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THE
MINISTRY OF FINANCE
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No:
98/2002/TT-BTC
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Hanoi,
October 24, 2002
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CIRCULAR
GUIDING THE IMPLEMENTATION OF TAX EXEMPTION AND REDUCTION
FOR SUBJECTS ENTITLED TO INVESTMENT PREFERENCES UNDER THE GOVERNMENT’S DECREE
No. 51/1999/ND-CP OF JULY 8, 1999 DETAILING THE IMPLEMENTATION OF DOMESTIC
INVESTMENT PROMOTION LAW (AMENDED) No. 03/1998/QH10
Pursuant to the current tax laws and
ordinances
Pursuant to the Government’s Decree No.51/1999/ND-CP of July 8, 1999/ND-CP of
July 8, 1999 detailing the implementation of the Domestic Investment Promotion
Law (amended) No.03/1998/QH10 (hereinafter referred to as Decree
No.51/1999/ND-CP for short) and Decree No.35/2002/ND-CP of March 29, 2002
amending and supplementing Lists A, B and C, promulgated in the Appendix to
Decree No.51/1999/ND-CP (hereinafter referred to as Decree No.35/2002/ND-CP for
short);
Pursuant to the Government’s Decree No.64/2002/ND-CP of June 19, 2002,
transforming State enterprises into joint-stock companies (in replacement of
the Government’s Decree No.44/1998/ND-CP of June 29, 1998 on transformation of
State enterprises into joint-stock companies);
Pursuant to the Government’s Decree No.103/1999/ND-CP of September 10, 1999 on
assignment, sale, business contracting, lease of State enterprises;
The Finance Ministry hereby guides the implementation of tax preferences for
subjects entitled to investment preferences under the Law on Domestic
Investment Promotion as follows:
A. GENERAL PROVISIONS
I. This Circular shall apply to subjects
entitled to tax preferences under the Law on Domestic Investment Promotion,
including:
1. State enterprises;
2. State enterprises transformed into
joint-stock companies under the provisions in the Government’s Decree
No.64/2002/ND-CP (replacing the Government’s Decree No.44/1998/ND-CP of June
29, 1998 on transformation of State enterprises into joint-stock companies);
3. State enterprises assigned to labor
collectives, or sold to collectives, individuals or legal persons under the
provisions in the Government’s Decree No.103/1999/ND-CP of September 10, 1999;
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5. Private enterprises;
6. Cooperatives, unions of cooperatives;
7. Private, people-founded, semi-public
education and training institutions; private and people-founded medical
establishments; national culture establishments set up and operating according
to the provisions of law;
8. Enterprises of political organizations,
socio-political organizations, professional societies with business
registration according to law provisions;
9. Individuals, business groups operating under
Decree No.66-HDBT of March 2, 1992 of the Council of Ministers (now the
Government) and individual business households with business registration under
the provisions in the Government’s Decree No.02/2000/ND-CP of February 3, 2000
on business registration;
10. Vietnamese citizens, overseas Vietnamese,
foreigners permanently residing in Vietnam, who buy shares, contribute capital
to Vietnamese enterprises.
II. The subjects mentioned at Points 1, 2, 3, 4,
5, 6, 7, 8 and 9 of Section I above (referred collectively to production and/or
business establishments), that have investment projects (for State enterprises
conducting equitization, assignment or sale, the investment projects shall be
plans on equitization, assignment or sale of the enterprises, approved by
competent authorities), and meet the conditions on labor, production and
business lines entitled to investment preferences, geographical areas of
investment preferences under the provisions in Articles 15 and 16 of Decree
51/1999/ND-CP, or investment projects in form of BOT, BTO, shall be entitled to
tax, land use levy and land rent preferences (referred collectively to as tax
preferences) under the guidance in Section B of this Circular when:
- They operate strictly according to
production/business lines already registered for business;
- They have registered the tax payment with the
tax offices;
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For production and/or business establishments
which have not yet implemented the regimes of accounting, invoice, dossiers,
tax amounts to be paid annually and calculated according to the regime of
turnover and taxable income portion package shall not be qualified to enjoy tax
preferences under the guidance in this Circular.
B. TAX PREFERENCES
I. REGARDING THE ENTERPRISE
INCOME TAX RATES
The enterprise income tax rate preferences under
the provisions in Article 20 of Decree No.51/1999/ND-CP shall be effected as
follows:
1. The application objects shall include
production and/or business establishments with projects of investment in
production and/or business lines belonging to domains entitled to investment
preferences defined in List A or investment projects executed in geographical
areas entitled to investment preferences according to the provisions in List B
or List C in Appendix issued together with Decree No.35/2002/ND-CP.
2. The specific preferential enterprise income
tax rates shall be as follows:
2.1. The tax rate of 25% for projects of
investment in production and/or business lines defined in List A in the
Appendix issued together with Decree No.35/2002/ND-CP;
2.2. The tax rate of 25% for investment projects
executed in geographical areas prescribed in List B in the Appendix issued
together with Decree No.35/2002/ND-CP;
2.3. The tax rate of 20% for projects of
investment in production and/or business lines prescribed in List A, which are
executed in geographical areas defined in List B in the Appendix issued
together with Decree No.35/2002/ND-CP;
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2.5. The tax rate of 15% for projects of
investment in production and/or business lines and crafts prescribed on List A,
which are executed in geographical areas defined in List C in the Appendix
issued together with Decree No.35/2002/ND-CP.
