On March 16, 2021, the Prime Minister of Vietnam issued Decision No. 10/2021/QD-TTg providing the criteria for identifying high-tech enterprises (Decision 10). Companies that are classified as “high-tech enterprises” are eligible for certain incentives, as Vietnam has prioritized development and investment in the country’s technology sector. Decision 10 will take effect on April 30, 2021, replacing Decision No. 19/2015/QD-TTg (Decision 19).
To qualify as high-tech enterprises, companies must satisfy criteria prescribed in the Law on High Technology and the Law on Investment (such as manufacturing products on the list of high-tech products and meeting environmental standards), and must also meet the following criteria:
1. Revenue from high-tech products must be at least 70% of the total annual net revenue of the enterprise (unchanged from Decision 19).
2. The enterprise’s annual research and development (R&D) expenditure (as further defined in Decision 10) as a percentage of its total revenue minus input value must meet the following standards:
Notably, Decision 10 now divides enterprises into three tiers rather than the two tiers (at 0.5% and 1%) under Decision 19. Small (third-tier) enterprises will need to meet higher criteria for R&D expenditure than before.
3. The number of employees working directly in R&D and holding a college (associate’s) degree or higher, as a percentage of the enterprise’s total employees, must meet the following standards:
Under Decision 19, a similar clause referred to employees holding a university (bachelor’s) degree or higher, and included only two tiers, at 2.5% and 5%. Under Decision 10, the R&D personnel requirements should be reduced, or at least unchanged, for all sizes of enterprises.
For more information on Decision 10, please contact us at [email protected].