When an FDI enterprise wants to raise capacity in Vietnam, the first legal choice is not “how much to invest” but “in what form”: expanding the existing project or setting up a new standalone project. The two forms travel two different procedure routes, enjoy two different incentive mechanics, and pose two different accounting problems. Choosing the wrong form does not destroy the incentives entirely, but it usually shrinks them exactly on the incremental revenue the investor values most.
Procedures: amending a certificate versus a new grant
An expansion project proceeds by amending the existing project’s investment registration certificate under Investment Law 143/2025/QH15: adjusting objectives, scale, capital and schedule. The advantage is keeping one legal entity, one land file and one accumulated compliance history; processing is usually faster than a new project because the registration authority already holds the original file. On environment, an expansion raising scale or capacity may require re-assessment of environmental impact or the corresponding environmental procedure for the expanded part under the Law on Environmental Protection 72/2020 — a step investors often underestimate until it becomes the bottleneck after the construction plan is fixed.
A new standalone project must pass investment policy approval (where applicable) and a new investment registration certificate, usually attached to a new legal entity or a project fully separate in land terms. This route is slower and costlier to establish, but gives the investor a “clean page”: capital structure, shareholders, land file and the tax incentive clock all start afresh — factors of great value where the existing project is near the end of its incentives or carries a complicated compliance history.
Tax incentives: only the increment versus the whole project
The largest tax difference is scope: incentives for expansion investment apply only to the incremental income from the expansion, where the expansion meets conditions like a new investment project (encouraged sector or locality) or meets the expansion criteria prescribed by CIT Law 67/2025/QH15 and Decree 320/2025/ND-CP. The incentive period for the expansion part runs from the year the expansion investment is completed and put into operation, separate from the original project’s running incentive clock. The original project keeps its existing incentives on the original income; the incremental part runs on its own clock.
By contrast, a new standalone project enjoys incentives on its entire income from the start (exemption from the first year of taxable income under the general rule), with a full 15-year preferential rate clock and complete exemption and reduction periods. That is why, in pure tax terms, a standalone project often looks “prettier” in the model: one full clock for all revenue, instead of two incentive layers stacked on two revenue parts that must be separated. But the standalone project pays for this with new entity, land and licence costs and establishment time — the computation must be whole-picture.
Separate accounting and the choice criteria
Expansion incentives carry a hard obligation: separate accounting of the incremental income from the expansion investment. The enterprise must split the expansion part’s revenue and costs through norms, production lines, volumes or another grounded allocation basis; if it cannot, the tax authority determines the incentivised income by its own allocation — usually less favourably. This is a compliance cost lasting the expansion part’s entire incentive period, and the reason many groups, while choosing expansion legally, still organise the expansion as an independent accounting unit internally.
Choice criteria: choose expansion when the original project still has good incentives, shared land and infrastructure are a major advantage, and the expansion is operationally fused with the existing plant. Choose a standalone project when a different capital or shareholder structure is needed, when the original project is nearly out of incentives and the new investment is large enough to deserve a full incentive clock, when the new site sits in a more incentivised locality, or when the old plant’s legal and environmental risks must be ring-fenced from the new activity.
Frequently Asked Questions
1. How do procedures (investment certificate, environmental assessment) differ between expansion and new projects?
An expansion follows the route of amending the existing project’s investment registration certificate (Investment Law 143/2025/QH15), usually faster, with environmental procedures only for the scale increase where re-assessment applies under the Law on Environmental Protection 72/2020. A new standalone project needs policy approval (where applicable) and a fresh certificate, typically with a new entity, land and licences from scratch.
2. How do tax incentives apply differently?
An expansion is incentivised only on the incremental income from the expansion investment, on its own clock from the year the expansion is completed, if it meets new-project-like conditions or the expansion criteria under CIT Law 67/2025/QH15. A standalone project is incentivised on its entire income with a complete clock (15-year preferential rate, full exemption and reduction periods by condition).
3. Is separate accounting required?
Yes — for an expansion, separately accounting the incremental income is a mandatory condition of the incentive: revenue and costs of the expansion part must be split on a grounded basis (production lines, volumes, norms). If not separable, the tax authority allocates by its own method, usually less favourably. A standalone project accounts everything within its own entity and project, so this requirement does not arise.
4. When should each option be chosen?
Choose expansion when shared infrastructure and land are the decisive advantage, the original project still holds good incentives, and the expansion is fused with existing operations. Choose a standalone project when a full incentive clock is warranted by a large investment, a different capital or shareholder structure is needed, the new locality is more incentivised, or the old project’s legal risks must be ring-fenced.
This article has been quality-reviewed by the FLAW AI Legal Council