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THE
GOVERNMENT
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SOCIALIST
REPUBLIC OF VIET NAM
Independence Freedom Happiness
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No.
124/2008/ND-CP
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Hanoi,
December 11, 2008
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DECREE
DETAILING AND GUIDING THE IMPLEMENTATION OF A NUMBER OF
ARTICLES OF THE LAW ON ENTERPRISE INCOME TAX
THE GOVERNMENT
Pursuant to the December 25,
2001 Law on Organization of the Government;
Pursuant to the June 3, 2008 Law on Enterprise Income Tax;
At the proposal of the Minister of Finance,
DECREES:
Chapter I
GENERAL PROVISIONS
Article 1.-
Governing scope
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Article 2.-
Taxpayers
Taxpayers are defined in Article
2 of the Law on Enterprise Income Tax.
1. Taxpayers defined in Clause
1, Article 2 of the Law on Enterprise Income Tax include:
a/ Enterprises established and
operating under the Law on Enterprises, the Law on State Enterprises, the Law
on Foreign Investment in Vietnam, the Investment Law, the Law on Credit
Institutions, the Law on Insurance Business, the Securities Law, the Petroleum
Law, and the Commercial Law, and enterprises defined in other legal documents
in the form of joint-stock company; limited liability company; partnership;
private enterprise; state company; party to business cooperation contract;
party to oil and gas production sharing contract, oil and gas joint-venture
enterprise or jointly managed company;
b/ Enterprises established under
foreign laws (below referred to as foreign enterprises) with or without
Vietnam-based permanent establishments;
c/ Public or non-public
non-business units producing and trading goods or providing services and having
taxable incomes under Article 3 of this Decree;
d/ Organizations established and
operating under the Law on Cooperatives;
dd/ Organizations other than
those defined at Points a, b, c and d of this Clause that carry out production
and business activities and have taxable incomes under Article 3 of this Decree.
2. Organizations established and
operating (or registering operation) under Vietnamese law, business individuals
paying tax according to the method of withholding tax in case of purchase of
services (including services associated with goods) from enterprises defined at
Points c and d, Clause 2, Article 2 of the Law on Enterprise Income Tax.
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Article 3.-
Taxable incomes
1. Taxable incomes include
income from goods production and trading and service provision and other
incomes specified in Clause 2 of this Article. For enterprises having
registered their business and earning incomes specified in Clause 2 of this
Article, such incomes will be determined as incomes from their production and
business activities.
2. Other incomes cover:
a/ Income from capital transfer,
including income from the transfer of part or the whole of the capital amount
invested in an enterprise, even in case of sale of enterprises, transfer of
securities and transfer of capital in other forms under law;
b/ Income from real estate
transfer under Article 13 of this Decree;
c/ Income from the right to own
or use assets, including earned copyright royalties in any forms and earned
royalties from intellectual property rights; income from technology transfer
under law; and asset lease in any forms;
d/ Income from the transfer or
liquidation of assets (excluding real estate) and other valuable papers;
dd/ Income from savings
interests, loan interests or foreign currency sales, including interests on
savings deposited at credit institutions, interests on loans in any forms under
law, credit guarantee charges and other charges under loan provision contracts;
and income from foreign currency sales;
e/ Refunded provisions and
amounts previously accounted as expenses which are left unused or have not been
used up in the period of their deduction;
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h/ Payable debts of
unidentifiable creditors;
i/ Omitted income from previous
years business activities;
k/ Difference between the
collected fines or damages for breaches of economic contracts and the paid
fines or compensations for contract breaches under law;
l/ Received aid in cash or in
kind, except that specified in Clause 6, Article 4 of this Decree;
m/ Difference resulting from the
re-valuation of assets under law for capital contribution or transfer upon
separation, split, merger, consolidation or transformation of enterprises,
excluding the case of re-valuation of fixed assets upon transformation of state
enterprises into joint-stock companies.
Asset-receiving enterprises may
make accounting based on re-valuation prices upon the determination of
deductible expenses specified in Article 9 of this Decree;
n/ Incomes from production and
business activities carried out outside Vietnam;
o/ Other incomes provided for by
law.
3. Vietnam-generated taxable
incomes of enterprises defined at Points c and d, Clause 2, Article 2 of the
Law on Enterprise Income Tax are incomes originating in Vietnam from the
provision of services or loans and copyright royalties collected from
Vietnamese organizations and individuals or foreign organizations and
individuals doing business in Vietnam, regardless of their places of business.
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The Ministry of Finance shall
specify taxable incomes referred to in this Clause.
Article 4.-
Tax-exempt incomes
Tax-exempt incomes are specified
in Article 4 of the Law on Enterprise Income Tax.
1. Tax-exempt incomes from the
provision of technical services directly for agriculture include income from
such services as irrigation and water drainage; soil ploughing and harrowing,
and dredging of intra-field canals and ditches; prevention and control of crop
and animal pests and diseases; and harvest of agricultural products.
