Encourage businesses to set up funds for research and innovation

In the official dispatch of the Ministry of Science and Technology issued on April 23, it clearly stated that encouraging and guiding businesses to set up funds and use them for science, technology and innovation to realize Resolution 57. The resolution also requires preferential policies to encourage businesses, especially small and medium-sized enterprises, to invest in digital transformation, research, scientific application, and technological innovation to improve production and business efficiency and corporate governance.

According to the Ministry of Science and Technology, the current legal system has many incentive mechanisms for businesses to invest in science and technology. In particular, businesses are allowed to deduct a maximum of 20% of their annual taxable income to establish a Science and Technology Development Fund. This fund is used for scientific research, technology development and innovation activities according to regulations.

In addition, expenses for scientific research, technological development and innovation are included in deductible expenses when determining taxable income. Expenses for research and development activities alone are calculated up to a maximum of 200% of actual costs according to current regulations, according to the Law on Corporate Income Tax. These incentives are intended to encourage businesses to boldly make long-term investments in new technology, new products and competitiveness.

To put the above policies and regulations into practice, the Ministry of Science and Technology requests ministries, branches and localities to direct affiliated agencies and units to disseminate and guide businesses to fully implement regulations on appropriation, management and use of the Science and Technology Development Fund.

They are also asked to promote businesses to invest in scientific research, technology development and innovation. “Encourage businesses, especially small and medium-sized enterprises, to increase the rate of spending on scientific research, technology development and innovation,” the document states, and recommends integrating the content of science, technology and innovation development in industry, field and local development programs and plans.

In addition, the Ministry of Science and Technology also requests ministries, branches and localities to proactively review and synthesize difficulties and obstacles in the process of enterprises setting up and using the Science and Technology Development Fund, spending on scientific research, technology development and innovation activities. The Ministry will coordinate with the Ministry of Finance to promptly provide guidance and handling.