Scenario: a Chinese electronic-modules maker is torn between Bac Ninh and Bac Giang for a new plant. Bac Giang offers more competitive land and labor costs — but does it also bring better investment incentives? The answer lies not in the province name but in two specific questions: which encouraged sector the project belongs to, and whether the exact project site sits on the preferential-location list.
Two incentive doors: by sector and by location
Investment Law 143/2025/QH15 (effective 1 March 2026, replacing Law 61/2020/QH14) and Law 67/2025/QH15 on Corporate Income Tax (effective 1 October 2025) open two independent incentive doors: by sector (encouraged business lines) and by location (socio-economically difficult or extremely difficult areas) — both lists in Decree 31/2021/ND-CP. An electronics project in Bac Giang may walk through one or both doors, depending on its dossier.
On rates, the incentive frame includes: 10% for 15 years for high-tech and supporting-industry projects (with a 4-year holiday and 50% reduction for 9 years in the maximum package); lower preferential rates for difficult-area projects. The standard rate remains 20% — and from 1 October 2025, industrial-park location alone no longer automatically qualifies for any preferential rate.
An electronics project in Bac Giang: stackable layers
1. Sector incentives (the main door). Electronic-component and module manufacturing may fall into high-tech or supporting-industry groups — eligible for 10%/15 years with a 4-year holiday and 50% reduction for 9 years if list and scale conditions are met. This is the most valuable layer and the one needing the heaviest dossier evidence.
2. Location incentives (the side door — verify). Some Bac Giang localities may sit on the difficult/extremely difficult area list in Decree 31/2021/ND-CP. If the project’s exact site is listed, location-based incentives apply — independently of sector incentives. The list must be checked for the precise commune/district; never infer from the province name.
3. Land-rent exemption/reduction. Under Decree 103/2024/ND-CP, projects in encouraged sectors or preferential locations may be considered for time-limited land-rent exemption/reduction (including the basic-construction period). Exact terms are decided by the competent authority on the dossier — application required, never automatic.
4. Import-duty incentives and other support. Goods forming fixed assets of an incentive-eligible project may be considered for import-duty exemption; training and infrastructure support follow current programs.
When both doors open: the most-favorable-rate rule
The subtlety for Bac Giang projects: a project may simultaneously meet sector and location incentive conditions. Investment Law 143/2025/QH15 (Articles 15, 16) provides: no two incentives of the same kind at the same time — the investor chooses the most favorable. Example: if the sector track offers 10%/15 years while the location track offers a lower rate for a shorter period, compare the present value of both options per phase, pick the optimum, and record it in the registration dossier.
Different kinds of incentives — CIT, land rent, import duty — may be enjoyed together. “Stacking” correctly means stacking different kinds, not two tax rates.
Global minimum tax: the layer over every incentive
For groups above EUR 750 million in consolidated revenue, Resolution 107/2023/QH15 and Decree 236/2025/ND-CP apply Vietnam’s minimum top-up tax from 1 January 2024. A 10% incentive rate may trigger top-up tax to reach the 15% minimum effective rate. Notably: when comparing Bac Ninh versus Bac Giang, paper incentive gaps can be flattened by the global minimum tax — the location decision should then weigh more heavily on actual land, labor and logistics costs.
Checklist for an electronics project in Bac Giang
- Map exact business lines against the encouraged-sector list in Decree 31/2021/ND-CP.
- Check the preferential-location list for the precise commune/district — never infer from the province name.
- Compare incentive options (sector vs location) and choose the most favorable under Articles 15, 16 of Investment Law 143/2025.
- File for land-rent exemption/reduction under Decree 103/2024/ND-CP.
- Model the global minimum tax if the group is above EUR 750 million.
Frequently asked questions
1. Does Bac Giang offer better incentives than Bac Ninh?
There is no province-wide answer. Incentives depend on the exact sector and whether the project’s commune/district is on the preferential-location list (Decree 31/2021). Bac Giang’s certain edge is more competitive land and labor costs — incentives must be checked case by case.
2. What if a project qualifies by both sector and location?
Both tracks may be considered, but two incentives of the same kind cannot apply at once — the most favorable must be chosen under Articles 15, 16 of Investment Law 143/2025/QH15.
3. How do we know if our site is a preferential location?
Check the difficult/extremely difficult area list in Decree 31/2021/ND-CP for the exact administrative unit hosting the project; the investment registration authority confirms it.
4. How many years of land-rent exemption apply?
No blanket figure exists. Decree 103/2024/ND-CP sets a time-limited exemption/reduction frame; exact terms are decided by the competent authority on each project’s dossier after application.
5. Does the global minimum tax wipe out all incentives?
No — it only “tops up” the gap to the 15% minimum effective rate for groups above EUR 750 million. Non-tax incentives (land rent, training, infrastructure support) are untouched by this mechanism.
This article has been quality-reviewed by the FLAW AI Legal Council