Production and/or business establishments which,
apart from their investment projects in production/business lines or geographical
areas entitled to investment preferences, conduct business activities in other
production/business lines or geographical areas, shall have to monitor and
account the taxable incomes of the investment preference-eligible production
and/or business lines or geographical areas separately from the taxable incomes
of business activities in other production/business lines or geographical areas
in order to declare and pay separate enterprise income tax strictly at the tax
rate prescribed for each production/business line or geographical area they are
involved in. Where the production and/or business establishments are unable to
separately monitor and account the taxable income of production/business lines
or business locations with different enterprise income tax rates, the total
taxable income of the production/business lines or business locations, which
cannot be accounted separately, must be declared by the establishments at the
highest enterprise income tax rate prescribed for the production/business lines
or business locations, which they cannot account separately.
The preferential enterprise income tax rates
guided in Section I, Part B of this Circular, shall apply only in the duration
the investment projects are entitled to enterprise income tax exemption or
reduction. Upon the expiry of the duration of enterprise income tax exemption
or reduction enjoyed by the investment projects, the production and/or business
establishments must declare and pay tax at different tax rates prescribed in
the Law on Enterprise Income Tax. Particularly for projects of extensive or
intensive investment, they shall apply only to the additional incomes earned
from the investment, which can be determined by the production and/or business
establishments under the guidance at Point 1.3.2, Section II, Part B of this
Circular.
II. ON THE DURATION AND
LEVELS OF EXEMPTION FROM AND REDUCTION OF ASSORTED TAXES
1. Regarding enterprise income tax
1.1. The enterprise income tax exemption or
reduction preferences for investors with investment projects on setting up
production and/or business establishments under the provisions in Article 21 of
Decree No.51/1999/ND-CP shall be effected as follows:
1.1.1. The application objects shall be newly
set-up production and/or business establishments (including State enterprises
transformed into joint-stock companies according to Decree No.64/2002/ND-CP and
State enterprises assigned to labor collectives or sold to collectives,
individuals or legal persons under Decree No.103/1999/ND-CP), which satisfy the
conditions on labor, production/business lines in domains entitled to
investment preferences, geographical areas entitled to investment preferences
as provided for in Articles 15 and 16 of Decree No.51/1999/ND-CP.
1.1.2. Tax exemption or reduction duration and
levels
a/ Exemption for two years as from the time the
taxable income is generated and 50% reduction of the payable tax amounts for
two subsequent years for projects which satisfy one condition prescribed in
Article 15 of Decree No.51/1999/ND-CP;
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c/ Exemption for three years as from the time
the taxable income is generated and 50% reduction of the payable tax amount for
five subsequent years for projects of investment in production and/or business
lines prescribed in List A, which are executed in geographical areas prescribed
in List B in the Appendix issued together with Decree No.35/2002/ND-CP;
d/ Exemption for three years as from the time
the taxable income is generated and 50% reduction of the payable tax amount for
seven subsequent years for investment projects which satisfy both conditions
prescribed in Article 15 of Decree No.51/1999/ND-CP and are executed in
geographical areas prescribed in List B in the Appendix issued together with
Decree No.35/2002/ND-CP;
e/ Exemption for four years as from the time the
taxable income is generated and 50% reduction of the payable tax amount for
seven subsequent years for projects of investment in production and/or business
lines prescribed in List A, which are executed in geographical areas prescribed
in List C in the Appendix issued together with Decree No.35/2002/ND-CP;
f/ Exemption for four years as from the time the
taxable income is generated and 50% reduction of the payable tax amount for
nine subsequent years for investment projects which satisfy both conditions
prescribed in Article 15 of Decree No.51/1999/ND-CP and are executed in
geographical areas prescribed in List C in the Appendix issued together with
Decree No.35/2002/ND-CP.
For operating production and/or business
establishments with investment projects on setting up new production and/or
business establishments entitled to investment preferences, the enterprise
income tax preferences shall be effected as follows:
- If the newly set-up production and/or business
establishments are units which are granted business registration certificates,
account their business results and register, declare and pay enterprise income
tax with the tax offices, they shall be entitled to the enterprise income tax
exemption, reduction duration and levels guided at Point 1.1, Section II, Part
B of this Circular.
- If the newly set-up production and/or business
establishments are units which conduct dependent-accounting and register,
declare and pay enterprise income tax at the principal production and/or
business establishments, the enterprise income tax exemption, reduction
duration and levels applicable to the principal production and/or business
establishments shall comply the guidance at Point 1.3, Section II, Part B of
this Circular. For this case, the taxable income entitled to tax exemption or
reduction preferences shall be correspondingly determined in percentage of the
turnover of the dependent-accounting units against the total turnover of the
principal production and/or business establishments.
Production and/or business establishments set up
in the following cases are not qualified to enjoy the enterprise income tax
preferences under the guidance in Section I and at Point 1.1, Section II, Part
B of this Circular:
- Production and/or business establishments are
set up as a result of division, separation, merger or consolidation under the
provisions of the Enterprise Law;
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If the production and/or business establishments
which are set up in the above-mentioned cases, invest in the expansion thereof
or make intensive investment and satisfy the conditions for enjoying the
investment preferences prescribed in Articles 15 and 16 of Decree
No.51/1999/ND-CP, they shall be considered for the enjoyment of enterprise
income tax preferences under the guidance in Section I and Point 1.3, Section
II, Part B of this Circular.
