Vietnam free zones
Since 2003, Healy Consultants Group PLC assist our Clients with setting up their business in Vietnam industrial zones (IZs) to benefit from reduced taxes and enjoy other numerous Government investment incentives. Vietnam industrial zones are ultimate spots for foreign entities looking to set up manufacturing companies in Southeast Asia with intent to distribute their products globally.
Benefits of setting up in a free zone
Vietnam currently runs over 250 industrial and export processing zones established throughout the country within key economic zones namely i) the Northern Vietnam Key Economic Region (NVKER), ii) Southern Key Economic Zone (SKEZ), iii) Central Vietnam Key Economic Region (CVKER) and iv) Mekong River Delta Economic Zone (MeKEZ). Please find below additional general information on their benefits.
- Our Clients setting up in the Vietnamese industrial zones will enjoy tax benefits including:
- Reduced corporate income tax at the rate of 10% for up to 15 years;
- 50% tax reduction on personal income for foreign and local employees;
- Corporate income tax exemption for up to 4 years for approved projects;
- 50% corporate income tax reduction for up to 9 years following expiry of exemption period.
- Other Government incentives enjoyed within the free zones include:
- Reduced income tax rate of 10% for up to 30 years for high-tech projects;
- Reduced tax rate of 10% for socialized projects like health and education applicable throughout the life of the project;
- 5 years tax holiday for importation of raw materials for manufacturing within the IZs;
- Exemption from VAT and excise tax for goods imported, processed or manufactured within the IZs.
- Trading companies will benefit from an industrial zone registration because:
- Companies may benefit from tariff cuts on goods traded within the ASEAN region;
- Government support in infrastructure development in areas with difficult socio-economic conditions;
- Exemption from land rental fees and access to preferential grants from the government;
- Access to abundant cheap labor with the current minimum wage ranging from US$96-US$138 per month.
The major industrial zones in Vietnam
- Vietnam Singapore industrial park (VSIP)
- Established in 1996 by both Governments of Vietnam and Singapore, VSIP is a world-class industrial park that was named the “Best Industrial Developer 2013” by UK’s Euromoney magazine;
- VSIP has projects located in both the Southern (Bac Ninh, Hai Phong) and Northern (Binh Duong) Vietnam;
- VSIP’s success has been accredited to i) the attractive investment environment, ii) transparent and liberal management framework and iii) strategic positioning;
- The industrial park welcomes investments in the areas of automotive components, electronics, pharmaceuticals and consumer goods.
- Phuoc Dong industrial park (PDIP)
- PDIP is a modern and innovative, environmentally-oriented manufacturing and commercial park located between Go Dau and Trang Bang Districts;
- The industrial zone welcomes investments from business sectors including logistics and supporting services, bio-fuel, construction materials, steel components and textile industry.
- Hiep Phuoc industrial park (HPIP)
- Hiep Phuoc industrial park was established in 2007 and is located in Nha Be District, Ho Chi Minh City;
- HPIP offers over 4,000ha of industrial land together with ready-built factory for rent;
- This free zone has access to modern road and sea transportation infrastructure suitable for export activities;
- The zone welcomes investments in sectors including leather processing, building materials, mechanics and chemicals.
- Dinh Vu – Cat Hai economic zone
- Dinh Vu-Cat Hai economic zone is a key Vietnamese coastal free zone located in Hai Phong city, covering an area of 22,540ha;
- This free zone offers businesses opportunities for investment in electronic and telecommunication, machinery, electrical and science equipment and chemical industries.
Table comparing different free zones in Vietnam
|Summary at a glance||VSIP Binh Duong||HPIP||PDIP||Dinh Vu – Cat Hai|
|Average annual industrial space rent per 1000 sqm||US$26,500||US$31,200||US$35,000||US$29,000|
|Company incorporation time||12 weeks||12 weeks||12 weeks||12 weeks|
|How long to open company bank account||4 weeks||4 weeks||4 weeks||4 weeks|
|Quality of utilities||Excellent||Good||Good||Excellent|
|Allowed to sign sales contracts with Vietnamese Clients||Yes||Yes||Yes||Yes|
|Allowed to invoice Vietnamese Clients||Yes||Yes||Yes||Yes|
|Corporate tax payable in Vietnam||Dependent on activity||Dependent on activity||Dependent on activity||Dependent on activity|
|Corporate bank account||HSBC||HSBC||HSBC||HSBC|
|Physical office space required||Yes||Yes||Yes||Yes|
|Industrial space availability||Many||Limited||Many||Many|
|Allowed to import raw material?||Yes||Yes||Yes||Yes|
|Allowed to export goods?||Yes||Yes||Yes||Yes|
|Wholly foreign owned||Yes||Yes||Yes||Yes|
|Can the entity hire expatriate staff in Vietnam||Yes||Yes||Yes||Yes|
|Minimum number of directors||1||1||1||1|
|Minimum number of shareholders||2||2||2||2|
|Tax registration certificate required||Yes||Yes||Yes||Yes|
|Individual shareholders allowed||Yes||Yes||Yes||Yes|
|Corporate shareholders allowed||Yes||Yes||Yes||Yes|
|Public register of shareholders and directors||Yes||Yes||Yes||Yes|
|LLC company allowed||Yes||Yes||Yes||Yes|
|Can apply for immigration visas||Yes||Yes||Yes||Yes|
|Annual audited financial statements||Yes||Yes||Yes||Yes|
|Annual tax return to be submitted||Yes||Yes||Yes||Yes|
Frequently asked questions
What is the difference between a Vietnam development zone and a Vietnam free trade zone?None, both correspond to Vietnam free trade zones (also known as economic free zones in Vietnam). Different free trade zones in Vietnam will offer different advantages, but this has nothing to do with their appellation. Healy Consultants can provide additional information to our Clients interested by Vietnam free zone company formation.
What type of business entity is usually incorporated in Vietnam free zones?Free zone companies in Vietnam are usually setup as LLCs, although it is also possible to use PLCs for such purpose.