Danang city unveils new incentives for semiconductor sector investments

New policies aimed at attracting investments and developing a semiconductor ecosystem were unveiled at "Danang Semiconductor Day 2024" organized by the central city administration on Friday.

The policies are offshoots of recently passed National Assembly Resolution 136/2024/QH15, which outlines unique mechanisms and policies for Danang's development, with a focus on attracting strategic investors and partners in the semiconductor sector.

Some of the new incentives for strategic investors include land leases and tax benefits. The government will lease land without auctioning land use rights. Investors can opt for a one-time land rental payment for the entire lease term.

In terms of tax incentives, research and development (R&D) expenses can be deducted at 150% of actual cost when calculating corporate income tax. Investors will also benefit from preferential customs procedures and receive support of up to 5% of the total cost for purchasing production support equipment; relocating assets, production lines; technology; and new investment projects.

For strategic partners, the incentives include direct leasing of IT infrastructure/assets without going through an auction. They will be assigned bids by the government for the purchase of unique equipment.

Strategic partners can receive up to 5% of the total cost for purchasing production support equipment; relocating assets, production lines; technology; and new investment projects. Partial support will be offered for hiring highly qualified personnel.

To qualify for the new incentives, enterprises must meet capital, revenue and technology requirements and sign a long-term cooperation agreement with Danang that includes commitments to human resource training, technology transfer, and investment expansion in the city, as detailed in the National Assembly resolution.

For activities related to semiconductors, artificial intelligence, information and communication, science and technology management, and innovations, the city will offer additional benefits including exemptions from corporate income tax (CIT) for five years starting from the time taxable income is recorded.

Five-year exemptions from personal income tax and tax on income from transferring shares or capital contributions to innovative enterprises and companies involving semiconductors and AI (yet to make an IPO) is another new policy incentive.

This includes a five-year personal income tax exemption on income from innovative start-up activities; semiconductor chip design, production, packaging, testing; and AI.

The city will also support students and experts in the semiconductor sector with training costs, and even offer accommodation benefits.

The People's Committee of Danang said at the event that it was working to finalize a draft resolution to support the semiconductor and AI sectors. The draft will be submitted to the city People's Council for approval by the end of 2024.

The resolution aims to create a favorable environment to attract students, experts and investors from leading semiconductor industry nations like the U.S, Japan, South Korea and the EU.

Danang, a central Vietnam economic hub, is preparing facilities and human resources to strongly develop its semiconductor sector, aiming to have 5,000 microchip engineers5,000 microchip engineers by 2023.