under this category.
- Award-winning Research: Any research tasks receiving accolades from competent state agencies bolster a firm’s claim to scientific and technological results.
- Competency Confirmations: Results that are certified or recognized by relevant authorities further solidify an enterprise’s innovative credentials.
- Technology Transfers: Any certified technology transfers can also constitute scientific advancements.
Comprehensive Incentives for Enterprises
Corporate Tax Benefits
One of the most attractive incentives offered by Decree 13 pertains to corporate taxes. Income generated from developing or selling products through research and development (R&D) activities can see significant tax reductions. Specifically, scientific and technological firms may enjoy a four-year tax exemption, followed by a 50% reduction over the next nine years. To qualify for these tax benefits, at least 30% of a firm’s total turnover must be derived from its scientific and technological projects.
Reduced Land and Water Surface Fees
Scientific and technological enterprises benefit from exemptions or reductions in land and water surface lease fees, as determined by the Department of Science and Technology. This financial relief is crucial for startups and established firms looking to minimize operational costs.
Accessible Credit Incentives
Projects centered on R&D of technological products can access State investment credits. Additionally, companies equipped with mortgages are eligible for preferential loans, which can have interest rates slashed by up to 50% from commercial banks. This essential financial support allows firms to explore innovative avenues without the heavy burden of high-interest loans.
Support for Government-Funded Projects
Companies involved in projects financed by the National Technological Innovation Fund or the Science and Technology Development Fund can also secure preferential interest rates or loan guarantees when borrowing from commercial banks. Similar support extends to feasible scientific and technological development ventures, which may receive favorable loans from relevant national funds.
Import and Export Tax Incentives
Decree 13 also includes provisions for tax incentives relating to imports and exports, thereby facilitating smoother operations for R&D, production, and other business endeavors in the scientific and technological sphere.
Additional Support Mechanisms
Beyond the financial incentives, enterprises engaged in scientific and technological research are prioritized for using national laboratories and government-owned research facilities without incurring fees. They only need to cover costs for raw materials necessary for their R&D activities. Furthermore, when registering land use rights and property ownership, these enterprises are exempt from registration fees, promoting easier establishment and growth.
The framework established by Decree 13 serves as a vital support system for the science and technology landscape in Vietnam, reflecting the government’s commitment to nurturing innovation and creating a vibrant business environment for emerging technological firms.