Vietnam offers up to 50% of initial investment costs for semiconductor and AI R&D projects

Vietnam’s Investment Support Fund will offer up to 50% of initial investment costs for semiconductors and artificial intelligence (AI) investors with research & development (R&D) projects.

The support is stipulated in the government’s Decree 182/2024 on the establishment, management, and use of the fund. The document came into force on December 31, 2024, and will be applied from fiscal year 2024.

In order to qualify for such support, firm must have no tax arrears, and the R&D investments must bring about positive impacts to the country's innovation and technology sectors.

The R&D investment must have an investment capital of at least VND3 trillion ($117.9 million) and the disbursement must reach at least VND1 trillion in three years from the licensing date.

In addition to the support exclusively for semiconductor and AI firms, the fund will also assist high-technology firms, businesses with high-technology products, companies with high-technology applications, and those with R&D center investments.

The support partly covers the costs of training, workforce development, R&D activities, investments in fixed assets, costs of production of high-tech items, costs of investments in social infrastructure, and other cases subject to government consideration.

The decree is a move in response to the impact of the Global Minimum Tax (GMT).

In a report on the draft fund decree seen by The Investor in July last year, the Ministry of Planning and Investment wrote that some global giants, including LG Chemical, AT&S and SMC, were eyeing investments in countries other than Vietnam or considering no more new investments here as the country's current policy lacked investment support.

The ministry stressed that Vietnam’s policy offered limited investment support, with only income-based incentives, such as exemptions and reduction of taxes and fees. The GMT would heavily impact Vietnam and prompt the country to update its legal framework.