2. For income from the
performance of scientific research and technological development contracts,
sale of products turned out from trial production and with technologies applied
for the first time in Vietnam, the maximum tax exemption duration is one year
from the date of commencing production under scientific research and
technological application contracts, trial production or production with new
technologies.
The Ministry of Finance shall
specify this Clause.
3. Income from goods production
and trading and service provision activities of enterprises employing disabled,
detoxified and HIV-infected persons who account for at least 51% of the average
number of laborers in a year.
Tax-exempt incomes specified in
this Clause exclude other incomes specified in Clause 2, Article 3 of this
Decree.
4. Income from job-training
activities exclusively reserved for ethnic minority people, the disabled,
children in extremely disadvantaged circumstances and persons involved in
social evils. If an establishment also provides job training for other
categories of people, tax-exempt income shall be determined based on the ratio
between the number of ethnic minority people, the disabled, children in
extremely disadvantaged circumstances and persons involved in social evils and
the total number of job trainees of the establishment.
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6. Aid used for educational,
scientific research, cultural, artistic, charitable, humanitarian and other
social activities in Vietnam.
Aid beneficiaries that
improperly use the aid shall pay enterprise income tax at 25% of the improperly
used aid amount.
Aid beneficiaries defined in
this Clause are organizations established and operating under law and strictly
observing the laws on accounting and statistics.
Chapter II
TAX BASES AND TAX
CALCULATION METHODS
Article 5.-
Tax bases
Tax bases include taxed income
in a tax period and tax rate.
Tax period is specified in
Article 5 of the Law on Enterprise Income Tax and the provisions of the law on
tax administration.
Enterprises may choose to apply
a tax period according to a calendar year or fiscal year and must register it
with tax agencies before application.
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1. Taxed income in a tax period
shall be determined as follows:
Taxed income = Taxable income - (Tax-exempt
income + Losses carried forward under regulations)
2. Taxable income shall be
determined as follows:
Taxable income = (Turnover -
Deductible expenses) + Other incomes
For an enterprise conducting
different business activities, taxable income from production and business
activities is the total of incomes from all business activities. If a business
activity makes losses, the enterprise may offset such losses with the taxable
income of an income-generating business activity selected by the enterprise.
The remaining income after loss offsetting is subject to the rate of enterprise
income tax on income-generating business activities.
Income from real estate transfer
must be separately accounted for tax declaration and payment and must not be
included in incomes or used to offset losses made by other business activities.
3. Taxable incomes from some
production and business activities shall be determined as follows:
a/ For income from capital
transfer (excluding income from securities transfer specified at Point b of
this Clause), taxable income is the total sum of money collected under a
transfer contract minus (-) the purchase price of the transferred capital
amount, minus (-) expenses for the transfer;
b/ For income from securities
transfer, taxable income is the selling price minus (-) the purchase price of
the transferred securities, minus (-) expenses for the transfer;
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d/ For income from asset lease,
taxable income is the lease turnover minus (-) basic depreciation, expense for
asset renovation, repair or maintenance, expense for lease of assets for
sublease (if any) and other deductible expenses related to the lease;
dd/ For income from transfer or
liquidation of assets (except real estate), taxable income is the sum of money
collected from asset transfer or liquidation minus (-) the residual book value
of assets at the time of transfer or liquidation and deductible expenses related
to the transfer or liquidation;
e/ For income from foreign
currency sales, taxable income is the total sum of money collected from foreign
currency sales minus (-) the purchase price of the quantity of sold foreign
currencies (excluding foreign exchange difference resulting from the
re-valuation of monetary items of foreign currency origin at the end of a
fiscal year or foreign exchange difference arising in the course of capital
construction investment before production and business activities are carried
out);
g/ For difference resulting from
the re-valuation of fixed assets upon capital contribution, taxable income is
the difference between the re-valuated value and the residual value of fixed
assets, and shall be allocated to the number of years during which depreciation
may be made for the re-valuated fixed assets at capital contributing
enterprises.
For fixed assets transferred
upon separation, split, consolidation, merger or transformation of enterprises,
taxable income is the difference between the re-valuated value and the book
value or the residual value of fixed assets.
For assets other than fixed
assets, taxable income is the difference between the re-valuated value and the
book value;
h/ For incomes received from
overseas production, business or service activities, taxable income is the
total of pre-tax incomes.
4. Incomes from oil and gas
exploration and extraction activities shall be determined based on each oil and
gas contract.
Article 7.-
Determination and carrying forward of losses
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2. Loss-suffering enterprises
may carry forward their losses to the subsequent year; these losses may be
offset with taxable income. The maximum duration for carrying forward losses is
five consecutive years, counting from the year following the year the losses
arise.
