The finance ministry issued Circular No. 83/2016/TT-BTC (“Circular 83”) on June 17, 2016. It guides the implementation of investment tax incentives prescribed in the Investment Law and government decree No. 118/2015/ND-CP, which details and regulates several articles of the Investment Law.
Circular 83 governs incentives of corporate income tax (CIT), import tax and non-agricultural land-use tax. It provides detailed guidance about applications for tax incentives, especially for investment projects in the fields of science and technology and agriculture.
Corporate income tax
1. Scientific and technological enterprises, which satisfy conditions about science and technology revenues required by law and have been granted a science and technology enterprise certificate, are entitled to CIT incentives while applying for investment in high-tech zones, particularly CIT exemption for four years and 50% reduction of the CIT tax for nine years from the first year of taxable income.
2. Projects expanding their scope of business, upgrading production capacity or changing new production technology (“expanded project”) and satisfying criteria about increasing the original cost of fixed assets (minimum VND20 billion), increasing the original cost proportion of fixed assets (minimum 20%) or of design capacity (minimum 20%), are entitled to get either CIT incentives during its remaining operational period, if any, or CIT exemption or reduction over the increased revenue caused by expansion. The period of tax exemption or reduction for this additional revenue of expanded projects is equal to the tax exemption or reduction period of new projects in the same area or sector qualifying for CIT incentives.
3. In case the investment project meets various requirements for enjoying CIT incentives, the investors can choose the most favourable incentives.
1. Projects having sectors subject to special investment incentives or implemented in areas of very difficult socio-economic conditions, are entitled to get import tax exemption applying to imported goods to constitute fixed assets; and import tax exemption for a period of five years from the date of start of production, applying to imported materials and components, which have not been yet produced in the country. These incentives do not apply to projects manufacturing and assembling automobiles, motorcycles, air conditioners and electric heaters, besides refrigerators, washing machines, electric fans and dishwashers, as well as DVDs, stereos, electric irons and kettles, in addition to hair and hand dryers, and other items as decided by the prime minister.
2. Projects investing in hotels, offices, apartments and houses, besides commercial centres, technical services, supermarkets and golf courses, as well as resorts, amusement parks, clinics and training, in addition to culture, finance, banking, and insurance, and also audit and consulting services, are exempt from paying import tax for imported goods to constitute fixed assets only for the first time. The projects enjoying exemption from paying first-time import tax cannot enjoy other import tax exemptions.
Non-agricultural land use tax
1. Projects with sectors subject to special investment incentives, or implemented in areas of very difficult socio-economic conditions, or satisfying both the above criteria are exempt from paying non-agricultural land use tax.
2. Projects having sectors subject to investment incentives, or implemented in areas of difficult socio-economic conditions, or in rural areas with at least 500 employees are entitled to 50% reduction in non-agricultural land use tax.
3. Especially, a project with total capital of at least VND6,000 billion and making disbursements of at least VND6,000 billion within three years of the date of issue of investment registration certificate or investment policy decision is exempt from paying import tax for goods constituting its fixed assets, and for imported materials and components that have not been yet produced in the country for a period of five years from the date of start of production; and is also exempt from paying non-agricultural land use tax. However, after these three years, in case the project does not disburse at least VND6,000 billion, the investors are not entitled to such tax incentives. Import tax and non-agricultural land use tax incentives must not apply to projects in mineral exploitation, production and the business of goods and services subject to special consumption tax, except for automobile production.
Circular 83 takes effect on August 1, 2016.