PLF Tutorials

LEGAL TUTORIALS FOR DOING BUSINESS IN VIETNAM

Tax Preference upon Investing in Vietnam


Performing the investments with tax preferences can bring considerable profits for investors.

 

Corporate Income Tax Preference

Corporate Income Tax (CIT) applied for all activities in Vietnam is 20%. However, some investment activities are subject to tax preference with lower tax rate. 

Investment activities entitled to CIT tax rate of 10% throughout the investment period:

  • Socialization in the fields of education – training, vocational training, health, culture, sports, environment and judicial assessment
  • Investment – business of social residential houses for sale, for lease and for lease purchase
  • Printed-newspaper activity including advertisement on printed newspapers and publication
  • Growing, caring and protecting forest.
  • Growing, processing agricultural products, maritime products and forest products in the areas with difficult socio-economic conditions
  • Producing, multiplying and hybridizing plants and domestic animals
  • Producing, exploiting and refining salt
  • Investing and preserving agricultural products after harvesting, preserving agricultural products, maritime products and food

Clause 3, Article 19 Circular 78/2014/TT-BTC

Clauses 3 and 4, Article 11 Circular 96/2015/TT-BTC 
 

Investment activities entitled to CIT tax rate of 17% in the 10-year period:

  • Performing new investment projects in the areas with difficult socio-economic conditions
A new investment project is a freshly performed project or the independently operating project to the projects which are performing the investment and business activities.
  • Performing new investment projects relating to the manufacture of:
    • High-class steel
    • Irrigation equipment
    • Energy saving products
    • Food for livestock, poultry and maritime products
    • Machineries, equipment serving for agriculture, forestry, fishery, salt production and processing
    • Development of traditional industries

Clause 4 Article 19 Circular 78/2014/TT-BTC
 

Investment activities entitled to CIT tax rate of 15% throughout the investment period:

Growing, feeding and processing in agricultural and maritime industries which do not locate in the areas with difficult or especially difficult socio-economic conditions.

Appendix II Decree No. 118/2015/ND-CP

Clause 14, Article 1, Decree No. 12/2015/ND-CP

Clause 4, Article 11 Circular No. 96/2015/TT-BTC
 

Investment activities entitled to CIT tax rate of 10% within 15 years:

  • New investment projects in the areas with especially difficult socio-economic conditions, economic zones and high-tech zones.
  • New investment projects relate to
    • Scientific research and technology development;
    • Application and investment for high-tech development;
    • Infrastructure development and investment;
    • Production of software products;
    • Material production;
    • Energy production;
    • Biotechnology development;
    • Environmental protection.
  • High-tech companies, agricultural companies applying high-technology.
  • New investment projects in the production and satisfying the following standards:
    • Scale of investment capital of minimum ~260.9 million US dollars
    • Disbursement within 3 years from the time to be permitted for initial investment
    • Having total minimum revenue of ~434.8 million US dollars per year, no later than after 3 years from the year gaining revenue, or using over 3,000 employees regularly
  • Investment projects in the production satisfying 3 standards:
    • Scale of invested capital over ~521.7 million US dollars
    • Using technology verified by Specialized Agency
    • Disbursement of total registered capital within 5 years from the date to be permitted for investment
  • New manufacturing investment projects with products falling into the List of industrial products supported for development priority (Vietnamese).

Clause 4 Article 3 2014 Law on Investment

Appendix of Decree No. 111/2015/ND-CP

Clause 1 Article 19 Circular No. 78/2014/TT-BTC

Clause 1 Article 11 Circular 96/2015/TT-BTC
 

Investment activities entitled to CIT tax rate of 17% throughout the investment period:

  • People’s credit fund
  • Micro financial organization

Article 19 Circular 78/2014/TT-BTC
 

Exemption, reduction of CIT tax rate

Tax exemption within 4 years and reduction of 50% of payable tax amount not exceeding the following 9 years shall be applied with

  • Objects entitled to CIT tax rate of 10% applying within the aforesaid 15-year period.

For example: A company operating in the software production established in January 2016

Companies performing new investment projects in the education - training, vocational education; health; culture, sports; environment  

Period from the establishment Applied tax policy CIT tax rate

First 4 years

January 2016 – January 2020

Tax exemption 0%

The following 9 years

January 2020 – January 2029

Tax reduction + tax preference

(50% x 10%)
5%

The following 2 years

January 2029 – January 2031
Tax preference 10%
After January 2031 Popular CIT tax rate 20%



Tax exemption for imported goods to create fixed assets for 
projects:

  • Investment projects falling into the sectors entitled to investment preferences or especially investment preferences;
  • Investment projects in the locality having difficult or especially difficult socio-economic conditions;
  • Investment projects having scale of capital of ~260.9 million US dollars or more, disbursement within 3-year period from the date the investment is licensed;
  • Investment projects in the rural area using from 500 employees or more, working full time, having labor contracts signed with the 12-month term or more.

High-tech companies, scientific and technology companies, scientific and technology organizations.

Imported goods for creating fixed assets include:

  • Machineries, equipment;
  • Components, details, separated parts, spare parts for synchronous assembling or synchronous use with machineries and equipment;
  • Raw materials and materials used for manufacturing machineries, equipment or for manufacturing components, details, separated parts, spare parts of machineries and equipment;
  • Specialized means of transport used in the technology line to serve for production.
  • Building materials which have not yet been produced by Vietnam.

Article 14 Decree 134/2016/NĐ-CP
 

Import tax exemption in the 5-year period with respect to raw materials, materials and components which have not yet been produced by Vietnam to provide for the production of projects:

  • Investment projects falling into the list of special sectors entitled to investment preferences;
  • Investment projects falling into the list of areas with especially difficult socio-economic conditions;
  • High-tech companies, scientific and technology companies and scientific and technology organizations.

.

Upon expiry of 5-year exemption period, if investors desire to import additional raw materials, materials, components for production, import tax shall be paid in full as stipulated.

Article 15 Decree 134/2016/NĐ-CP

Note: Import tax preference does not apply for investment projects of mineral exploitation; production and business of goods and services falling into categories subject to special consumption tax except for automobile manufacture.
 

Tax Preference for Non-Agricultural Land Use

Find out Distinguishing agricultural land and non-agricultural land (Vietnamese)

Tax exemption for non-agricultural land for projects

  • Investment projects falling into sectors entitled to especially investment preferences or investment in the areas with especially difficult socio-economic conditions.
  •  Investment projects in the areas with especially difficult socio-economic conditions with the scale of capital of ~260.9 million US dollars or more, minimum disbursement within 3-year period from the date the investment is licensed;
  • Investment projects falling into the sectors entitled to investment preferences performed in the areas having difficult socio-economic conditions.

Article 10 Circular 153/2011/TT-BTC

Reduction of 50% of non-agricultural land use tax

  • Investment projects falling into the sectors entitled to investment preferences as stipulated in or investment in the locality having difficult socio-economic conditions.
  • Investment projects in the rural areas with difficult socio-economic conditions using more than 500 employees working full time, having labor contract signed from 12-month period or more.

Article 11 Circular 153/2011/TT-BTC

Note:

Tax preference for using non-agricultural land does not apply for investment projects on mineral exploitation; production and business of goods, services falling into objects subject to special consumption tax except for automobile manufacture.  

With respect to high-tech companies, scientific and technology companies, scientific and technology organizations, based on the conditions on sectors, areas, scale of capital or quantify of employees, competent authorities will apply the exemption or reduction of 50% of non-agricultural land use tax.

Questions