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MINISTRY
OF FINANCE
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SOCIALIST
REPUBLIC OF VIETNAM
Independence – Freedom – Happiness
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No.: 1534/BTC-CST
Re: Incentive policies for rooftop solar
power projects with installed capacity of not exceeding 50kw
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Hanoi,
January 31, 2019
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To:
- Departments
of Taxation of provinces/cities;
- Customs Departments of provinces/cities.
The Prime Minister has promulgated the
Decision No. 11/2017/QD-TTg dated April 11, 2017 on mechanism for encouraging
development of solar power in Vietnam and Decision No. 02/2019/QD-TTg dated
January 08, 2019 providing amendments to the Decision No. 11/2017/QD-TTg. In
order to implement guidelines given by Deputy the Prime Minister Vuong Dinh Hue
at the Official Dispatch No. 5111/VPCP-KTTH dated May 31, 2018 of the Office of
the Government, the Ministry of Finance hereby provides guidance on tax
policies for rooftop solar power projects with installed capacity of not
exceeding 50kW as follows:
1. Investment
incentives:
Clause 6 Section I Part A of the
Government's Decree No. 118/2015/ND-CP dated November 12, 2015 providing
guidelines for some Articles of the Law on investment stipulates that “Production
of renewable energy, clean energy, and waste-to-energy production” are
classified as business lines eligible for special investment incentives. The
generation of electricity using solar energy of rooftop solar power projects is
considered as “production of renewable energy, clean energy” business line.
Thus, these projects are eligible for special investment incentives.
2. Import duties:
- Clause 11
Article 16 of the Law on export and import duties No. 107/2016/QH13 stipulates
that “Imports as fixed assets of an entity eligible for investment
incentives as prescribed by regulations of the Law on investment, including:
a) Machinery and equipment;
components, parts, spare parts for assembly or operation of machinery and
equipment; raw materials for manufacture of machinery and equipment,
components, parts, or spare parts of machinery and equipment;
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c) Building materials that
cannot be domestically produced.
Exemption of import duty on the
imports specified in this Clause also applies to new investment projects and
extension projects.
- Clause 13
Article 16 of the Law on export and import duties No. 107/2016/QH13 stipulates
that “Raw materials and components which cannot be domestically manufactured
and are imported serving the manufacturing of investment projects eligible for
investment incentives or in an extremely disadvantaged area prescribed by
regulations of law on investment, high technology enterprises, science and
technology enterprises, science and technology organizations are exempt from
import duties for 05 years from the commencement of manufacture”.
- Clause 2
Article 10 of the Decision No. 11/2017/QD-TTg stipulates that “Solar power
projects are eligible for exemption from import duties on goods imported as
fixed assets in accordance with effective regulations on import and export
duties regarding materials, components and semi-finished products that cannot
be domestically manufactured and are imported to serve manufacturing activities
of projects”.
Pursuant to the abovementioned
regulations, rooftop solar power projects with capacity of not exceeding 50kw
are eligible for exemption from import duties on goods imported as fixed assets
of projects according to Clause 2 Article 10 of the Decision No.
11/2017/QD-TTg; in case, the business line of a rooftop solar power project
with capacity of not exceeding 50kw is considered as business lines eligible
for special investment incentives as regulated by the Law on investment, apart
from application of incentive policies mentioned in Clause 2 Article 10 of the
Decision No. 11/2017/QD-TTg, it is eligible for exemption from import duties on
raw materials and components which cannot be domestically manufactured and are
imported serving the manufacturing of investment project for a period of 05
years from the commencement of manufacture as regulated in Clause 13 Article 16
of the Law on export and import duties No. 107/2016/QH13. Procedures for duty
exemption shall be carried out according to Article 30 and Article 31 of the
Government’s Decree No. 134/2016/ND-CP dated September 01, 2016 providing
guidelines for the Law on export and import duties.
3. Corporate
income tax (CIT):
- Clause 1 and
Clause 2 Article 15 of the Government’s Decree No. 218/2013/ND-CP dated
December 26, 2013 providing guidelines for the Law on corporate income tax
stipulates that “1. 10% rate for 15 years is applied to:
…
b) Incomes of the enterprise
from execution of new investment projects in the following areas: ... production of renewable energy, clean energy, and
waste-to-energy production; development of biotechnology.
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2. 10% tax
applies to the following incomes:
a) Incomes of enterprises' investment
in the public sector fields such as education – training, vocational training,
healthcare, culture, sports and environment.
The list of types, criteria for
scale, and standards of enterprises making investment in the public sector is
compiled by the Prime Minister;
…”.
- Clause 1 and Clause 2 Article 16
of the Decree No. 218/2013/ND-CP stipulates: “1. Tax exemption for 4 years
and 50% tax reduction for the next 9 years are applied to:
a) Incomes of enterprises from
execution of investment projects prescribed in Clause 1 Article 15 of this
Decree;
b) Incomes of enterprises from
execution of new investment projects in the public sector in disadvantaged
areas or extremely disadvantaged areas as prescribed in the Appendix enclosed
with this Decree.
