Vietnam’s New Rules Prioritize Defense Enterprises for Key Projects

Vietnam’s Decree No. 404/2026/NĐ-CP took effect on November 11, 2026. It sets out special operating and financial management mechanisms for certain enterprises for which the Ministry of National Defense exercises ownership rights, as well as other enterprises undertaking military and defense tasks. Deputy Prime Minister Nguyễn Văn Thắng signed the decree on behalf of the government.

Enterprises directly serving national defense and security may receive priority for designation as investors, or for taking on and operating projects aligned with their development strategies and assigned tasks. Eligible projects include those in locations of strategic importance to national defense, projects combining economic and defense purposes, and projects involving core technology, digital transformation or strategic minerals. Projects legally requiring investor selection remain subject to the priority mechanism under investor selection rules.

The decree allows enterprises to receive some or all project funding from the state budget for assigned tasks. With approval from the competent authority, projects involving military or defense research or strategic technologies may enter into technology transfer contracts with foreign parties before an investment decision is made. Preliminary expenses that meet documentation requirements and are directly related to a project may be included in its costs. If an assigned project is not approved or is discontinued, qualifying actual expenses may be deducted when calculating taxable corporate income.

For enterprises directly serving national defense and security in areas with difficult or especially difficult socioeconomic conditions, certain employee expenses and other cash payments of at least VND 5 million per transaction may be deducted when calculating taxable corporate income. In areas with especially difficult conditions, income these enterprises earn from producing crops, forestry products, livestock and farmed aquatic products may be exempt from corporate income tax.

The Military Industry and Telecoms Group (Viettel) and its subsidiaries may use an amount from their science and technology development funds of up to 5% of annual taxable income for venture investment, investment in relevant funds or the establishment of venture investment enterprises. The decree also allows capital and assets to be transferred between Viettel’s wholly owned subsidiaries at their book value at the time of transfer, without payment or revaluation.

Photo courtesy of Viettel.（VietVance）

Source: VietVance