1.2. Enterprise income tax preferences for
capital-mobilizing and -lending activities of people’s credit funds:
As from January 1, 2001, the capital-mobilizing
and -lending activities of the people’s credit funds shall be entitled to
enterprise income tax preferences under the provisions in Article 21 of Decree
No.51/1999/ND-CP of July 8, 1999 of the Government. The specific enterprise
income tax preference levels shall be determined as follows:
1.2.1. The capital-mobilizing and -lending
activities of the people’s credit funds set up as from January 1, 2001 onward
shall be entitled to enterprise income tax exemption and reduction as from the
time the taxable income is generated as follows:
a/ Exemption for two years and 50% reduction of
the payable tax amount for two subsequent years for the people’s credit funds
which fail to meet the preference conditions on average labor employment in the
year as provided for in Article 15 of Decree No.51/1999/ND-CP;
b/ Exemption for two years and 50% reduction of
the payable tax amount for four subsequent years for the people’s credit funds
which meet the preference conditions on average labor employment in the year
but fail to meet the conditions on geographical areas entitled to investment
preferences under the provisions in Article 16 of Decree No.51/1999/ND-CP;
c/ Exemption for three years and 50% reduction of
the payable tax amount for five subsequent years for the people’s credit funds
which are headquartered in the geographical areas prescribed in List B in the
Appendix issued together with Decree No.35/2002/ND-CP, but fail to satisfy the
preference conditions on average labor employment in the year as provided for
in Article 15 of Decree No.51/1999/ND-CP;
d/ Exemption for three years and 50% reduction
of the payable tax amount for seven subsequent years for the people’s credit
funds which are headquartered in geographical areas prescribed in List B in the
Appendix issued together with Decree No.35/2002/ND-CP and satisfy the
preference conditions on average labor employment in the year as provided for
in Article 15 of Decree No.51/1999/ND-CP;
e/ Exemption for four years and 50% reduction of
the payable tax amount for seven subsequent years for the people’s credit funds
which are headquartered in geographical areas prescribed in List C in the
Appendix issued together with Decree No.35/2002/ND-CP, but fail to satisfy the
preference conditions on average labor employment in the year as provided for
in Article 15 of Decree No.51/1999/ND-CP;
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1.2.2. The capital-mobilizing and-lending activities
of the people’s credit funds set up before January 1, 2001, if the investment
preference duration has not yet expired, shall be entitled to the enterprise
income tax preferences for the remaining preference duration, as from January
1, 2001. The remaining preference duration shall be determined as equal to the
tax exemption or reduction duration enjoyed by the people’s credit funds under
the conditions stated at Point 1.2.1, Section II of this Circular minus (-) the
duration from the time the people’s credit funds have the taxable income to the
end of 2000. In cases where the people’s credit funds earn their taxable income
after January 1, 2001, the tax exemption or reduction duration shall be
calculated from the year the people’s credit funds start having their taxable
income.
To enjoy the enterprise income tax preference
levels under the guidance at Point 1.2, Section II, Part B of this Circular,
the people’s credit funds must carry out the procedures to apply for investment
preference certificates according to regulations. Annually, basing themselves
on the practical conditions for investment preferences, the people’s credit
funds shall determine by themselves the enterprise income tax preference levels
and proceed with the tax declaration and payment into the State budget
according to each period as well as the tax settlement for the whole year with
the tax offices as provided for.
1.3. The enterprise income tax exemption and
reduction preferences for investment projects on extensive or intensive
investment under the provisions in Article 23 of Decree No.51/1999/ND-CP shall
be effected as follows:
1.3.1. Application objects shall be the
production and/or business establishments which carry out projects for
extensive or intensive investment in production and/or business activities in
the production and/or business lines prescribed in List A in the Appendix
issued together with Decree No.35/2002/ND-CP; the production establishments
which carry out investment projects on their relocation from inner cities,
inner towns or into industrial parks, export processing zones, hi-tech parks,
industrial clusters.
1.3.2. The duration and levels of tax exemption
or reduction for the increased income amounts brought about by the extensive or
intensive investment projects shall be as follows:
a/ Exemption for one year and 50% reduction of
the payable tax amount for four subsequent years;
b/ Exemption for three years and 50% reduction
of the payable tax amount for five subsequent years for investment projects
executed in geographical areas prescribed in List B in the Appendix issued
together with Decree No.35/2002/ND-CP;
c/ Exemption for four years and 50% reduction of
the payable tax amount for seven subsequent years for investment projects
executed in geographical areas prescribed in List C in the Appendix issued
together with Decree No.35/2002/Nd-CP.
The tax exemption and reduction duration for
extensive or intensive investment projects shall be determined by either of the
following two methods:
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- It is calculated from the year following the
year when the investment projects are completed and put into production and/or
business.
For investment projects with the implementation
duration of over one year, which are divided into many investment items, the
production and/or business establishments shall be entitled to the application
of enterprise income tax exemption and/or reduction duration when the projects
are completed and put into production and/or business; where investment items
are completed and put into production and/or business one after another, the
tax exemption and/or reduction duration shall be calculated according to each
investment item completed and put into production and/or business.
Basing themselves on the situation of investment
project execution and the above-calculated tax exemption and/or reduction
duration, the production and/or business establishments shall register with the
tax offices the specific tax exemption and/or reduction duration for their
units. The written registration of tax exemption and/or reduction duration
shall be made and sent to the tax offices together with the copies of
investment preference certificates or the ownership conversion decisions of
competent agencies (for State enterprises transformed into joint-stock
companies under Decree No.64/2002/ND-CP and State enterprises assigned to labor
collectives or sold to collectives, individuals or legal persons under Decree
No.103/1999/ND-CP).
The production and/or business establishments
must account separately the increased income amounts brought about by
investment in order to determine the enterprise income tax amounts to be exempt
or reduced. Where the production and/or business establishments cannot account
separately the income amounts increased due to investment, the increased income
amounts entitled to tax exemption or reduction shall be determined
corresponding to the ratio between the value of fixed assets which are newly
invested, completed, handed over and put to use and the total historical cost
of the fixed assets actually used for production and/or business during the tax
exemption or reduction period.