2. Tax
exemption for 4 years and 50% tax reduction for the next 5 years are applied to
incomes of enterprises from execution of new investment projects in the public
sector in areas other than disadvantaged areas and extremely disadvantaged
areas as prescribed in the Appendix enclosed with this Decree”.
- Clause 5
Article 3 of the Circular No. 78/2014/TT-BTC dated June 18, 2014 stipulates: “5.
In case public service providers, other organizations that are not enterprises
established and operating under the Law of Vietnam, and enterprises paying VAT
using direct method earn incomes from goods and services subject to CIT and can
determine their revenues but cannot determine costs and incomes from business
activities, they shall declare and pay CIT at the following percentage of
revenues from the sale of goods and supply of services. To be specific:
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Regarding education, healthcare,
art performance: 2%.
+ For goods trading: 1%.
+ For other business activities: 2%”.
- Clause 4
Article 18 of the Law on corporate income tax stipulates: “Within the same
period, if an enterprise meets multiple requirements for CIT incentives on the
same income, it shall be entitled to the most favorable CIT incentive”.
Pursuant to the abovementioned
regulations, enterprises shall be eligible for CIT incentives on incomes from
new rooftop solar power projects with capacity of not exceeding 50kW according
to Clause 1 Article 15 and Clause 1 Article 16 of the Decree No.
218/2013/ND-CP.
- In case an
enterprise generating electricity from a rooftop solar power project with
capacity of not exceeding 50kw is classified as a producer of renewable
energy from sunlight and meets criteria for scale and standards for producers
of renewable energy from sunlight as prescribed in Point 8 Section VI - The
List of types, criteria for scale, and standards of enterprises making
investment in the public sector field that is environment (promulgated together
with the Prime Minister’s Decision No. 693/QD-TTg dated May 06, 2013 on
amendments to the List of types, criteria for scale, and standards of
enterprises making investment in the public sector fields such as education –
training, vocational training, healthcare, culture, sports and environment
enclosed with the Prime Minister’s Decision No. 1466/QD-TTg dated October 10,
2008), it shall be eligible for CIT rate incentives on incomes from investment
in that public sector as regulated in Clause 2 Article 15 of the Decree No.
218/2013/ND-CP.
With regard to new investment
projects in the public sector fields in disadvantaged areas or extremely
disadvantaged areas or in other areas, they shall be given exemption or
reduction of CIT as regulated in Clause 2 Article 16 of the Decree No. 218/2013/ND-CP.
- In case an
enterprise generating electricity from a rooftop solar power project with
capacity of not exceeding 50kw is a public service provider, other organization
that is not an enterprise established and operating under the Law of Vietnam,
or an enterprise paying VAT using direct method, earns incomes from goods and
services subject to CIT and can determine its revenue but cannot determine
costs and incomes from business activities, it shall declare and pay CIT
according to the percentage of revenues from the sale of goods and supply of
services with respect to incomes from its rooftop solar power project according
to regulations on other business activities in Clause 5 Article 3 of the
Circular No. 78/2014/TT-BTC dated June 18, 2014 of the Ministry of Finance.
Within the same period, if the
enterprise meets multiple requirements for CIT incentives on the same income,
it shall be entitled to the most favorable CIT incentive.
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Pursuant to the Law on excise tax,
electricity is not subject to excise tax.
5. Value-added tax (VAT):
- Clause 25
Article 4 of the Circular No. 219/2013/TT-BTC dated December 31, 2013 of the
Ministry of Finance providing guidelines for the Law on value-added tax and the
Government’s Decree No. 209/2013/ND-CP dated December 18, 2013 providing
guidelines for the Law on value-added tax stipulates that “Goods/services of
a household business or businessperson whose annual revenue does not exceed one
hundred million VND shall be not subject to VAT”.
- Article 11
of the Circular No. 219/2013/TT-BTC stipulates: “10% rate shall be applied
to goods/services other than the ones prescribed in Article 4, Article 9 and
Article 10 of this Circular”.
- Clause 2
Article 13 of the Circular No. 219/2013/TT-BTC stipulates direct method
employed for calculating VAT: “2. The payable VAT under the direct method
is calculated by multiplying the rate (%) by revenue and applied as follows:
a) Subjects of application:
- Enterprises
and cooperatives that are operating with annual revenue less than one billion
VND, except for case of voluntary payment of VAT using credit-invoice method as
prescribed in Clause 3 Article 12 of this Circular;
- New
enterprises and cooperatives, except for case of voluntary payment of VAT using
credit-invoice method as prescribed in Clause 3 Article 12 of this Circular;
- Household
businesses and businesspeople;
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- Economic organizations other
than enterprises and cooperatives, except for case of registration of payment
of VAT using credit-invoice method.
b) The rate (%) used for
calculating VAT on revenue is provided for as follows:
…
- Manufacturing, transport,
services associated with goods, construction inclusive of building materials: 3%;
- Other
business activities: 2%.
c) Revenue means total amounts
actually earned from goods sale or service provision and written on invoice of
goods/services subject to VAT, inclusive of surcharges and/or additional fees
paid to a business establishment”.
