Expansion Project Incentives 2026: Thresholds, Tax

Investment incentives are not reserved for brand-new projects. Under Article 17 of the 2025 Investment Law and Article 21 of Decree 96/2026/ND-CP, expansion projects also qualify for special incentives when they meet the prescribed capital thresholds. In parallel, Article 20 of Decree 320/2025/ND-CP (effective 15 December 2025) details corporate income tax incentives for the incremental income generated by expansion projects. This guide explains how to apply incentives to expansion projects in 2026.

1. Expansion projects qualify for special incentives: Art. 17 of the 2025 Investment Law + Art. 21 of Decree 96/2026

The key policy point: special incentives under Article 17 of the 2025 Investment Law (Law 143/2025/QH15, effective 1/3/2026) are not limited to new investment projects — they include expansion projects. Article 21 of Decree 96/2026/ND-CP (effective 31/3/2026) provides detailed guidance.

On thresholds, the special incentive framework is built around three tiers: VND 3,000 billion, VND 6,000 billion and VND 30,000 billion (total project investment, including the expansion capital). Investors with expansion projects must determine which tier their post-expansion total investment falls into to know the applicable incentive scope and level.

Practical note: when calculating total investment of an expansion project, combine the original investment capital and the additional expansion capital — treating the expansion portion in isolation to slip into a lower tier is a misreading that the tax authority or investment registration authority may reject when reviewing incentive eligibility.

2. Tax incentives for incremental income: Article 20 of Decree 320/2025

Decree 320/2025/ND-CP (effective 15/12/2025) is the guiding instrument on corporate income tax, in which Article 20 governs tax incentives for the incremental income of expansion investment projects.

Under Article 20, there are 2 tax incentive scenarios for the incremental income of expansion projects (investors should check the original text to identify the scenario applying to their case, as each carries different conditions and incentive levels).

To qualify, an expansion project must meet 3 quantitative criteria:

Capital criterion: additional investment capital reaching VND 40 billion (or VND 20 billion in prescribed cases) — separately accounted for the expansion phase;
Fixed asset criterion: the added fixed asset value meeting the prescribed threshold, evidencing genuine investment in production capacity (not paper capital increases);
Capacity criterion: designed capacity increasing by at least 20% compared to pre-expansion levels.

All three criteria must be met simultaneously with supporting files (investment capital settlement, asset acceptance records, designed capacity dossiers) — the tax authority will examine them during the annual CIT finalisation of the incentive year.

3. Trap to avoid: merger/split/spin-off projects are NOT “new investment projects”

This is the easiest point to get wrong in 2026 practice: a project resulting from a merger, split or spin-off INHERITS the investment incentives and uncarried-forward losses of the predecessor enterprise — it is not a “new investment project” eligible to claim fresh incentives from scratch.

Practical consequences:

The post-restructuring enterprise continues the incentives the predecessor was enjoying (inheritance), with the remaining incentive period — the incentive clock is not “reset” as for a new project;
Uncarried-forward losses are inherited as prescribed, not recalculated from zero;
Any claim for “new” incentives for a merger/split/spin-off-originated project will be rejected by the tax authority — and may trigger back-tax assessment and penalties if wrongly claimed.

Note: the exact provision on incentive inheritance in mergers/splits/spin-offs has not had its article number verified in the research scope — do not cite a specific article number without checking the original text; the policy principle above is the rule to follow.

4. Roadmap for applying incentives to an expansion project — checklist

Step 1: Confirm your project is an “expansion project” as legally defined (scale expansion, capacity increase, technology upgrade of an operating project) — as distinct from a new project or a merger/split/spin-off project;
Step 2: Calculate post-expansion total investment and map it against the 3,000/6,000/30,000 billion tiers for special incentive eligibility (Art. 17, 2025 Investment Law; Art. 21, Decree 96/2026);
Step 3: Check the 3 quantitative criteria of Article 20, Decree 320/2025 (additional capital 40/20 billion; added fixed assets; +20% capacity) and prepare supporting files;
Step 4: Identify the applicable one of the 2 tax incentive scenarios for incremental income, and separately account incremental income from existing-operation income;
Step 5: Register/apply for incentives with the competent authority and monitor through annual CIT finalisation.

FAQ

Do expansion projects qualify for special incentives?
Yes. Article 17 of the 2025 Investment Law and Article 21 of Decree 96/2026 provide special incentives including for expansion projects, with three capital tiers of VND 3,000/6,000/30,000 billion.

Which income gets the tax incentive for an expansion project?
The incremental income from the expansion activity (Article 20, Decree 320/2025), under 2 incentive scenarios — this income must be separately accounted.

What are the quantitative conditions for the tax incentive?
Three criteria: additional investment capital reaching 40 billion (or 20 billion in prescribed cases); added fixed assets; designed capacity up by at least 20%.

My company just merged — can it claim incentives as a new project?
No. A merger/split/spin-off project inherits the predecessor incentives and uncarried-forward losses — it is not a “new investment project”. Wrongly claiming new incentives risks back-tax and penalties.

Legal sources cited

Investment Law 143/2025/QH15 (effective 1/3/2026) — Article 17 (special incentives);
Decree 96/2026/ND-CP (effective 31/3/2026) — Article 21 (incentive guidance);
Decree 320/2025/ND-CP (effective 15/12/2025) — Article 20 (tax incentives for expansion projects).