3. Losses from real estate
transfer must be separately accounted and may only be offset with this
activity’s taxable income. The maximum duration for carrying forward losses is
five consecutive years, counting from the year following the year the losses
arise.
Article 8.-
Turnover
Turnover used for calculating
taxable income is specified in Article 8 of the Law on Enterprise Income Tax.
1. Turnover used for calculating
taxable income is the total of sales, processing remunerations and service
charges, including also subsidies and surcharges enjoyed by enterprises,
regardless of whether money has been collected or not.
For enterprises declaring and
paying value-added tax according to the tax credit method, turnover used for
calculating enterprise income tax is exclusive of value-added tax. For
enterprises declaring and paying value-added tax according to the method of
calculation of tax based directly on added value, turnover used for calculating
enterprise income tax is inclusive of value-added tax.
2. The time of determining
turnover used for calculating taxable income for sold goods is the time of
transfer of the right to own or use goods to purchasers.
The time of determining turnover
used for calculating taxable income for services is the time of completing the
provision of services to purchasers or the time of making service provision
invoices.
3. Turnover used for calculating
taxable income in some cases is specified as follows:
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b/ For goods and services used
for barter, donation or internal consumption, it shall be determined based on
the selling price of products, goods or services of the same or similar
categories at the time of barter, donation or internal consumption;
c/ For goods processing
activities, it is the proceeds from processing activities, including
remuneration, expenses for fuel, power and auxiliary materials, and other
expenses;
d/ For asset lease, it is the
rental paid periodically by the lessee under the lease contract. In case the
lessee advances the rental for many years, it shall be allocated to the number
of years for which the rental has been advanced;
dd/ For credit or financial
leasing activities, it is receivable loan interest or financial lease turnover arising
in a tax period;
e/ For golf course business
activities, it is the proceeds from the sale of membership cards and golf
playing tickets and other revenues in a tax period;
g/ For transportation
activities, it is the whole turnover from freights for passenger, cargo and
luggage transportation arising in a tax period;
h/ For electricity and clean
water supply activities, it is the sum of money indicated on the value-added
invoice;
i/ For insurance or re-insurance
business activities, it is the receivable sum of principal insurance premiums;
agency service charges (including those for loss survey, indemnity
consideration, claim for a third party to pay indemnities, disposal of goods
subject to 100% indemnity); re-insurance undertaking charges; re-insurance
commissions; and other revenues minus (-) refunded or reduced insurance
premiums, re-insurance undertaking charges and refunded or reduced re-insurance
transfer commissions;
In case of co-insurance,
turnover used for calculating taxable income is principal insurance premiums
allocated according to the co-insurance ratio, exclusive of value-added tax.
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k/ For construction and
installation activities, it is the value of the work, work item or work volume
tested upon take-over. If construction or installation activities do not
involve the supply of materials, machinery and equipment, it is exclusive of
the value of materials, machinery or equipment;
l/ For business activities
conducted under business cooperation contracts without the establishment of
legal persons:
- If parties to a business
cooperation contract divide business results based on the sales turnover of
goods or services, it is the turnover divided to each party under the contract;
- If parties to a business
cooperation contract divide business results based on products, it is the
turnover of products divided to each party under the contract;
- If parties to a business
cooperation contract divide business results based on pre-tax profits, it is
the goods or service sales under the contract.
m/ For casino, prize-winning
video game or betting entertainment business services, it is the excise
tax-inclusive proceeds from these services minus (-) prizes already paid to
customers;
n/ For securities trading, it is
the proceeds from securities brokerage, dealing, issuance underwriting and
investment consultancy, investment fund management, fund certificate issuance,
market organization and other securities services under law;
o/ For oil and gas prospecting,
exploration and extraction activities, it is the whole oil and gas sales
turnover under arms length contracts in a tax period.
p/ For derivative financial
services, it is the proceeds from the provision of derivative financial
services in a tax period;
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Article 9.-
Deductible and non-deductible expenses upon determination of taxable incomes
1. Except for the expenses
specified in Clause 2 of this Article, enterprises may deduct any expenses
which fully meet the following conditions:
a/ They are actually paid for
production and business activities;
b/ They are accompanied with
adequate invoices and documents as prescribed by law.
In case of purchase of
agricultural, forestry or fishery products from producers or fishermen;
purchase of handicraft products made of jute, sedge, bamboo, leaf, rattan,
straw, coconut husk or shell or materials taken from agricultural products,
from craftsmen; purchase of soil, rock, sand or gravel from local mining
inhabitants; purchase of scraps from individual collectors or second-hand
domestic appliances from households or individuals, and purchase of services from
non-business individuals, there must be documents of payment to sellers and
lists of goods or services signed by responsible at-law representatives or
authorized persons of enterprises.
