Incentive mechanism in the Draft Law on High Technology: How to make it strong and transparent enough?

The revision of the Law on High Technology after more than 15 years aims to modernize the legal framework, create incentives for research and development (R&D) and technology transfer, and create a sustainable innovation ecosystem. One of the focuses set by the business community, experts and drafting agencies is to design an incentive mechanism that is strong enough to stimulate long-term investment, transparent, and specifically quantified to avoid abuse and ensure resource efficiency.

The draft Law on High Technology (amended) adds a number of important incentive policies: Tax incentives, support for research infrastructure, technology transfer incentive mechanisms, commercialization support policies, and a proposal for "super-deduction" of R&D costs (the draft proposes that this amount can be up to 200% in the options reported by the press). These policies are powerful tools to encourage businesses to increase investment in technology. However, some contents in the draft are still at a general level; for example, "incentives on land, credit, infrastructure" need to specify conditions, duration, incentive rates, criteria for evaluating effectiveness, etc. to avoid misunderstandings and ensure implementation.

Developed countries all use tax instruments for R&D: "super deductions" and/or tax credits, accompanied by a system of conditions, audits and transparent reporting. OECD, World Bank and studies show that R&D tax incentives can increase R&D investment, but the effectiveness depends largely on policy design and implementation management (definition of deductible expenses, limits, conditions of application, prevention of R&D transfer pricing between affiliated companies). If Vietnam applies the proposed 200% super deduction, the key is to include criteria for measuring results and control mechanisms.

Draft Law on High Technology amends and supplements important incentives.

The draft Law on High Technology (amended) opens up great opportunities for promoting R&D and technology transfer if the incentives are designed to be attractive enough.

Experts and businesses have emphasized that incentives must go hand in hand with responsibility, transparency and enforcement monitoring tools. In that case, incentives will not only encourage investment but also truly promote domestic technological capacity, contributing to turning the strategic goals of the Resolution and the draft Law into reality.

Center for Science and Technology Communication

Source: https://mst.gov.vn/co-che-uu-dai-trong-du-thao-luat-cong-nghe-cao-lam-sao-de-du-manh-va-minh-bach-197251012134516562.htm