Tax Briefcase

Measures to promote technology transfer in Vietnam

Technology transfer could escalate technology absorption and productivity growth at less cost and risk. The Vietnamese government has been stepping up efforts and improving policy formulation to promote and support transfer, mastery and development of foreign technology in Vietnam to narrow the gap in technology qualifications and capacities with developed countries around the world. 

Transition to high-tech manufacturing, integration into the global value chain and increasing the skilled workforce will lead to sustainable development of the country. Preferential policies are developed to create favourable conditions for technology transfer into/within Vietnam.
 
Forms of Technology transfer: The transfer of a technology can be implemented via the following forms:

  1. An independent technology transfer contract; 
  2. A part of technology transfer in the following cases: 
    • Investment project;
    • Capital contribution by technology;
    • Franchise agreement;
    • Transfer of industrial property rights;
    • A contract for purchase and sale of machinery or equipment to which the transfer of a technology is attached.
  3. Other forms of transfer of technology as stipulated by law. 

Registration of Technology transfer

Technology transfer agreements are subject to compulsory registration with the State Management Agencies of Science and Technology, except for restricted technology transfers which have already been granted specific permit.
 
If the technology is transferred from overseas or from a Vietnam based company to another Vietnam based company, the transferee is responsible for the registration. Otherwise, if the transfer is from Vietnam to overseas, it is the transferor’s obligation.
 
Having the Technology Transfer Registration Certificates is one of the prerequisite for receipt of available supports and incentives.
 
Fund aids in Technology transfer
 
The National Technology Renewal Fund has been established to support enterprises in forms of loan with preferential interest rate, interest rate subsidy, loan guarantee, and financial support. Enterprises whose business activity engages in below technology transfers can be eligible for this fund:

  • Enterprises engaging in technology transfer which are in the category of encouraged technologies;
  • Technologies promoting the development of agriculture, forestry and fisheries in rural regions, mountainous regions and areas with difficult or extremely difficult socio-economic conditions;
  • Technology incubation, science and technology business incubation, decoding technology; and
  • Training of science and technology personnel in service of technology transfer.

Tax incentives for Technology transfer
 
Enterprises engaged in technology transfers in Vietnam can expect to receive tax incentives as follow:

  • Exemption of import duty is applied to imported goods directly in use for technological research, development or renewal, including machines, equipment, components, supplies and means of transport that cannot be domestically produced together with scientific documents, books and newspapers.
  • Technology transfer is not subject to value added tax (“VAT”). If a contract of technology transfer is associated with a transfer of machinery/equipment, the value of transferred technology is not subject to VAT. 
  • Incomes from transferring encouraged technology to organization/individual in geographical area with particularly difficult socio-economic conditions will be entitled to tax exemption.
  • Enterprise that transfers encouraged technology to organization/individual in areas with difficult socio- economic conditions is entitled to 50% reduction of payable corporate income tax (“CIT”) calculated on incomes from technology transfer. 

For more information on the definition and tax implications relating to technology transfer, please refer to our article “Technology Transfer Transactions in Vietnam – Potential Tax Risks” published on Bloomberg dated 30 September 2019[1].

 

[1] https://news.bloombergtax.com/daily-tax-report-international/insight-technology-transfer-transactions-in-vietnam-potential-tax-risks