Changes in Criteria for Determining High-tech Enterprises
A recent decision issued by the Prime Minister on the changes in criteria for determining high-tech enterprises provides more clarity on whether an entity could be deemed as a high-tech enterprise and thus be able to enjoy incentives provided under the laws of Vietnam. Some of the incentives that high-tech enterprises are eligible for include but not limited to exemption and/or reduction of income tax, import and export taxes. Decision No.10/2021/QĐ-TTg (“Decision 10”) on criteria for determining high-tech enterprises will become effective on 30 April 2021 thereby replacing decision No.19/2015/QĐ-TTg (“Decision 19”). Several salient similarities and differences between the two decisions are as follows:
| No. | Criteria | Decision 10 | Decision 19 |
| 1 | Revenue | Revenues generated from hi-tech products must account for at least 70% of the total annual net revenue of enterprises. | Revenues generated from hi-tech products must account for at least 70% of the total annual net revenue of enterprises. |
| 2 | Expenses on research and development | Percentage of expenses on research and development of enterprises (including depreciation of investment for infrastructures, fixed assets, recurrent expenditure on research and development; expenditure on training and training assistance for research and development of enterprises, science and technology organisations, training facilities in Vietnam; fees for copyrights…) over total net revenue less input value (including materials and components serving import and domestic procurement) of each year:
| Total expenses for research and development activities conducted in Vietnam must account for at least 1% of its total annual net revenue, for small-and-medium-sized enterprises, or 0.5%, for enterprises with a total capital of over VND 100 billion and more than 300 employees. |
| 3 | Worker | Percentage of workers participating in research and development having at least college-level education of enterprises over the total number of workers:
| The number of research and development staff members holding a university or higher degree must account for at least 5% of the enterprise’s total number of employees, for small and medium-sized enterprises. For enterprises with a total capital of over VND 100 billion and more than 300 employees, the number of research and development staff members holding a university or higher degree must account for at least 2.5% of the total number of employees and be not less than 15. |
If you have any questions or require any additional information, please contact Hoang Tran of ZICO Law Vietnam (a member of ZICO Law).
This alert is for general information only and is not a substitute for legal advice.