- Article 2 of
the Circular No. 92/2015/TT-BTC dated June 15, 2015 of the Ministry of Finance
providing guidelines for VAT and personal income tax incurred by residents
doing business, amendments to some Articles on personal income tax of the Law
No. 71/2014/QH13 on amendments to Tax Laws and the Government's Decree No.
12/2015/ND-CP dated February 12, 2015 on guidelines for the Law on amendments
to Tax Laws and Decrees on taxation stipulates: “Article 2. Tax calculation
methods applied by businesspeople paying fixed tax
1. Applied
principles:
a) Businesspeople who pay fixed
tax (hereinafter referred to as payers of fixed tax) are those who earn revenue
from trading in goods/services in any field and sector prescribed by lawsoft,
except for the businesspeople mentioned in Article 3, Article 4, and Article 5
of this Circular.
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…
2. Basis
for tax calculation
…
b) Tax rates
b.1) Tax rates include VAT rate
and PIT rate and vary according to the business line as follows:
…
- Manufacturing, transport,
services associated with goods, construction inclusive of building materials
shall incur 3% VAT and 1.5% PIT.
- Other
business lines shall incur 2% VAT and 1% PIT.b.2) The detailed list of business
lines and corresponding tax rates is provided in Appendix 01 enclosed
herewith”.
Pursuant to the abovementioned
regulations:
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- If the
revenue earned by an individual or a household business from execution of the
rooftop solar power project is VND 100 million per year or lower, the revenue
from selling of electricity shall not be subject to VAT as regulated in Clause
1 Article 2 of the Circular No. 92/2015/TT-BTC.
- When selling
electricity, enterprises that execute solar power projects and pay VAT using
credit-invoice method shall issue invoices and make declaration of output VAT
as regulated in Article 11 of the Circular No. 219/2013/TT-BTC.
- In case an
enterprise that executes a rooftop solar power project with capacity of not
exceeding 50kw is eligible for payment of VAT using direct method, it shall
make declaration and payment of VAT on its manufacturing as regulated in Point
b Clause 2 Article 13 of the Circular No. 219/2013/TT-BTC.
6. Personal income tax (PIT):
Pursuant to the Law No.
71/2014/QH13 on amendments to the Tax Laws and relevant instructional
documents, businesspeople shall pay PIT directly on their incomes with various
tax rates depending on their business fields or works. A businessperson whose
revenue is VND 100 million/year or lower must not make declaration and payment
of PIT and VAT as regulated in Clause 1 Article 2 of the Circular No.
92/2015/TT-BTC.
In case the revenue earned by an
individual or a household business from execution of the rooftop solar power
project is more than VND 100 million per year, that individual or household
business shall pay PIT at the rate corresponding to his/her/its business line
as prescribed in the abovementioned Point b.1 Article 2 of the Circular No.
92/2015/TT-BTC.
7. Fees and charges:
Pursuant to the Law on fees and
charges, fees for processing of applications for electricity license and
applications for business registration concerning power projects (including
solar power projects) are provided for in the List enclosed with this Law. Specific
fees, collection, transfer, management and use thereof shall be collected and
made according to regulations of the Ministry of Finance (fees for processing
of applications for electricity license) or of Provincial-level People’s
Councils (business registration fees).
- Fees for
processing of applications for electricity license shall be paid according to
the Circular No. 167/2016/TT-BTC dated October 26, 2016 of the Ministry of
Finance on fees for processing of applications for electricity license,
collection, transfer, management and use thereof. Pursuant to Clause 2 Article
3 of the Circular No. 12/2017/TT-BCT dated July 31, 2017 of the Ministry of
Industry and Trade on procedures for issuance and revocation of electricity
licenses, “Generation of electricity with installed capacity of not
exceeding 01MW to serve the purpose of selling electricity to other
organizations and individuals shall be exempted from electricity license”. Thus,
rooftop solar power projects with installed capacity of not exceeding 50kW
(< 01MW) shall be exempted from electricity license.
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These guidelines on tax policies
for rooftop solar power projects are given by the Ministry of Finance to
relevant authorities for knowing and instructing concerned entities to comply
with tax laws./.
BY
ORDER OF MINISTER PP. DIRECTOR OF TAX POLICY DEPARTMENT
DEPUTY DIRECTOR
Nguyen Thi Thanh Hang