The increased enterprise income
entitled to tax exemption and/or reduction
=
The total taxable enterprise income
in the year
x
The value of newly invested fixed
assets
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In which:
+ The total taxable enterprise income in the
year is determined strictly according to the prescribed regime on settlement of
enterprise income tax.
+ The total historical cost of fixed assets
actually used in production and/or business, includes: The value of newly
invested fixed assets already completed, handed over and put to use and the
historical cost of the existing fixed assets being used for production and/or
business according to the period-end figures of the accounting balance sheet of
the year when tax exemption and reduction is considered.
Where the investment projects are executed for
more than one year and divided into many investment items and the production
and/or business establishments have already registered with the tax offices for
the application of the calculation of tax exemption or reduction duration
according to each investment item already completed and put into production
and/or business, the value of newly invested fixed assets shall be determined
according to the accumulated value of the investment items already completed
and put to use up to the time of enterprise income tax settlement (December 31)
of the year of tax exemption and/or reduction. For investment projects
completed part by part or investment item by investment item, but the newly
invested fixed assets have not yet been put into production and/or business in
order to raise the production and/or business capacity and efficiency of the
production and/or business establishments in the year, they are not entitled to
the application of the calculation of tax exemption and reduction under the
guidance at Point 1.3, Section II, Part B of this Circular.
Example 1: At the end of 2000, Company A had the
total historical cost of fixed assets involved in production and/or business
activities being VND 30 billion. The Company had the following investment
projects: In 2001, a production chain valued at VND 10 billion was completely
installed and put to use; in 2002, a production chain valued at VND 15 billion
was completely installed and put to use. The Company was unable to account
separately the income amounts increased due to the execution of investment
projects and it has already registered the application of the calculation of
tax exemption and reduction duration according to each investment item
completed and put into production and/or business. For its business results,
the Company had its taxable income of VND 12 billion in 2001 and VND 20 billion
in 2002.
The income amount increased due to investment,
which is entitled to tax exemption and reduction shall be determined as
follows:
+ In 2001:
The increased
income amount entitled to tax exemption, reduction
=
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x
VND 10 billion
VND 30 billion
+ 10 billion
+ In 2002:
The increased income
amount entitled to tax exemption, reduction
=
VND 20 billion
x
VND 10 billion
+ 15 billion
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Example 2: Also with the above example, the
Company implements the investment project part by part, which, however, shall
be put into production and/or business only when it is fully completed. For
this case, the increased taxable income brought about by investment shall be
determined when the entire project is completed and put into production and/or
business (2002) as follows:
+ For 2002:
The increased
income amount entitled to tax exemption, reduction
=
VND 20 billion
x
VND 25 billion
VND 30 billion
+ 25 billion
1.4. The enterprise income tax preferences for
investors with investment projects in forms of BOT, BTO, prescribed in Article
22 of Decree No.51/1999/ND-CP shall be effected as follows:
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1.4.2. The tax exemption or reduction duration
and levels:
Exemption of tax for four years as from the time
the taxable income is generated and 50% reduction of the payable tax amount for
nine subsequent years for the income amounts earned from the execution of
investment projects in forms of BOT and BTO.
If production and/or business establishments,
apart from the incomes from BOT or BTO projects, earn incomes from other
production and/or business activities, they shall have to account separately
the business results of each kind of activity in order to implement the tax
preference regime and make tax declaration and payment according to the
separate regulations for each type of business activity of the establishments.
1.5. The enterprise income tax preferences
supplemented under the provision in Article 24 of Decree No.51/1999/ND-CP shall
be effected as follows:
The production and/or business establishments,
which have projects of investment (regardless of their investment forms being
the setting up of new production and/or business establishments or the
extensive or intensive investment) in the production and/or business lines
prescribed in List A or projects of investment in geographical areas entitled
to investment preference according to Decree No.35/2002/ND-CP, shall not have
to pay additional enterprise income tax on the taxable income amounts which the
production and/or business establishments have determined in order to enjoy
enterprise income tax exemption and/or reduction preferences.
1.6. Additional preferences on enterprise income
tax exemption and/or reduction for export goods- producing and/or trading
establishments under the provisions in Article 27 of Decree No.51/1999/ND-CP
shall be effected as follows:
1.6.1. The application objects are export
goods-producing and/or trading establishments entitled to the enterprise income
tax preferences in one of the cases prescribed in Articles 20, 21, 22, 23 and
24 of Decree No.51/1999/ND-CP.
1.6.2. Tax exemption and/or reduction duration
and levels:
a/ The 50% reduction of the payable tax amount
on the taxable income from export by the production and/or business
establishments in cases:
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a.2/ In the first year, the new goods items with
economic and technical properties and utilities different from those of the
goods items previously exported by the enterprises;
a.3/ In the first year, the goods are exported
into the market of a new country or a new territory different from the former
market.
b/ The 50% reduction of the payable tax amount
on the increased taxable income from export in the fiscal year by the
production and/or business establishments with export turnover being higher
year after year;
c/ The 20% reduction of the payable tax amount
on the taxable income from export in the fiscal year by the production and/or
business establishments in cases:
c.1/ They have export turnover accounting for
more than 50% of the total turnover;
c.2/ They keep the export market stable in
quantity or value of export goods for three previous years in a row.
d/ The additional 25% reduction of the payable tax
on the income amount earned from export in the fiscal year for production
and/or business establishments entitled to tax preferences under the guidance
at Items a, b and c, Point 1.6.2, Section II, Part B of this Circular, if the
investment projects yield the incomes from such export implemented in
geographical areas prescribed in List B in the Appendix issued together with
Decree No.35/2002/ND-CP.
e/ The full exemption of the payable enterprise
income tax on the income from export in the fiscal year for production and/or
business establishments entitled to tax preferences under the guidance at Items
a, b and c, Point 1.6.2, Section II, Part B of this Circular, if the investment
projects yield the incomes from such export implemented in geographical areas
prescribed in List C in the Appendix issued together with Decree
No.35/2002/ND-CP.
