Scenario: a German software company wants a 300-engineer R&D centre in Hanoi, torn between office space inside Hoa Lac Hi-Tech Park and a downtown headquarters. How do the incentive frames differ?
Software and IT: a firmly encouraged sector
The Law on Investment 143/2025/QH15 (effective 1 March 2026, replacing Law 61/2020/QH14) lists in Articles 15 and 16 the incentive forms: corporate income tax, land-rent and land-use-fee exemptions or reductions, and investment support. The Law on Corporate Income Tax 67/2025/QH15 (effective 1 October 2025) sets the standard 20% rate; 15% for annual revenue up to VND 3 billion, 17% for revenue over VND 3 billion to VND 50 billion; encouraged-sector projects — including software production and information technology — qualify for 10% over 15 years, a four-year exemption and a 50% reduction of payable tax for nine further years.
Software and IT sit on the encouraged list in Decree 31/2021/ND-CP — its schedules remain citable until replaced. Decree 103/2024/ND-CP governs land-use-fee and land-rent relief. A note from Law 67/2025: an ordinary office or industrial park no longer automatically confers tax incentives; but Hoa Lac Hi-Tech Park applies its own incentive mechanism for high-tech projects.
Hoa Lac versus downtown: comparing two frames
The Hoa Lac option: a software/R&D project inside the hi-tech park — if it meets high-tech criteria — enjoys tax incentives under the park mechanism, plus land-rent relief under Decree 103/2024 and park policy. That is a sector-plus-hi-tech-park “combo” on one project.
The downtown option: the software company remains in an encouraged sector, so — if conditions are met — it accesses the 10%/15-year, four-year-exempt, nine-year-half-rate frame on software income; but downtown office rent carries no land-policy relief. The choice is therefore not only about tax: Hoa Lac offers low site costs and a concentrated R&D ecosystem, downtown offers hiring power and client proximity. Model total after-tax cost for both options.
Choosing the frame where several mechanisms exist
Article 15 of the Law on Investment bars two same-type tax incentives at the same time; the investor picks the most favourable tier. For a Hoa Lac project that also meets encouraged-sector conditions, compare the hi-tech-park tax frame with the sector tax frame, take one best frame for software/R&D income, then layer the different types: tax, land rent, support.
A framework illustration: a 300-engineer R&D centre in Hoa Lac meeting high-tech criteria holds a basket of the chosen best tax frame on R&D income, plus in-park land-rent relief. All figures are conditional legal frames, not absolute commitments for any specific project.
Checklist for a Hanoi software company
Identify the activities (software production, R&D, outsourcing) against encouraged-sector and high-tech criteria; compare Hoa Lac versus downtown on total after-tax cost; work with the Hoa Lac Hi-Tech Park Authority on eligibility and procedures; lock land/office rents; record incentives in the Investment Registration Certificate; self-declare at annual finalisation.
1. Does a pure software company (no manufacturing) get incentives?
Potentially, if conditions are met. Software production and IT activities are encouraged; the scale, staffing and technology conditions follow current regulations.
2. What does Hoa Lac add over downtown?
Hoa Lac layers the hi-tech-park mechanism (tax plus land rent) onto the encouraged-sector pillar; downtown keeps only the sector pillar but wins on hiring and client proximity.
3. Is outsourced software development for foreign clients incentivised?
Outsourcing and software export remain software production; qualifying income enjoys the corresponding frame if encouraged-sector conditions are met.
4. Can we take both the park frame and the sector frame?
Not for the same tax type at the same time. Under Article 15 of the Law on Investment, the investor takes one best tax frame per income stream.
5. Is IT consulting income incentivised?
Only if that service independently meets incentive conditions. Tax incentives attach to incentivised software-production and R&D income; other income bears the standard rate.
This article has been quality-reviewed by the FLAW AI Legal Council