TAX ARTICLES

3 Types Of Tax Incentives For Investment Projects Which Come Into Effect August 1st 2016

tax-1501475-1600x1200 (1)

The Ministry of Finance has issued Circular 83/2016/TT-BTC dated June 17th 2016, which regulates in detail 3 types of tax incentives for the investment projects in Vietnam involving the corporate income tax, import duty and non-agricultural land use tax.

Preferential corporate income tax

Circular 83 governs in detail several cases subject to incentives as follows:
  • New investment projects in the areas being economic zones and hi-tech zones (including the centralized information technology zones which were established under the decision of the Prime Minister) are entitled to enjoy the tax incentives applicable for the new investment projects in the economic zones and high-tech zone in accordance with the law of corporate income tax.
  • New investment projects in industrial zones (except the industrial zones located in areas with favorable socio-economic conditions as prescribed by the Government), which do not belong to the incentive investment fields or areas; or the new investment projects in the areas of economic zones and hi-tech zones, are entitled to enjoy the tax incentives applicable for the new investment projects in industrial zones under the provisions on corporate income tax. This also applies to the new investment projects in the export processing zones.
  • For the expansion of investment projects: If such projects meet the criteria prescribed by the Corporate Income Tax Law, the enterprise is entitled to select the tax incentives for active projects for the remaining time (if any) or tax exemption and reduction for the increased income due to the expansion of investments. The duration of tax exemption and tax reduction for the increased income due to the expansion of investments as stipulated in this Clause should be equal to the duration of tax exemption and tax reduction applicable to new investment projects in the same investment incentive fields or areas under the regulations of corporate income tax.

Preferential import duty

Projects with operational sectors subbject to special investment incentives; projects operating in areas with extremely difficult socio-economic conditions, or projects with capital from 6000 billion VND or more will be entitled to have the following incentives:

  • Import duty exemption for imported goods as fixed assets such as equipment, machinery and specialized means of transport in the technological lines which cannot be domestically produced, components and details, etc. as prescribed in detail in the Law on Export Duty and Import Duty;
  • Import duty exemption in 5 years for materials, supplies and components which cannot be domestically produced; imported for production activities of investment projects (except for the projects of manufacture and assembly of automobiles, motorcycles , air conditioners, electric heaters, refrigerators, washing machines, electric fans, dishwashers, etc.)

Projects under the category of investment incentives such as manufacture of automobiles, auto parts, shipbuilding, etc. ; projects operating in areas with difficult socio-economic conditions such as Kon Tum, Son La, Lai Chau, etc. or projects using 500 or more labors to operate in rural areas: import duty exemption for imported goods as fixed assets.

Preferential non-agricultural land use tax

Tax exemption for investment projects:
• under the sectors subject to special investment incentives; or
• operating in areas with extremely difficult socio-economic conditions; or
• with capital from 6000 billion or more, capital disbursement within at least 3 years from the date of issuance of the Investment Registration Certificate and operating in areas with extremely difficult socio-economic conditions; or
• the investment projects under the stipulated sectors subject to investment incentives and operating in areas with difficult socio-economic conditions.
 A 50% tax rate reduction for investment projects:
• under the sectors subject to investment incentives as stipulated in Section B Annex I Decree 118/2015/ND-CP; or
• under areas with difficult socioe-conomic conditions as defined in Annex II Decree 118/2015/ND-CP; or
• have the number of employees from 500 or more operating in rural areas with difficult socio-economic conditions.
In order to gain such incentives, investment projects must meet one of the following conditions:
• The investment sectors of the project belong to the sectors includingmanufacturing new materials, new energy; manufacturing electronic products and key mechanical products; high-tech activities, and many other sectors as prescribed in Clause 2 Article 15 of 2014 Investment Law, Clause 1 Article 16 of Decree 118/2015 / ND-CP;
• The capital scale of the projects should be from 6000 billion or more, and the disbursement of at least 6,000 billion within 3 years commencing from the date of issuance of the Investment Registration Certificate or the investment policy decisions;
• The number of the employees from 500 or more people in rural areas;
• Operating area of the project is the local area with difficult or extremely difficult socio-economic conditions.

In addition, there are two cases that should be noted:

The investment projects for mineral exploitation are not entitled to enjoy preferential import duty and non-agricultural land use tax.
For the projects producing goods and services subject to excise tax:
• Only new investment projects of under 24 seats carmaker (including cars for both passengers and cargoes transportation with two or more rows of seats, with fixed bulkhead design between compartment s of passengers and cargoes) are subject to preferential corporate income tax;
• Other types of goods and services subject to special consumption tax cannot gain the preferential corporate income tax, import duty and non-agricultural land use tax.

PLF Law Firm 

Share on facebook
Share on twitter
Share on linkedin
We'd love to meet you and let you the perfect solution