Practical Guide for Foreign Investors (2026-2027)
- Background: Why Vietnam is changing its FDI incentive system
Vietnam historically attracted foreign investors through very generous tax incentives, such as:
- Corporate income tax (CIT) holidays (4–9 years)
- Preferential CIT rates (5–10%)
- Long-term tax reductions
However, the OECD Global Minimum Tax (Pillar 2) requires multinational companies with global revenues of €750 million or more to pay at least 15% effective tax worldwide.
If Vietnam taxes below 15%, the investor’s home country can collect the difference.
As a result:
- Vietnam’s traditional tax incentives lose their effectiveness
- The government risks losing tax revenue to other countries
Vietnam therefore implemented the Global Minimum Tax from 1 January 2024 and began redesigning its entire FDI incentive framework.
- Who is affected by the new rules
The global minimum tax applies only to large multinational groups.
Threshold
A company is affected if:
- Global consolidated revenue ≥ €750 million
Typical companies affected in Vietnam
Examples include:
- semiconductor manufacturers
- electronics manufacturers
- large technology groups
- major automotive and industrial producers
Many of Vietnam’s largest investors fall into this category.
- Vietnam’s key policy response: Investment Support Fund
The central instrument of the new FDI strategy is the Investment Support Fund, introduced under Decree 182/2024/NĐ-CP.
Purpose
The fund replaces traditional tax incentives with direct financial support.
Types of support
Eligible investors may receive:
- Cash grants
- Subsidies for high-tech equipment
- Support for R&D activities
- Workforce training funding
- Infrastructure support
- Technology transfer support
Unlike tax incentives, these subsidies do not reduce the corporate tax rate, so they remain compliant with OECD Pillar 2 rules.
- Priority sectors for new investment incentives
Vietnam is now targeting high-quality FDI rather than volume-based investment.
The following sectors receive priority support:
- Semiconductors
- Artificial intelligence
- Digital technologies
- Advanced manufacturing
- Renewable energy
- Biotechnology
- High-tech electronics
- Research and development centers
These sectors are considered strategic for Vietnam’s long-term economic development.
- Practical implications for foreign investors
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- Tax incentives are no longer the main attraction
Traditional tax holidays may still exist, but for large multinational groups:
- the effective tax rate will ultimately be at least 15%
-
- Investment negotiations will focus on subsidies
Investors should expect negotiations with authorities to focus on:
- government support packages
- infrastructure commitments
- workforce training programs
- R&D incentives
-
- Increased compliance obligations
Large multinational companies must prepare for:
- Pillar 2 reporting obligations
- calculation of effective tax rate
- compliance with top-up tax rules
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- Strategic investment screening
Vietnam increasingly evaluates projects based on:
- technology level
- environmental impact
- innovation potential
- supply chain contribution
Labor-intensive projects with limited technological value receive lower priority.
5. Opportunities for foreign investors
Despite the tax reform, Vietnam remains highly attractive due to:
- strong economic growth
- political stability
- expanding manufacturing base
- strategic position in global supply chains
- strong government commitment to high-tech investment
The new incentive model may even provide larger total financial support, particularly for large technology projects.
Conclusion
Vietnam is undergoing a fundamental transformation of its foreign investment incentive system due to the implementation of the OECD Global Minimum Tax.
The country is moving away from a tax-holiday-driven FDI model toward a system based on direct financial support, innovation incentives, and strategic sector development.
For multinational investors, the practical implications are clear:
- the minimum effective tax rate will be 15%
- traditional tax incentives will play a smaller role
- investment negotiations will increasingly focus on government subsidies, infrastructure support, and R&D incentives
At the same time, Vietnam continues to actively compete for global investment, particularly in high-technology and strategic industries.
Foreign investors who align their projects with Vietnam’s innovation and industrial policy priorities will continue to find significant opportunities in the Vietnamese market
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Please do not hesitate to contact Dr. Oliver Massmann under [email protected] if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