2. Non-deductible expenses upon
determination of taxable incomes provided for in Clause 2, Article 9 of the Law
on Enterprise Income Tax are specified as follows:
a/ Expenses not fully satisfying
the conditions specified in Clause 1 of this Article, except the uncompensated
value of losses caused by natural disasters, epidemics, fires or other force
majeure circumstances;
Uncompensated value of losses
caused by natural disasters, epidemics, fires or other force majeure
circumstances is the total value of losses minus (-) the value which must be compensated
by insurance enterprises or other organizations or individuals under law.
b/ The business administration
expense allocated by an overseas enterprise to its Vietnam-based permanent
establishment in excess of the prescribed level shall be calculated according
to the following formula:
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=
Taxed
turnover of Vietnam-based permanent establishment in a tax period
x
Total
business administration expenses of the overseas company in a tax period
Total
turnover of the overseas company, including turnovers of permanent
establishments based in other countries in a tax period
c/ Expense in excess of the prescribed
level of deduction for the setting up of provisions;
d/ Fixed asset depreciation made
in contravention of the Finance Ministry’s regulations, including depreciation
for passenger cars of 9 seats or less (except cars used for commercial
transportation of passengers or for tourist or hotel business) corresponding to
the historical cost in excess of VND 1.6 billion/car; depreciation for civil
aircraft or yachts not used for commercial cargo or passenger transportation or
for tourist or hotel business;
dd/ Advanced expenses in
contravention of law;
Advanced expenses include those
for regular overhaul of fixed assets; those for activities of which turnover
has been accounted but contractual obligations have not yet been fulfilled; and
other advanced expenses under the Finance Ministry’s regulations.
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g/ Expense for advertisement,
marketing, sales promotion and brokerage commissions (excluding insurance
brokerage commissions under the law on insurance business or commissions for
agents selling goods at set prices); expense for reception, protocol and
conferences; expense in support of marketing and payment discount; expense for
press agencies newspapers given as presents or gifts directly related to
production and business activities, in excess of 10% of total deductible
expenses. For enterprises established on or after January 1, 2009, such expense
is in excess of 15% of total deductible expenses for the first 3 years from the
date of establishment.
Total deductible expenses
exclude the expenses specified above; for trade activities, total deductible
expenses exclude purchasing prices of sold goods.
h/ Recovered expenses in excess
of the ratio set in approved oil and gas contracts; if an oil and gas contract
does not set the ratio of recoverable expenses, the expense in excess of 35%
must not be included in deductible expenses;
Expenses which may not be
included in recoverable expenses include:
- Expenses specified in Clause
2, Article 9 of the Law on Enterprise Income Tax;
- Expenses arising before oil
and gas contracts come into force, except those agreed under oil and gas
contracts or decided by the Prime Minister;
- Oil and gas commissions and
other expenses not included in recoverable expenses under contracts;
- Interests on investments in
prospecting, exploration and development of oil and gas fields and oil and gas
extraction;
- Fines and damages.
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k/ Expenses not corresponding to
taxed turnover;
k/ Foreign exchange rate
difference resulting from the re-valuation of monetary items of foreign
currency origin at the end of a tax period; foreign exchange rate difference arising
in the course of capital construction investment.
The Ministry of Finance shall
specify deductible and non-deductible expenses mentioned in this Article.
Article
10.- Tax rates
Enterprise income tax rates are specified
in Article 10 of the Law on Enterprise Income Tax.
1. The enterprise income tax
rate is 25%, except the cases specified in Clause 2, this Article, and Article
15, of this Decree.
2. The enterprise income tax
rate applicable to activities of prospecting, exploring and extracting oil and
gas and other precious and rare natural resources in Vietnam is between 32% and
50%. Based on the location, mining conditions and reserves of mines, the Prime
Minister shall, at the proposal of the Minister of Finance, decide on a
specific tax rate applicable to each project or business establishment.
Other precious and rare natural
resources mentioned in this Clause include platinum, gold, silver, tin,
tungsten, antimony, gems and rare earths.
Article
11.- Tax calculation method
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2. The payable enterprise income
tax amount applicable to real estate trading is income from real estate trading
multiplied by (x) the tax rate of 25%.
3. For enterprises defined at
Points c and d, Clause 2, Article 2 of the Law on Enterprise Income Tax, the
payable enterprise income tax amount is the percentage (%) of the sales
turnover of goods and services in Vietnam, specifically:
a/ Services: 5%, goods supplied
together with services: 1%;
b/ Copyright royalties: 10%;
c/ Charter of aircraft
(including aircraft engines or spare parts) or seagoing ships: 2%;
d/ Hire of machinery, equipment
or means of transport (except those specified at Point c of this Clause): 5%;
dd/ Loan interests: 10%;
e/ Securities transfer: 0.1%;
g/ Offshore construction,
transportation or re-insurance, and other activities: 2%.