In order to acquire grounds for realization of
the additional enterprise income tax preference levels under the guidance at
Point 1.6, Section II, Part B of this Circular, the export goods-producing
and/or trading establishments must account separately the income amount
entitled to preference according to each case mentioned above. In cases they
are unable to account separately the income amount entitled to preference as prescribed
for the above export, such income amount shall be determined as corresponding
to the percentage of the export turnover as prescribed against the total
turnover of the production and/or business establishments.
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2. Regarding the land use tax
The land use tax exemption and/or reduction
preferences (including tax on the use of agricultural land and tax on houses
and land) as prescribed in Article 19 of Decree No.51/1999/ND-CP shall be
effected as follows:
2.1. The application objects are production
and/or business establishments which satisfy conditions on labor, production
and/or business lines in domains entitled to investment preferences, geographical
areas entitled to investment preferences under the provisions in Articles 15
and 16 of Decree No.51/1999/ND-CP, and are assigned land by the State for
implementation of investment projects.
Production and/or business establishments, which
satisfy conditions for investment preferences but execute their investment
projects on land areas not assigned by the State for implementation of the
projects or execute the projects on the land areas previously assigned by the
State, are not qualified for land use tax exemption or reduction as provided
for in Article 19 of Decree No.51/1999/ND-CP.
2.2. The land use tax preference duration and
levels
2.2.1. Production and/or business
establishments, which are assigned land by the State for implementation of
investment projects belonging to production and/or business lines prescribed in
List A in the Appendix issued together with Decree No.35/2002/Nd-CP, shall
enjoy land use tax exemption or reduction as from the time the land is assigned
for the implementation of investment projects as follows:
a/ The 50% reduction of land use tax for seven
years for investment projects belonging to production and/or business lines
prescribed in Section II, List A in the Appendix issued together Decree
No.35/2002/ND-CP;
b/ Land use tax exemption for the whole
project-implementing duration for investment projects belonging to production
and/or business lines prescribed in Section I, List A issued together with
Decree No.35/2002/ND-CP.
2.2.2. Production and/or business establishments
assigned land by the State for execution of investment projects in geographical
areas prescribed in List B in the Appendix issued together with Decree
No.35/2002/ND-CP shall be exempt from land use tax as from the time they are
assigned land for execution of investment projects as follows:
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b/ Exemption for ten years for investment
projects executed in geographical areas prescribed in Section I, List B in the
Appendix issued together with Decree No.2002/ND-CP.
2.2.3. Production and/or business
establishments, which are assigned land by the State for execution of
investment projects in geographical areas prescribed in List B in the Appendix
issued together with Decree No.35/2002/ND-CP and at the same time satisfy the
conditions prescribed in Article 15 of Decree No. 51/1999/ND-CP, are exempt from
land use tax as from the time they are assigned land for execution of
investment projects as follows:
a/ Exemption for eleven years for investment
projects belonging to production and/or business lines prescribed in List A in
the Appendix issued together with Decree No.35/2002/ND-CP;
b/ Exemption for fifteen years for investment
projects which simultaneously satisfy two conditions prescribed in Clauses 1
and 2, Article 15 of Decree No.51/1999/ND-CP.
2.2.4. Production and/or business establishments
assigned land by the State for execution of investment projects in geographical
areas prescribed in List C in the Appendix issued together with Decree
No.35/2002/ND-CP are exempt from land use tax as from the time they are
assigned land for the execution of investment projects as follows:
a/ Exemption for eleven years for investment
projects in geographical areas prescribed in Section II, List C, the Appendix
issued together with Decree No.35/2002/ND-CP.
b/ Exemption for fifteen years for investment
projects in geographical areas prescribed in Section I, List C, the Appendix
issued together with Decree No.35/2002/ND-CP.
c/ Land use tax exemption for the whole
project-executing duration for investment projects belonging to production
and/or business lines prescribed in List A and being executed in geographical
areas prescribed in List C in the Appendix issued together with Decree
No.35/2002/ND-CP.
Annually, during the period of land use tax
preferences, production and/or business establishments must themselves determine
and account into their production/business costs the payable land use tax
amounts after subtracting the exempt or reduced amounts of land use tax
according to levels guided at Point 2.2, Section II, Part B of this Circular.
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According to the provisions in Article 26 of
Decree No.51/1999/ND-CP, the production and/or business establishments, which
have investment projects belonging to production/business lines prescribed in
List A or investment projects in geographical areas prescribed in List B or
List C, the Appendix issued together with Decree No.35/2002/ND-CP, shall be
exempt from import tax for the following commodities which cannot be produced
at home yet or can be domestically produced but fail to meet the quality
requirements:
- Equipment, machinery and/or special-use
transport means (included in technological chains), which are imported to
formulate fixed assets of the enterprises or to expand the investment scale,
renew technologies.
- Transport means used exclusively for conveyance
of workers.
4. Regarding tax on profit (income) transfer
abroad
The preferences on overseas transfer of income
as provided for in Article 28 of Decree No.51/1999/ND-CP shall be effected as
follows:
4.1. The application objects are investors being
overseas Vietnamese, foreigners permanently residing in Vietnam, foreigners
contributing capital or buying shares as provided for in Decree
No.51/1999/ND-CP.
4.2. Levels of preference of tax on overseas
transfer of income
To pay a tax amount equal to 5% of the lawful
income to be transferred abroad. The way of determining the payable tax amounts
and the tax payment procedures shall comply with the guidance in Section V,
Part C of Circular No.18/2002/TT-BTC of February 20, 2002 of the Finance
Ministry.
