Scenario: A tier-1 supplier to a Korean electronics group has operated in Bac Ninh for eight years. As the group expands orders, it must decide: expand within the current site, lease additional workshops in a neighboring park under the same entity, or establish a new company? Each choice carries different consequences for procedures, tax incentives and risk — and a wrong choice costs far more than the first time.
Expand within the existing entity or establish a new company
This is the first and most important decision. Expanding within the same entity (amending the IRC: more capital, added sites, more capacity) streamlines procedures and leverages the company’s reputation and compliance record. If the original project enjoys tax incentives, the expansion portion may qualify as an expansion investment project.
Conversely, a new company suits cases where the second plant serves different customers or industries, or the investor wants to ring-fence legal and financial risk between the two sites. The downside: redoing all procedures from zero with no inheritance of the old incentives. Rule of thumb: same customers and value chain favor expanding the old entity; different customers or risk-separation needs favor a new setup.
Expansion incentives: never assume
A common second-time mistake is assuming “the old project got incentives, so the expansion will too.” Expansion incentives must be separately considered and recorded under the Corporate Income Tax Law 67/2025/QH15 (effective 1 October 2025) — only qualifying expansion capital counts.
Caution: if the original project’s incentive period has expired, the expansion does not “revive” whole-project incentives — only qualifying new investment counts. The IRC amendment dossier must clearly separate expansion capital, added capacity and new commitments (jobs, technology) as the basis for incentive assessment.
A distinctive risk: dependence on one major customer
Many Korean suppliers in Vietnam depend on a single chaebol for 70–90% of revenue. A second plant serving the same customer amplifies this concentration risk: when the group adjusts its supply chain, both plants shake together.
Mitigation: use the second plant to diversify customers — other brands or export markets. Legally, this also argues for a separate entity segregating contracts, receivables and risks by customer group.
IRC amendment procedures: faster but not simple
IRC amendments (more capital, added objectives, new sites) go through the original IRC issuer — the park management board — under the Investment Law 143/2025/QH15 (effective 1 March 2026). The dossier includes the amendment proposal, the original project’s implementation report, and proof of financial capacity for the expansion.
The common snag: unfulfilled obligations of the original project (capital schedule, reporting, environmental duties) draw supplementation requests. “Clean up” the original project’s compliance before filing for expansion.
Checklist for the second time
One: choose the entity model on customers and risk, not habit. Two: review the original project’s compliance before filing. Three: pin down in writing the tax incentive level for the expansion — never assume. Four: reassess customer dependence and plan diversification. Five: update environmental and fire-prevention dossiers for the new capacity.
Frequently asked questions
Does a second factory under the same company need a new IRC?
No entirely new IRC is needed — amend the existing IRC (increased capital, added sites/objectives). If the second plant is in another province, coordinate amendment jurisdiction with both localities’ authorities.
Does the expansion get the same tax incentives as the original project?
Not automatically. Expansion capital must meet incentive conditions under the Corporate Income Tax Law 67/2025/QH15 and be recorded separately. If the original project’s incentive period has expired, only the qualifying expansion portion is considered.
When should a new company be set up instead of expanding the old entity?
When the second plant serves different customers, materially different industries, or needs legal and financial risk ring-fencing (e.g., one side taking large loans, the other not). For the same customers and value chain, expanding the old entity is usually more efficient.
Any special procedures for a second factory in another province?
The IRC must be amended to add the investment site in the new province, plus land, environmental and fire-prevention procedures under the new locality’s rules — each province may have different detailed requirements. Engage the new province’s park management board early.
This article has been quality-reviewed by the FLAW AI Legal Council