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Article
12.- Places for tax payment
1. Enterprises shall pay tax in
localities where they are headquartered. For an enterprise that has a dependent
cost-accounting production establishment operating in a province or centrally
run city other than the locality where it is headquartered, the tax amount
shall be calculated and paid in the locality where the enterprise is
headquartered and the locality where its production establishment is based.
The enterprise income tax amount
calculated and paid in a province or centrally run city where the dependent
cost-accounting production establishment is based is the enterprise income tax
amount payable by the enterprise in a period multiplied by (x) the ratio
between expenses incurred by the production establishment and total expenses
incurred by the enterprise.
Tax payment specified in this
Clause is not applicable to works, work items or dependent cost-accounting
construction establishments.
The decentralization, management
and use of enterprise income tax revenues must comply with the State Budget
Law.
2. Dependent cost-accounting
units of enterprises practicing cost-accounting in the whole system that have
incomes from activities other than their major business activities shall pay
tax in provinces or centrally run cities where other activities are carried
out.
3. The Ministry of Finance shall
guide places for tax payment referred to this Article.
Chapter
III
INCOMES FROM REAL ESTATE
TRANSFER
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Article
14.- Taxable income from real estate transfer is turnover from real estate
transfer activities minus the cost of real estate and deductible expenses
related to real estate transfer.
1. Turnover used for calculating
taxable income shall be determined based on the real price of each transfer.
If the price of a transfer of
land use rights is lower than the land price set by the provincial-level
Peoples Committee, the price set by the provincial-level Peoples Committee at
the time of real estate transfer will be applied.
2. The time of determining
turnover used for calculating taxable income is the time of handover of real
estate.
If money is advanced according
to schedule, the time of determining turnover used for calculating the
enterprise income tax amount to be temporarily paid is the time of money
collection. The Ministry of Finance shall guide the temporary tax payment
referred to this Clause.
3. Deductible expenses for real
estate transfer:
a/ The cost of transferred land,
to be determined according to the origin of land use rights, specifically:
- For land allocated by the
State with collection of land use levy or land rental, its cost is the land use
levy or lease rental actually remitted into the state budget;
- For land transferred from
other organizations or individuals, its cost is based on contracts and lawful
payment documents upon the receipt of land use or lease rights; if contracts
and lawful payment documents are unavailable, such cost shall be calculated
based on the price set by the provincial-level Peoples Committee at the time
the enterprise receives real estate transferred;
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- For inherited or donated land
with unidentifiable cost, such cost shall be determined based on the land price
set by the provincial-level Peoples Committee at the time of inheritance or
donation.
For land inherited or donated
before 1994, its cost shall be determined based on the land prices set in 1994
by the provincial-level Peoples Committee on the basis of the Table of land
price brackets in the Governments Decree No. 87/CP of August 17, 1994.
b/ Expense for compensations and
supports upon land recovery by the State;
c/ Charges and fees related to
the grant of land use rights under law;
d/ Expense for soil improvement
or ground leveling;
dd/ Value of infrastructure or
architectural works on land;
e/ Other expenses related to
transferred real estate.
Chapter IV
ENTERPRISE INCOME TAX
INCENTIVES
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1. The incentive tax rate of 10%
for 15 years is applicable to:
a/ New enterprises established
under investment projects in geographical areas with extreme socio-economic difficulties
specified in the Appendix to this Decree, economic zones or hi-tech parks
established under the Prime Ministers decisions;
b/ New enterprises established
under investment projects in the domains of:
- High technology as prescribed
by law; scientific research and technological development;
- Development of water plants,
power plants, water supply and drainage systems; bridges, roads, railways;
airports, seaports, river ports; airfields, stations and other infrastructure
works of special importance as decided by the Prime Minister;
- Manufacture of software
products.
2. For new large and hi- or
new-tech enterprises established under investment projects in the domains
specified at Point b, Clause 1 of this Article in which investment should be
specially attracted, the duration for application of the incentive tax rate may
be extended but must not exceed 30 years. The Prime Minister shall, at the
proposal of the Minister of Finance, decide on the extension mentioned in this
Clause.
3. The tax rate of 10% is
applicable to incomes of enterprises operating in education-training,
vocational training, healthcare, cultural, sports and environmental domains
(below collectively referred to as socialized domains) throughout their
operation duration.
The Prime Minister shall
promulgate a list of socialized domains mentioned in this Clause.
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5. The incentive tax rate of 20%
is applicable to agricultural service cooperatives and peoples credit funds
throughout their operation duration.
After the expiration of the
duration for application of the tax rate of 10% specified at Point a, Clause 1
of this Article, agricultural service cooperatives and peoples credit funds
shall switch to enjoy the tax rate of 20%.
6. The duration for application
of incentive tax rates specified in this Article is counted consecutively from
the first year an enterprise has turnover from activities eligible for tax
incentives.
