Vietnam: Can public investment projects that are carried out for 2 consecutive terms of midterm public investment plans exceed the 20% of total capital from January 1, 2025?

Vietnam: Can public investment projects that are carried out for 2 consecutive terms of midterm public investment plans exceed the 20% of total capital from January 1, 2025?

Pursuant to Article 93 of the Law on Public Investment 2024 (effective from January 1, 2025) stipulating the rights and responsibilities of agencies, organizations, and individuals related to the decision on investment policy as follows:

Rights and responsibilities of agencies, organizations, individuals related to the decision on investment policy

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2. In cases where programs or projects are implemented over two consecutive medium-term public investment plan periods, in addition to the provisions in clause 1 of this Article, agencies, organizations, individuals, and heads of organizations deciding on the investment policy of programs, projects have the following responsibilities:

a) Decide on the investment policy of programs, projects ensuring that the total value of the investment level of the programs and projects to be implemented in the subsequent medium-term public investment plan period does not exceed 20% of the total public investment capital in the previous medium-term period according to each source of central and local budget, except for national target programs, national important projects, projects using ODA capital, foreign concessional loans, and projects using capital from lawful revenue of state agencies, public service providers for investment;

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3. In cases where programs or projects are implemented over two consecutive medium-term public investment plan periods as prescribed in point a, point d clause 2 of this Article exceed the 20% of total capital, the competent authority deciding on the investment policy of the program, project shall report to the Prime Minister of the Government of Vietnam for central budget capital, and report to the People's Council at all levels for local budget capital managed by their level for approval but must not exceed 50% corresponding to the regulations at point a, point d clause 2 of this Article.

Thus, in cases where programs or public investment projects that are carried out for 2 consecutive terms of midterm public investment plans exceed the 20% of total capital, the competent authority deciding on the investment policy of the program, project shall report to the Prime Minister of the Government of Vietnam for central budget capital, and report to the People's Council at all levels for local budget capital managed by their level for approval, but must not exceed 50%.

This is also a new point of the Law on Public Investment 2024 compared to the Law on Public Investment 2019, which only allowed programs or public investment projects that are carried out for 2 consecutive terms of midterm public investment plans not to exceed the 20% of total capital.

What criteria must expansion investment projects meet for enterprises to enjoy CIT incentives in Vietnam?

Based on point a clause 6 Article 18 of Circular 78/2014/TT-BTC supplemented by clause 5 Article 10 of Circular 96/2015/TT-BTC, Article 5 of Circular 130/2016/TT-BTC and amended by clause 4 Article 10 of Circular 96/2015/TT-BTC stipulates that for enterprises to enjoy CIT incentives, expansion investment projects must meet the following criteria:

- The additional original cost of fixed assets upon project completion going into operation must reach a minimum of 20 billion VND for expansion investment projects in fields enjoying Corporate Income Tax incentives as stipulated in Decree 218/2013/ND-CP or from 10 billion VND for expansion investment projects implemented in areas with difficult or extremely difficult socio-economic conditions as prescribed by Decree 218/2013/ND-CP.

- The proportion of the additional original cost of fixed assets must be at least 20% compared to the total original cost of fixed assets prior to investment.

- The design capacity upon expansion investment must increase by at least 20% compared to the design capacity according to the economic-technical feasibility study before initial investment.

What are the conditions for applying Corporate Income Tax incentives for enterprises in Vietnam?

Based on clause 1 Article 18 of Circular 78/2014/TT-BTC stipulating the conditions for applying Corporate Income Tax incentives as follows:

Conditions for applying Corporate Income Tax incentives

1. Corporate Income Tax incentives only apply to enterprises that implement accounting policies, invoices, vouchers, and pay Corporate Income Tax by declaration.

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Thus, for enterprises to be eligible to apply for Corporate Income Tax incentives, the first condition is that the enterprise must implement accounting policies, invoices, vouchers, and pay Corporate Income Tax by declaration.