III. LAND USE LEVY EXEMPTION,
REDUCTION
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1. The application objects are production
and/or business establishments which satisfy the conditions on labor,
production and/or business lines in the domains entitled to investment
preferences, geographical areas entitled to investment preferences as provided
for in Articles 15 and 16 of Decree No.51/1999/ND-CP, and are assigned land by
the State for the execution of projects of investment in production and/or
business activities subject to the payment of land use levy.
Production and/or business establishments which
satisfy conditions for enjoyment of investment preferences but execute their
investment projects on the land areas in the following cases shall not be
qualified for land use levy exemption or reduction as provided for in Article
17 of Decree No.51/1999/ND-CP:
- They execute their investment projects on the
land areas not assigned by the State for the execution of investment projects
(Example: Production and/or business establishments execute their investment
projects on land areas received from other persons with the land use right,
then legalized).
- They execute their investment projects on the
land areas assigned to them by the State but not for the purpose of executing
the investment projects (Example: Production and/or business establishments
execute their investment projects on scale expansion on the land areas already
assigned to them by the State before the time of executing the investment
projects).
2. Land use levy exemption, reduction levels:
2.1. 50% reduction of the land use levy, if the
investment projects belong to the production and/or business lines prescribed
in List A, the Appendix issued together with Decree No.35/2002/ND-CP;
2.2. 75% reduction of the land use levy, if the
investment projects are executed in geographical areas prescribed in List B,
the Appendix issued together with Decree No.35/2002/ND-CP;
2.3. The land use levy shall be exempt in the
following cases:
a/ The investment projects belong to production
and/or business lines prescribed in List A and are executed in geographical
areas prescribed in List B in the Appendix issued together with Decree No.35/2002/ND-CP;
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The above-mentioned land use level exemption and
reduction levels shall be determined once at the time when the production
and/or business establishments are assigned land for execution of investment
projects and the land use levy amounts to be paid into the State budget must be
calculated according to regulations. Where the production and/or business
establishments are, at the time of land assignment, not qualified to enjoy the
land use levy exemption or reduction preference, but are allowed by the State
to defer the payment thereof and in the delayed payment duration they satisfy
the conditions for enjoyment of investment preferences, the production and/or
business establishments, in this case, still have to fully pay the determined
payable land use levy amounts according to the prescribed time limits and are
not entitled to enjoy the land use levy exemption or reduction as guided in
Section III, Part B of this Circular.
IV. LAND RENT EXEMPTION,
REDUCTION
The land rent exemption and reduction
preferences as provided for in Article 18 of Decree No.51/1999/ND-CP shall be
effected as follows:
1. The application objects are production and/or
business establishments which satisfy the conditions on labor, production
and/or business lines in domains entitled to investment preferences, in
geographical areas entitled to investment preferences as provided for in
Articles 15 and 16 of Decree No.51/1999/ND-CP, and are leased land by the State
for execution of investment projects on production/business activities.
Production and/or business establishments, which
execute their investment projects without renting land from the State or
execute their investment projects on the land areas previously rented from the
State, including the land areas where the investment projects are executed, and
have not yet signed the land-renting contracts but actually used such land before
the time of project execution and the tax offices have managed the collection
of land rent, shall not be qualified for land rent exemption as provided for in
Article 18 of Decree No.51/1999/ND-CP and the guidance in this Circular.
For State enterprises having been converted into
joint-stock companies under the provisions in Decree No.64/2002/ND-CP and State
enterprises assigned to labor collectives or sold to collectives, individuals
or legal persons as provided for in Decree No.103/1999/ND-CP, while the newly
set-up enterprises still carry out production and/or business activities on the
land areas previously rented from the State by such State enterprises, the land
rent exemption as prescribed in Article 18 of Decree 51/1999/ND-CP and the
guidance in this Circular shall not apply. In cases where the ownership form is
converted and the newly set-up enterprises rent more land from the State to
expand their production and/or business, they shall be exempt from the land
rent under the guidance in this Circular only for the newly rented land areas
for production and/or business expansion.
2. Land rent preference duration and levels:
2.1. Production and/or business establishments,
which are leased land by the State for execution of investment projects on production
and/or business activities and if their investment projects meet the conditions
prescribed in Article 15 of Decree No.51/1999/ND-CP, shall be exempt from land
rent as from the time of signing the land-renting contracts to execute the
investment projects as follows:
a/ Exemption for three years for investment
projects which fully satisfy one condition prescribed in Article 15 of Decree
No.51/1999/ND-CP;
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2.2. Production and/or business establishments
leased land by the State for the execution of investment projects on production
and/or business activities, if the investment projects are executed in the
geographical areas prescribed in List B in the Appendix issued together with
Decree No.35/2002/ND-CP shall be exempt from land rent as from the time the
land- renting contracts are signed to execute the investment projects as
follows:
a/ Exemption for seven years for projects in
geographical areas prescribed in Section II, List B in the Appendix issued
together with Decree No.35/2002/ND-CP.
b/ Exemption for ten years for projects in
geographical areas prescribed in Section I, List B in the Appendix issued
together with Decree No.35/2002/ND-CP.
2.3. Production and/or business establishments,
which are leased land by the State for execution of investment projects on
production and/or business activities, if the investment projects are executed
in geographical areas prescribed in List B in the Appendix issued together with
Decree No.35/2002/ND-CP, and simultaneously satisfy the conditions prescribed
in Article 15 of Decree No.51/1999/ND-CP, shall be exempt from land rent as
from the time the land-renting contracts are signed to execute the investment
projects as follows:
a/ Exemption for eleven years for investment
projects belonging to production and/or business lines prescribed in List A, in
the Appendix issued together with Decree No.35/2002/ND-CP;
b/ Exemption for thirteen years for investment
projects which simultaneously satisfy both conditions prescribed in Clauses 1
and 2 of Article 15 of Decree No.51/1999/ND-CP.