Article
16.- Tax exemption and reduction
1. Tax exemption for 4 years and
50% reduction of payable tax amounts for 9 subsequent years are applicable to:
a/ New enterprises established
under investment projects specified in Clause 1, Article 15 of this Decree;
b/ New enterprises operating in
socialized domains in geographical areas with socio-economic difficulties or
extreme socio-economic difficulties specified in the Appendix to this Decree.
2. Tax exemption for 4 years and
50% reduction of payable tax amounts for 5 subsequent years are applicable to
new enterprises operating in socialized domains in geographical areas outside
the list of those with socio-economic difficulties or extreme socio-economic
difficulties specified in the Appendix to this Decree.
3. Tax exemption for 2 years and
50% reduction of payable tax amounts for 4 subsequent years are applicable to
new enterprises established under investment projects in geographical areas
with socio-economic difficulties specified in the Appendix to this Decree.
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In the first tax year, if an
enterprises production and business duration eligible for tax exemption or
reduction is less than 12 (twelve) months, the enterprise is entitled to tax
exemption or reduction right in that year or may register with the tax agency
for enjoyment of tax exemption or reduction from the subsequent tax year.
Article
17.- Tax reduction in other cases
1. Production, construction or
transport enterprises which employ many female laborers are entitled to
reduction of enterprise income tax amounts equal to additional expenses paid
for female laborers, including:
a/ Expense for job re-training;
b/ Salaries and allowances (if
any) for teachers in crches or kindergartens organized and managed by the
enterprises;
c/ Expense for additional medical
check-ups in a year;
d/ Post-natal allowances for
female laborers. The Ministry of Finance shall, pursuant to the labor law,
coordinate with the Ministry of Labor, War Invalids and Social Affairs in
specifying allowance levels mentioned in this Clause;
dd/ Salaries and allowances for
female laborers who return to work during their prescribed maternity leave.
2. Enterprises which employ
ethnic minority laborers are entitled to reduction of enterprise income tax
amounts equal to additional expenses for job training, housing subsidies,
social insurance premiums and health insurance premiums for these laborers, if
they have not yet received the States supports under regulations.
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The deduction for setting up of
enterprises scientific and technological development funds is specified in
Article 17 of the Law on Enterprise Income Tax.
1. Enterprises established and
operating under Vietnamese law may deduct up to 10% of annual taxed income for
setting up their scientific and technological development funds.
Annually, enterprises may decide
by themselves on the level of deduction for setting up their scientific and
technological development funds under the above provision and make reports on
the setting up and use of these funds, enclosed with enterprise income tax
finalization declarations.
The Ministry of Finance shall
set the form of report on the setting up and use of enterprises scientific and
technological development funds.
2. For operating enterprises
which undergo ownership transformation, are consolidated or merged, the new
enterprises set up as a result of such ownership transformation, consolidation
or merger may take over the former enterprises scientific and technological
development funds and shall take responsibility for the management and use of
these funds.
If the scientific and
technological development fund of an enterprise is not used up upon its
separation or split, the new enterprise set up as a result of such separation
or split may take over the former enterprises scientific and technological
development fund and shall take responsibility for the management and use of
this fund. Enterprises shall decide on and register with tax agencies the division
of their scientific and technological development funds.
Article
19.- Conditions for application of enterprise income tax incentives
Conditions for application of
enterprise income tax incentives are specified in Article 18 of the Law on Enterprise
Income Tax.
1. Enterprises shall separately
account income from production and business activities eligible for enterprise
income tax incentives (including incentive tax rates or tax exemption or
reduction); any turnover or deductible expenses which cannot be separately
accounted shall be determined based on the ratio between the deductible
expenses or turnover from production and business activities eligible for tax
incentives and the total deductible expenses or turnover of enterprises.
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3. In the same duration, an
enterprise which is entitled to different tax incentives for the same income
may choose to apply the most beneficial incentive.
4. In a tax year within the
duration eligible for enterprise income tax incentives, if an enterprise fails
to satisfy one of the conditions for enjoyment of tax incentives specified in
Article 18 of the Law on Enterprise Income Tax and this Article, it is not
entitled to tax incentives in such tax year and shall pay tax at the rate of
25%.
5. New enterprises established
under investment projects eligible for tax incentives specified in Articles 15
and 16 of this Decree are enterprises making business registration for the
first time, excluding:
a/ Enterprises established as a
result of separation, split, merger or consolidation under law;
b/ Enterprises established as a
result of form conversion or ownership transformation, except the case of
assignment, contracting or lease of state enterprises;
c/ Newly established private
enterprises and one-member limited liability companies whose owners are heads
of individual business households and which see no changes in business lines;
d/ Newly established private
enterprises, partnerships, limited liability companies or cooperatives with
their at-law representatives (unless at-law representatives are other than
capital contributors), partners or contributors of largest capital amounts
having participated in business activities in the capacity as at-law
representatives, partners or contributors of largest capital amounts in
operating enterprises or enterprises dissolved within less than 12 months
counting from the time of dissolution of old enterprises to the time of
establishment of new enterprises.
