Vietnam Free Zone and the Benefits Offered for Businesses

Foreign individuals and entities are flocking to Vietnam’s economic free zones in recent years, looking to form their manufacturing companies and enjoy the tax benefits for the distribution and export of their products. There are significant industrial zones in Vietnam, and they have emerged as important hubs for different industries, ranging from light to heavy. Here is a comprehensive guide.

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Free Zones in Vietnam

VSIP (Vietnam-Singapore Industrial Park)

This industrial park was built in 1996 and is known as one of the best world-class industrial parks. VSIP has industrial parks in 6 provinces throughout Vietnam, including Quang Ngai, Hai Duong, Nghe An, Hai Phong, Binh Dinh & Bac Ninh.

Electronics, automotive components, consumer products, and medicines are some of the major investment projects in VSIP.

HPIP (Hiep Phuoc Industrial Park)

This industrial park is located in Ho Chi Minh City’s Nha Be District. Over 4,000 hectares of industrial property, HPIP contains ready-built facilities. Due to its proximity to Ho Chi Minh City, Vietnam’s financial center, as well as its sophisticated road system, export operations are thriving in this industrial zone.

PDIP (Phuoc Dong Industrial Park)

Also known as PDIP this industrial park is situated between Trang Bang district and Go Dau district, this free zone is considered one of the most innovative and environmentally focused commercial and manufacturing parks in Vietnam.

PDIP’s major investment industries are biofuel, steel components, logistics, support services, construction materials, and textiles.

The Economic Zone of Dinh Vu-Cat Hai

This 22,540-hectare industrial zone is an essential coastal free zone in Vietnam strategically located in Hai Phong. The main industries in this free zone are machinery, electronics, and communications, chemical, scientific, and electrical equipment.

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Reasons to Set up a Business in Vietnam Free Zone

Setting up a company in the right Vietnam free zone can serve as a strategic advantage for businesses in the long run. Currently, Vietnam has 250 industrial and export processing zones in four major economic zones: Southern Key Economic Zone (SKEZ), Central Key Economic Zone (CKEZ), Northern Key Economic Zone (NKEZ), and Mekong River Delta Economic Zone (MeKEZ).

Below are the reasons why foreign entrepreneurs establish their firms in free zones in Vietnam:

Reap the Tax Benefits

Companies can enjoy reduced corporate income tax with a tax rate of 10% for a maximum of 15 years
Foreign and local employees are eligible for a 50% reduction in personal income tax
Approved projects are exempted from corporate income tax for a maximum of 4 years

Enjoy Additional Government Incentives

High-technology projects have a 10% income tax rate reduction for a maximum of 30 years
Socialized projects such as education and health are qualified for a 10% reduced tax rate throughout the entire project
Imported, manufactured, or processed goods within the industrial zones are exempted from value-added tax (VAT) and excise tax
Raw materials imported for manufacturing in Vietnam industrial zones are eligible for a 5-year tax holiday

More Benefits for Trading Companies

Tariff cuts are applicable for company with goods traded in the ASEAN regions
Areas with difficult socio-economic conditions get support from the government for their infrastructure development
Companies can have access to the government’s preferential grants and are exempted from land rental fees
Easy accessibility to low-cost labor with US$96 to US$138 monthly minimum wage

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