2.4. Production and/or business establishments
leased land by the State for the execution of investment projects on production
and/or business activities, if the investment projects are executed in
geographical areas prescribed in List C in the Appendix issued together with
Decree No.35/2002/ND-CP, shall be exempt from land rent as from the time the
land-renting contracts are signed to execute the investment projects as
follows:
a/ Exemption for eleven years for investment
projects executed in geographical areas prescribed in Section II, List C, the
Appendix issued together with Decree No.35/2002/ND-CP;
b/ Exemption for fifteen years for investment
projects executed in geographical areas prescribed in Section I, List C, the
Appendix issued together with Decree No.35/2002/ND-CP.
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Annually, within the land rent preference time
limits, production and/or business establishments must themselves determine and
account into their production and/or business costs the land rent amounts
payable into the State budget after subtracting the land rent amounts entitled
to exemption and reduction preferences according to levels as guided at Point
2, Section IV, Part B of this Circular.
C. IMPLEMENTATION
ORGANIZATION
I. FOR PRODUCTION AND/OR
BUSINESS ESTABLISHMENTS
1. After being granted the investment preference
certificates, production and/or business establishments which implement
investment projects entitled to tax preferences under the guidance in this
Circular must send the valid copies of their investment preference certificates
to the tax offices directly managing the tax collection within 10 working days
as from the date they are granted the investment preference certificates for
use as basis for effecting tax preferences for them strictly according to the
provisions in Article 37 of Decree No.51/1999/ND-CP.
Annually, based on the granted investment
preference certificates, production and/or business establishments shall
determine by themselves the amounts entitled to tax preferences as well as the
amounts payable into the State budget, and declare and make declaration and
payment into the State budget according to each period as well as the annual
settlement with the tax offices according to the prescribed regime. The year
for determining tax preference amounts under the guidance in this Circular
shall be calculated according to the tax settlement year.
2. Particularly for the following cases, the tax
preference order and procedures shall be as follows:
2.1. State enterprises converted into
joint-stock companies under the provisions in Decree No.64/2002/ND-CP and State
enterprises assigned to labor collectives or sold to collectives, individuals
or legal persons under the provisions in Decree No.103/1999/ND-CP, if
satisfying the conditions on production and/or business lines, labor and
geographical areas for investment preferences, shall be entitled to enjoy tax
preferences under the guidance in this Circular without having to fill in the
procedures of application for investment preference certificates.
In order to enjoy tax preferences under the provisions
in Decree No.51/1999/ND-CP of July 8, 1999 of the Government, the State
enterprises converted into joint-stock companies and the State enterprises
assigned to labor collectives or sold to collectives, individuals or legal
persons must send to the tax offices directly managing the enterprises
(including the tax offices, the customs offices) the copies of the decisions on
conversion of the ownership form of the competent bodies (affixed with the
enterprises stamps certifying as true copies of the originals) and their own
written certification of the conditions for enjoying tax preferences, the tax
preference levels to be enjoyed by the enterprises.
Annually, based on the actual conditions for
enjoyment of investment preferences, the enterprises shall determine by
themselves and take responsibility for the accuracy of their determination of,
the amounts of tax, State budget remittances, to be paid, exempt or reduced
under the guidance in this Circular. The enterprises shall have to declare and
pay tax as well as State budget remittances and make annual settlement with the
tax offices according to the prescribed regime.
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2.3. For production and/or business
establishments entitled to tax preferences under the guidance in Section III,
Part B of this Circular, the dossiers and competence for consideration of land
use levy exemption or reduction shall comply with the guidance in Circular
No.115/2000/TT-BTC of December 12, 2000 of the Finance Ministry guiding the
implementation of the Government’s Decree No.38/2000/ND-CP of August 23, 2000
on land use levy collection.
3. In the course of executing their projects,
production and/or business establishments which fail to fully meet the conditions
for enjoyment of tax preferences at registered levels due to objective or
subjective reasons shall have to notify such in writing to the agencies which
have granted the investment preferences within 30 days as from the time the
projects are not qualified to enjoy investment preferences as prescribed.
Within 7 days after receiving the notification of the production and/or
business establishments, the agencies which have decided on the granting of
investment preferences shall consider and decide on the partial adjustment or
full withdrawal of the accepted investment preferences.
4. Production and/or business establishments
which commit acts of dishonesty in order to enjoy tax preferences under the Law
on Domestic Investment Promotion or fail to notify in time as prescribed the
tax offices of changes in investment conditions which lead to the reduction of
tax preference levels against the registered levels for adjustment of tax
preference levels, shall have to compensate for damage and refund the tax preference
amounts they have enjoyed in the period when the projects are no longer
qualified for investment preferences. Besides, the production and/or business
establishments shall, depending on the seriousness of their violations, be
administratively sanctioned or examined for penal liability according to law
provisions.
5. If production and/or business establishments
simultaneously enjoy tax preferences under the Domestic Investment Promotion
Law and tax preferences under other law provisions, they shall be entitled to
only enjoy the tax preferences under one of the above-mentioned provisions
chosen by the enterprises themselves and have to register the application of
the tax preference regimes with the direct managing tax offices.
If production and/or business establishments
execute many tax preference-eligible investment projects simultaneously, they
must monitor and separately account the taxable income of each investment
project for application of enterprise income tax preference level prescribed
for each project. Where the establishments cannot account separately the
taxable income of each project, they may only apply the lowest enterprise
income tax preference levels they are enjoying for the taxable income which
cannot be accounted separately.