Chapter V
IMPLEMENTATION
PROVISIONS
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1. This Decree takes effect on
January 1, 2009.
2. Enterprises enjoying enterprise
income tax incentives under Enterprise Income Tax Law No. 09/2003/QH11, the
Petroleum Law and the Governments legal documents promulgated before the
effective date of this Decree may continue to enjoy such incentives for the
remaining duration; in case enterprise income tax incentives (including tax
rate incentives and tax exemption or reduction) are lower than incentives
specified in this Decree, enterprises are entitled to tax incentives under this
Decree for the remaining duration.
The remaining duration for
enjoyment of tax incentives shall be counted consecutively from the time of
implementation of tax incentives under legal documents on foreign investment in
Vietnam, domestic investment promotion and enterprise income tax, which are
promulgated before the effective date of this Decree.
Business establishments which
were granted investment licenses, business registration certificates or
investment incentive certificates before the date the Socialist Republic of
Vietnam became a full-fledged member of the World Trade Organization (i.e.,
January 11, 2007) which have income from export of goods (except garments) and
are enjoying enterprise income tax incentives for their satisfaction of the
export ratio conditions specified in legal documents on foreign investment in
Vietnam, domestic investment promotion and enterprise income tax, may continue
to enjoy tax incentives under these legal documents till the end of 2011.
3. Enterprises having operated
in socialized domains before the effective date of this Decree which are
applying the tax rate higher than 10% may switch to apply the tax rate of 10%
from the effective date of this Decree.
4. Enterprises having investment
projects on production expansion which, by December 31, 2008, are under
construction and expected to be completed and put into production or business
in 2009, may continue to enjoy tax incentives regarding expanded investment
conditions under Enterprise Income Tax Law No. 09/2003/QH11 and the Governments
legal documents promulgated before the effective date of this Decree.
5. For enterprises in the tax
exemption or reduction duration under Enterprise Income Tax Law No.
09/2003/QH11 and the Governments legal documents promulgated before the
effective date of this Decree, which, by the end of the 2008 tax period:
a/ Have no turnover yet, their
tax exemption or reduction duration shall be counted from the first year when
taxable income is generated; if no taxable income is generated within the first
3 years, counting from the first year when turnover is earned, their tax
exemption or reduction duration shall be counted from the fourth year;
b/ Have turnover but for less
than 3 years, counting from the time turnover is earned, their tax exemption or
reduction duration shall be counted from the first year when taxable income is
generated; if no taxable income is generated within the first 3 years, counting
from the first year when turnover is earned, their tax exemption or reduction
duration shall be counted from the fourth year;
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6. Enterprises set up as a
result of form conversion, ownership transformation, separation, split, merger
or consolidation shall pay enterprise income tax (including fines, if any) and,
at the same time, may enjoy enterprise income tax incentives (including losses
not yet carried forward) of former enterprises if still satisfying the
conditions for enterprise income tax incentives and loss carrying-forward under
law.
7. The settlement of tax-related
problems and tax finalization, exemption and reduction before January 1, 2009,
must comply with the laws on enterprise income tax, foreign investment in
Vietnam and domestic investment promotion, and other legal documents
promulgated before the effective date of this Decree.
Article
21.- The Ministry of Finance shall guide the implementation of this Decree.
Ministers, heads of
ministerial-level agencies, heads of government-attached agencies, presidents
of provincial-level Peoples Committees, and concerned organizations and
individuals shall implement this Decree.
