New Corporate Income Tax Incentives

 

For the time being, the economy is still in difficulty. To help enterprises deal with their snags, the Government always sees the reform of tax policies in general and CIT policies in particular as a driving force. The Government has widened the scope of taxpayers subject to tax incentives and tax reductions as this has helped them with more cash for production and business investment. Besides, to quicken administrative reform in tax field, on June 18, 2014, the Ministry of Finance issued Circular 78/2014/TT-BTC on instructions to the implementation of Government Decree 218/2013/ND-CP dated December 12, 2013 on CIT. Accordingly, universal CIT was slashed to 22 per cent 25 per cent as from January 1, 2014.

 

Furthermore, companies are granted other tax preferences. They will enjoy 10 per cent income tax rate in the first 15 years in the following cases: Income from new projects located in areas with extremely difficult socioeconomic conditions; Income from scientific research and technological development; Income from new environmental protection projects, including the manufacturing of environmental pollution treatment equipment, monitoring equipment and environmental analysers, the treatment of solid waste, wastewater and gas emissions, and the recycling and reuse of wastes; Income from high-tech projects, high-tech agricultural projects, etc.

 

Companies also enjoy 10 per cent income tax rate in an indefinite applicable period. This tax rate is applicable to income of enterprises from socialisation activities in specified sectors; Income from press agencies providing newspapers and publishers conducting publishing activities as specified in the Law on Press; Income from social housing projects; Income from activities in forestation, tending of forests; breeding, rearing and growing agricultural, forest and aquaculture products in areas with social and economic difficulties; production of artificial strains, new plant varieties, livestock breeding; production, mining and refining of salt; investment in post-harvest preservation of agricultural products, preservation of agricultural and aquaculture products and foodstuffs; Income of cooperatives operating in the field of agriculture, forestry, fishery and salt production in areas with social and economic difficulties.

Enterprises are subject to 20 per cent income tax rate in 10 years for income from newly-invested projects based in areas with difficult social and economic conditions; Income from newly-invested projects manufacturing high-grade steel; manufacturing energy-saving products; manufacturing machines and equipment for agriculture, forestry, aquaculture and salt production and manufacturing irrigation equipment.

 

The preferential income tax rate of 20 per cent, reduced to 17 per cent as from January 1, 2016, is applicable to income from people’s credit funds, cooperative banks and microfinance organisations. The applicable period is indefinite.

 

In addition, tax exemption and reduction are also applied to certain cases: Companies engaged in production, construction and transportation employing from 10 to 100 women; companies employing minority people; companies transferring technologies specified to be in the field of priorities to organisations and individuals in areas with difficult socioeconomic conditions.

 

An official from the General Department of Taxation said, new changes to CIT are expected to help companies to increase investment capital in new projects, particularly in localities with difficult social and economic conditions.