Driving Vietnam's Private Sector Growth: Core Incentives Introduced by Decree 20/2026

Overview of Decree 20/2026/ND-CP

On January 15, 2026, the Vietnamese government issued Decree No. 20/2026/ND-CP ("Decree 20"), which provides comprehensive regulations and detailed implementation guidance for several provisions of Resolution No. 198/2025/QH15 ("Resolution 198") on special mechanisms and policies to promote private sector development.

Aligned with Resolution 198, Decree 20 establishes a framework of targeted incentives covering tax relief, access to land and business premises, support for innovation and digital transformation, and capacity-building measures for the private sector.

The decree comprises six chapters and 17 articles and takes effect from the date of issuance, January 15, 2026, with the exception of Clauses 2 and 3 of Article 16, which relate to CIT and PIT incentives for certain regulated cases.

The provisions covered by detailed regulations include:

• Article 7 on support for access to land and premises for production and business
• Clauses 1 and 2 of Article 8 on support for lease of buildings and land in the form of public property
• Clauses 1, 2, 3, 4, 5, and 8 of Article 10 on support for taxes, fees and charges
• Article 12 on support for research, development, and application of science, technology, innovation, and digital transformation
• Clause 2 of Article 13 on support for enhancing corporate governance capacity and human resource quality

Applicable to enterprises, household businesses, individual business operators, and other relevant organizations and individuals, the decree serves as a key legal instrument for translating Vietnam's private sector development strategy into actionable policies.

Structure of the Decree

Chapter I (Articles 1–3): General provisions, including the scope of application, eligible entities, and definitions of key terms

Chapter II (Articles 4–6): Support for access to land and business premises, including infrastructure investment support, land fund allocation, rental discounts, and leasing of public land and properties

Chapter III (Articles 7–8): Tax incentives, such as exemptions and reductions in corporate income tax (CIT) and personal income tax (PIT) for qualified enterprises and individuals

Chapter IV (Articles 9–11): Support for science and technology, innovation, digital transformation, and human resource development, including R&D funding, tax deductions, digital platform support, and training programs

Chapter V (Articles 12–15): Implementation arrangements, specifying the duties of ministries, government agencies, provincial People's Committees, socio-political organizations, business associations, enterprises, household businesses, and individual operators

Chapter VI (Articles 16–17): Implementation provisions, including the decree's effective date and enforcement responsibilities

Corporate Income Tax and Personal Income Tax Incentives

CIT Exemption for Small and Medium-Sized Enterprises

Small and medium-sized enterprises (SMEs) are granted full CIT exemption for three years from the issuance date of the first Enterprise Registration Certificate (ERC).

CIT Incentives for Innovative Startups

The following entities qualify for full CIT exemption for two years, followed by a 50% CIT reduction for the subsequent four years:

• Innovative startup enterprises
• Innovative startup investment fund management companies
• Intermediary organizations supporting innovative startups

PIT Incentives for Experts and Scientists

Experts and scientists working for innovative startups, R&D centers, innovation centers, and intermediary support organizations receive:

• Full PIT exemption for two years
• 50% PIT reduction for the subsequent four years
• Applicable to salaries and remuneration

PIT and CIT Exemption on Capital Transfer Income

Income derived from the transfer of shares, contributed capital, capital contribution rights, and related subscription rights in innovative startups is exempt from PIT/CIT.

Support for Access to Land and Business Premises

Infrastructure Investment Support and Land Fund Allocation

Provincial People's Committees must publicly disclose support principles, criteria, norms, and designated land areas within industrial parks and technology incubators reserved for priority enterprises, including:

• Private sector high-tech enterprises
• Small and medium-sized enterprises
• Innovative startup enterprises

Responsibilities of Infrastructure Developers

State-supported capital may not be included in total project investment capital. Developers remain responsible for infrastructure management, maintenance, and upkeep.

Treatment of Phased Industrial Park Development

Reserved land funds are determined by development phase. If land remains unused after two years from infrastructure completion, it may be leased to other enterprises.

Refund of Reduced Sublease Rentals

Infrastructure developers are reimbursed for discounted sublease rentals provided to supported enterprises, subject to conditions:

• Valid land reservation contracts
• Evidence of payment
• 12-month deadline for reimbursement requests

Refund Mechanisms and Funding Sources

Reimbursement is provided through:

• Offset against land rental obligations
• Direct refunds from the state budget
• Funding sourced from central and local budgets

Refund Obligations in Cases of Non-Compliance

Supported enterprises must make full reimbursement of support amounts plus late payment interest where violations result in:

• Project termination
• Land recovery
• Transfer to ineligible entities

Leasing of Public Houses and Land Assets

Leasing of public property (houses and land) is conducted through:

• Posted-price mechanisms
• Rental reductions for eligible enterprises
• Transparent and publicly disclosed procedures

Support for Science, Technology, Innovation, and Digital Transformation

The decree establishes support mechanisms including:

• Funding for research and development (R&D) activities
• Tax deductions for R&D expenditures
• Support for development and use of digital platforms
• Training and capacity-building programs
• Technology transfer support
• Incentives for innovation investment

Implementation Responsibilities

Ministries and Government Agencies

Responsible for:

• Issuing detailed guidance documents
• Monitoring and evaluating implementation
• Coordinating with local authorities

Provincial People's Committees

Responsible for:

• Implementing policies at the local level
• Publicly disclosing support information
• Reviewing and approving applications for support
• Allocating local budgets

Enterprises, Household Businesses, and Individual Operators

Responsible for:

• Complying with legal regulations
• Providing accurate and complete information
• Using support for intended purposes
• Submitting periodic reports on business results

Significance for the Private Sector

Decree 20/2026/ND-CP represents a key legal instrument that:

• Translates Vietnam's private sector development strategy into actionable policies
• Facilitates enterprise access to resources
• Encourages innovation and digital transformation
• Enhances the competitiveness of Vietnamese enterprises
• Promotes sustainable economic growth

This decree marks an important step forward in creating a favorable, transparent, and equitable business environment, contributing to the robust development of Vietnam's private sector in the new period.

Key Takeaways for SME Owners

SME owners should pay particular attention to:

• Tax Benefits: Three-year full CIT exemption for new SMEs; extended benefits for innovative startups
• Land Access: Priority allocation of land in industrial parks and technology incubators with potential rental discounts
• Innovation Support: Funding and tax incentives for R&D activities and digital transformation
• Human Resources: Tax incentives for hiring qualified experts and scientists
• Compliance Requirements: Maintain accurate records, use support funds appropriately, and submit required reports

Application Process

To access these incentives, enterprises should:

1. Verify eligibility based on size classification, industry sector, and business activities
2. Prepare required documentation (ERC, tax registration, business plans)
3. Submit applications to relevant provincial authorities
4. Maintain compliance with reporting and operational requirements
5. Coordinate with local business associations for guidance and support

The decree establishes clear procedures and timelines, ensuring that eligible enterprises can efficiently access the full range of support measures designed to accelerate private sector growth and enhance Vietnam's economic competitiveness.