ON
BEHALF OF THE GOVERNMENT
PRIME MINISTER
Nguyen Tan Dung
APPENDIX
LIST OF GEOGRAPHICAL AREAS ELIGIBLE FOR ENTERPRISE
INCOME TAX INCENTIVES
(To the Governments Decree No. 124/2008/ND-CP of December 11, 2008)
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Province
Geographical areas with
extreme socio-economic difficulties
Geographical areas with socio-economic
difficulties
1
Bac Kan
All districts and towns
2
Cao Bang
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3
Ha Giang
All districts and towns
4
Lai Chau
All districts and towns
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Son La
All districts and towns
6
Dien Bien
All districts and Dien Bien
city
7
Lao Cai
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Lao Cai city
8
Tuyen Quang
Na Hang and Chiem Hoa
districts
Ham Yen, Son Duong and Yen Son
districts and Tuyen Quang town
9
Bac Giang
Son Dong district
Luc Ngan, Luc Nam, Yen The and
Hiep Hoa districts
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Hoa Binh
Da Bac and Mai Chau districts
Kim Boi, Ky Son, Luong Son,
Lac Thuy, Tan Lac, Cao Phong, Lac Son and Yen Thuy districts
11
Lang Son
Binh Gia, Dinh Lap, Cao Loc, Loc
Binh, Trang Dinh, Van Lang and Van Quan districts
Bac Son, Chi Lang and Huu Lung
districts
12
Phu Tho
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Doan Hung, Ha Hoa, Phu Ninh,
Song Thao, Thanh Ba, Tam Nong and Thanh Thuy districts
13
Thai Nguyen
Vo Nhai and Dinh Hoa districts
Dai Tu, Pho Yen, Phu Luong,
Phu Binh and Dong Hy districts
14
Yen Bai
Luc Yen, Mu Cang Chai and Tram
Tau districts
Tran Yen, Van Chan, Van Yen
and Yen Binh districts and Nghia Lo town
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Quang Ninh
Ba Che and Binh Lieu
districts, Co To island district and islands in the province
Van Don district
16
Hai Phong
Bac Long Vi and Cat Hai island
districts
17
Ha Nam
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Ly Nhan and Thanh Liem
districts
18
Nam Dinh
Giao Thuy, Xuan Truong, Hai
Hau and Nghia Hung districts
19
Thai Binh
Thai Thuy and Tien Hai
districts
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Ninh Binh
Nho Quan, Gia Vien, Kim Son,
Tam Diep and Yen Mo districts
21
Thanh Hoa
Muong Lat, Quan Hoa, Ba Thuoc,
Lang Chanh, Thuong Xuan, Cam Thuy, Ngoc Lac, Nhu Thanh and Nhu Xuan districts
Thach Thanh and Nong Cong
districts
22
Nghe An
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Tan Ky, Nghia Dan and Thanh
Chuong districts
23
Ha Tinh
Huong Khe, Huong Son and Vu
Quang districts
Duc Tho, Ky Anh, Nghi Xuan,
Thach Ha, Cam Xuyen and Can Loc districts
24
Quang Binh
Tuyen Hoa, Minh Hoa and Bo
Trach districts
Other districts
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Quang Tri
Huong Hoa and Dac Krong
districts
Other districts
26
Thua Thien Hue
A Luoi and Nam Dong districts
Phong Dien, Quang Dien, Huong
Tra, Phu Loc and Phu Vang districts
27
Da Nang
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28
Quang Nam
Dong Giang, Tay Giang, Nam
Giang, Phuoc Son, Bac Tra My, Nam Tra My, Hiep Duc, Tien Phuoc and Nui Thanh
districts, and Cu Lao Cham island
Dai Loc and Duy Xuyen
districts
29
Quang Ngai
Ba To, Tra Bong, Son Tay, Son
Ha, Minh Long, Binh Son and Tay Tra districts, and Ly Son island district
Nghia Hanh and Son Tinh
districts
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Binh Dinh
An Lao, Vinh Thanh, Van Canh,
Phu Cat and Tay Son districts
Hoai An and Phu My districts
31
Phu Yen
Song Hinh, Dong Xuan, Son Hoa and
Phu Hoa districts
Song Cau, Dong Hoa, Tay Hoa
and Tuy An districts
32
Khanh Hoa
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Van Ninh, Dien Khanh and Ninh Hoa
districts, and Cam Ranh town
33
Ninh Thuan
All districts
34
Binh Thuan
Phu Quy island district
Bac Binh, Tuy Phong, Duc Linh,
Tanh Linh, Ham Thuan Bac and Ham Thuan Nam districts
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Dak Lak
All districts
36
Gia Lai
All districts and towns
37
Kon Tum
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38
Dak Nong
All districts
39
Lam Dong
All districts
Bao Loc town
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Ba Ria-Vung Tau
Con Dao island district
Tan Thanh district
41
Tay Ninh
Tan Bien, Tan Chau, Chau Thanh
and Ben Cau districts
Other districts
42
Binh Phuoc
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Dong Phu, Binh Long, Phuoc
Long and Chon Thanh districts
43
Long An
Duc Hue, Moc Hoa, Tan Thanh, Duc
Hoa, Vinh Hung and Tan Hung districts
44
Tien Giang
Tan Phuoc district
Go Cong Dong and Go Cong Tay
districts
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Ben Tre
Thanh Phu, Ba Chi and Binh Dai
districts
Other districts
46
Tra Vinh
Chau Thanh and Tra Cu
districts
Cau Ngang, Cau Ke and Tieu Can
districts
47
Dong Thap
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Other districts
48
Vinh Long
Tra On district
49
Soc Trang
All districts
Soc Trang town
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Hau Giang
All districts
Vi Thanh town
51
An Giang
An Phu, Tri Ton, Thoai Son,
Tan Chau and Tinh Bien districts
Other districts
52
Bac Lieu
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Bac Lieu town
53
Ca Mau
All districts
Ca Mau city
54
Kien Giang
All districts and islands in
the province
Ha Tien and Rach Gia towns
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