Scenario: a wind project’s CFO models IRR and finds two same-size, same-PPA projects differ by 2% — solely because one sits in an investment-incentive zone with CIT holidays. Tax incentives are not automatic “gifts” — they are variables to structure from site selection.
CIT incentives: by sector and location
CIT Law 67/2025/QH15 (effective 1 October 2025) grants CIT incentives (preferential rates, tax holidays, reductions) to projects in incentivized sectors and/or incentive zones. Renewable projects may qualify as incentivized sectors; locating in difficult socio-economic areas raises the benefit. Conditions must be met fully and simultaneously — missing one loses the whole package.
Import-duty incentives for equipment
Imported machinery and equipment forming fixed assets of incentivized projects may enjoy import-duty exemption under import/export tax law — where domestically unproducible. Imported turbines, panels and inverters dominate capex — duty exemption directly moves total investment.
VAT and other obligations
Power sales bear VAT under VAT Law 48/2024/QH15 (effective 1 July 2025). Project companies also owe contractor tax on foreign contractors (new framework: Law 67/2025, Decree 320/2025, Circular 20/2026), land rent, environmental fees — build the full tax-obligation table from the feasibility study.
Risk of losing incentives: “living” conditions
Tax incentives are not permanent privileges: if projects cease meeting conditions (relocation, sector change, commitment breaches), tax authorities may claw back exempted/reduced taxes plus late-payment interest. Every major project change needs a tax-incentive impact review first.
Frequently asked questions
1. What CIT incentives do renewable projects get?
Under Law 67/2025/QH15 (effective 1 October 2025): preferential rates, holidays and reductions for incentivized sectors/zones — conditions met fully and simultaneously.
2. Are imported turbines and panels duty-exempt?
Possibly — as fixed-asset-forming equipment of incentivized projects, where domestically unproducible, under import/export tax law.
3. Are power sales subject to VAT?
Yes, under VAT Law 48/2024/QH15 (effective 1 July 2025).
4. When are exempted taxes clawed back?
When projects cease meeting incentive conditions (relocation, sector change, commitment breaches) — plus late-payment interest.
5. What tax applies to foreign turbine-installation contractors?
Withholding of foreign contractor tax under the new framework: Law 67/2025, Decree 320/2025, Circular 20/2026.
This article has been quality-reviewed by the FLAW AI Legal Council.