Example: In 2001, Company X was executing 3
investment projects entitled to tax preferences. Of the above three investment
projects, two were in the period of enterprise income tax exemption while the
third project was in the period of 50% reduction of payable enterprise income
tax.
For 2001 final settlement, Company X could only
account separately the taxable income of an investment project entitled to
enterprise income tax exemption. Under the above guidance, the above-mentioned
separately accountable income portions shall be exempt from enterprise income
tax and the income portions which cannot be accounted separately of the two
remaining investment projects shall only be entitled to the application of 50%
reduction of the payable income tax amount.
II. FOR TAX-COLLECTING
AGENCIES
1. The tax-collecting agencies (including tax
offices and customs offices, which are hereinafter referred collectively to as
tax offices) shall base themselves on the tax preference amounts clearly
inscribed in the investment preference certificates (for State enterprises
converted into joint-stock companies and State enterprises assigned to labor
collectives or sold to collectives, individuals or legal persons, it is their
own written determinations) to determine the exempt or reduced tax amounts when
the production and/or business establishments have fulfilled their obligations
and send to the tax offices all necessary papers as guided in this Circular.
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Annually, when settling tax, the tax offices
shall have to officially determine the tax preference amounts enjoyed by
production and/or business establishments, the amounts to be paid into the
State budget by production and/or business establishments and notify the latter
thereof so that they fully pay the deficits within the prescribed time limits,
or the overpaid amounts as compared to the payable amounts inscribed in the
notices of the tax offices in order to deduct them from the payable amounts of
the subsequent period.
3. If in the course of inspecting the tax
settlement, the tax offices detect that production and/or business
establishments, which are in the period of enjoying investment preferences,
commit acts of settling the enterprise income tax falsely against the
production and/or business realities or commit acts of making false
declarations, they shall consider and handle as follows:
- If the investment projects are being in the
period of enterprise income tax exemption, the production and/or business
establishments may still enjoy the enterprise income exemption according to the
prescribed regimes. Depending on the faults committed by production and/or
business establishments, the tax offices shall apply different administrative
sanctioning levels to acts of untruthfully settling or falsely declaring the
enterprise income tax by production and/or business establishments.
- If the investment projects are being in the
period of enterprise income tax reduction, the taxable income amounts
untruthfully or falsely declared by production and/or business establishments
shall not be considered for tax reduction. Depending on the faults committed by
the production and/or business establishments, the tax offices shall apply
various administrative sanctioning levels to or transfer the cases to agencies
competent to examine the penal liability for, acts of untruthfully settling or
falsely declaring enterprise income tax by production and/or business
establishments.
In all circumstances, the tax offices must
retrospectively collect fully the tax deficit amounts from production and/or
business establishments which commit acts of falsely declaring tax or evading
tax and apply sanctioning measures according to law provisions.
4. The tax offices at all levels must open
dossiers, monitoring books, archive fully documents related to projects
entitled to tax preferences as guided in this Circular. Annually, the
provincial/municipal Tax Departments shall report to the Finance Ministry (the
General Tax Department- the Planning Section) on the subjects entitled to
investment preferences under the Domestic Investment Promotion Law, the tax
amounts and other State budget remittances, which are already exempt or
reduced, together with the reports on results of State budget collection in
areas under their respective management.
5. Tax and customs officials, individuals, who
abuse their positions and powers to deliberately act in contravention of the
provisions in Decree No.51/1999/ND-CP and the guidance in this Circular, thus
causing losses to the State budget, shall, depending on the seriousness of
their violations, be disciplined, administratively sanctioned or examined for
penal liability according to law provisions.
III. IMPLEMENTATION EFFECT
1. For investment projects already granted the
investment preference certificates under the provisions of the Domestic
Investment Promotion Law and now not on Lists A, B or C, in the Appendix issued
together with Decree No.35/2002/ND-CP, they shall continue enjoying the tax
preferences according to the granted investment preference certificates.
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3. For investment projects already executed but
previously not registered for enjoyment of investment preferences under the
provisions of Decree No.51/1999/ND-CP, if satisfying the conditions prescribed
in Decree No.35/2002/ND-CP and the project owners have the dossiers of investment
preference registration and have been already granted the investment preference
certificates by competent bodies, they shall only enjoy tax preferences for the
remaining tax preference duration (if any), as from the date Decree
No.35/2002/ND-CP takes implementation effect.
4. In case of change of investors for investment
projects which are being in the period of enjoying tax preferences under the
guidance in this Circular, the new investors, if satisfying conditions for
investment preferences as provided for, shall continue enjoying the tax
preferences for the remaining preference duration of each specific tax
preference amount inscribed in the investment preference certificates already
granted to the former investors of the investment projects. The new investors
shall have the responsibility to fulfill all obligations which the former
investors committed with the State to fulfill.
5. This Circular takes effect 15 days after its
signing and replaces Circular No.22/2001/TT-BTC of April 3, 2001 of the Finance
Ministry guiding the tax exemption or reduction for subjects entitled to
investment preferences under Decree No.51/1999/ND-CP of July 8, 1999 of the
Government, detailing the implementation of the Domestic Investment Promotion
Law (amended).
For investment projects and cases of tax
exemption or reduction at different preference levels under the documents
guiding the implementation of tax exemption or reduction for subjects entitled
to investment preferences of the Finance Ministry before this Circular takes
effect, if the investors have already settled tax according to the prescribed
regimes, the retrospective collection or refund of tax amounts overpaid or
underpaid by investors as compared to the tax preference levels guided in this
Circular shall not be effected.
FOR THE FINANCE MINISTER
VIVE MINISTER
Truong Chi Trung