The Ministry of Science and Technology is currently soliciting feedback on a draft circular stipulating criteria for identifying electronics manufacturing enterprises eligible for corporate income tax incentives.
Specifically, Article 3 of the draft stipulates that, to qualify for corporate income tax incentives, enterprises undertaking electronics manufacturing projects must simultaneously meet conditions related to revenue, R&D capacity, and investment levels for innovation.
First, revenue from electronics manufacturing activities must account for at least 70% of the enterprise's total revenue.
Regarding research and development capacity, enterprises are required to maintain an R&D department with an appropriate number of personnel.
Another important criterion is the level of investment in scientific research, technology development, and innovation activities. The total expenditure for these activities must reach a minimum of 3% of average net revenue over the three preceding financial years. If an enterprise has been operating for less than three years, the average will be calculated over the entire operating period since establishment, but not less than one full financial year.
For foreign-invested enterprises (FIEs) to be eligible for corporate income tax incentives, they must meet similar criteria applicable to domestic enterprises. However, if an FIE fails to meet one of the two criteria regarding R&D personnel or investment expenditure for scientific research, technology development, and innovation activities, it may still be considered if it satisfies one of the two following additional conditions:
First, the enterprise transfers technology to at least one Vietnamese enterprise within 5 years from the date of issuance of its Investment Registration Certificate, Investment Policy Decision, or a written agreement from a competent authority.
Second, the enterprise, with a Vietnamese enterprise participating in its production value chain, simultaneously meets two requirements: (i) 20% to 30% of the enterprises in the chain are Vietnamese enterprises fulfilling contracts for assembly, supply of raw materials, components, materials, or services directly serving the project; and (ii) at least 20% of the product cost of the project must be generated by Vietnamese enterprises participating in the value chain.