What are conditions for issuing an electricity license in Vietnam from February 1, 2025? Are revenues from electricity trading eligible for corporate income tax incentives in Vietnam?
What are conditions for issuing an electricity license in Vietnam from February 1, 2025?
Based on Article 31 of the Electricity Law 2024 (effective from February 1, 2025), the conditions for issuing an electricity license are defined as follows:
- An organization granted an electricity license must meet the following conditions:
+ Legally established according to the provisions of the law;
+ Have a team for technical management, business management and personnel directly involved in operational tasks that meet the requirements in terms of quantity and professional qualifications.
- For electricity generation, transmission, and distribution sectors, the organization must satisfy the conditions specified in Clause 1, Article 31 of the Electricity Law 2024 and the following conditions:
+ Have projects and facilities for electricity generation, transmission, and distribution that align with the power development plan, the power network development plan within the provincial plan, plan for implementing the power development plan, plan for implementing the provincial plan including contents on power network development options, and adjustment decisions (if any); constructed and installed according to the approved design, meeting the conditions for commissioning and use;
+ Complies with legal regulations on maritime, land, fire prevention, and rescue, environmental protection laws, and other relevant legal stipulations during the construction and installation of electricity generation, transmission, and distribution projects;
+ Have safety management documents for dams and water reservoirs according to the legal provisions specific to hydropower plants.
- For wholesale and retail electricity sectors, the organization granted a permit must fulfill the conditions regulated in Clause 1, Article 31 of the Electricity Law 2024 and have a suitable wholesale and retail electricity operational plan.
Are revenues from electricity trading eligible for corporate income tax incentives in Vietnam?
Based on Official Dispatch 1884/TCT-CS of 2024 from the General Department of Taxation guiding the determination of income eligible for Corporate Income Tax incentives regarding revenues from electricity trading activities include the following contents:
Firstly, based on points b, c Clause 1 Article 15 of Decree 218/2013/ND-CP about preferential tax rates as follows:
Preferential Tax Rates
- 10% tax rate for 15 years applicable to:
...
b) Income from enterprises undertaking new investment projects in areas: ... production of renewable energy, clean energy, energy from waste destruction; ...
c) Income from enterprises undertaking new investment projects in the field of environmental protection, including: manufacturing of environmental pollution treatment equipment, monitoring and environmental analysis devices; treatment and protection of the environment; waste water, gas, solid waste treatment; recycling and reusing waste;
...
And, based on point a Clause 1 Article 16 of Decree 218/2013/ND-CP regarding corporate income tax exemption and reduction as follows:
Tax Exemption and Reduction
- Tax exemption for 4 years, 50% tax reduction in the subsequent 9 years for:
a) Income from enterprises undertaking new investment projects specified in Clause 1, Article 15 of this Decree;
...
Secondly, based on Clause 2 Article 10 of Circular 96/2015/TT-BTC stipulating:
Amend and Supplement Certain Contents of Article 18 of Circular No. 78/2014/TT-BTC (amended and supplemented at Article 5 of Circular No. 151/2014/TT-BTC) as follows:
...
- Amend and Supplement Clause 4, Article 18 of Circular No. 78/2014/TT-BTC as follows:
- Enterprises with investment projects enjoying corporate income tax incentives due to fulfilling conditions in investment incentive fields and areas determine incentives as follows:
a) Enterprises with investment projects eligible for corporate income tax incentives due to fulfilling conditions in investment incentive fields will have incomes from incentive fields, and incomes from the liquidation of scrap, waste products in the incentive field, exchange rate differences directly related to revenue, cost of the incentive field, termless bank deposit interest, other directly related incomes also eligible for corporate income tax incentives.
...
Thirdly, based on Article 18 of Circular 78/2014/TT-BTC supplemented by Clause 5 Article 10 of Circular 96/2015/TT-BTC stipulating on conditions for applying corporate income tax incentives.
Fourthly, based on Clause 3 Article 12 of Decision 31/2014/QD-TTg regarding investment capital and tax incentives as follows:
Investment capital and tax incentives
...
- Corporate income tax: Exemption and reduction of corporate income tax for projects using waste for electricity generation are implemented as for projects in the investment incentive field according to current legal provisions on tax.
The Official Dispatch 1884/TCT-CS of 2024 also concludes as follows:
...
Based on the above regulations, in the case where the Company implements a new investment project, is licensed for operation in the electricity sector, has revenue from electricity production activities (using heat during waste incineration for electricity generation), the revenue from electricity production activities of the Company is eligible for corporate income tax incentives according to regulations.
Thus, revenue from electricity production activities will be eligible for corporate income tax incentives under the regulations for projects in the investment incentive field.
What are conditions for issuing an electricity license in Vietnam from February 1, 2025? Are revenues from electricity trading eligible for corporate income tax incentives in Vietnam? (Image from the Internet)
What are the conditions for applying corporate income tax incentives 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
- Corporate income tax incentives apply only to enterprises implementing policies on accounting, invoicing, documentation, and paying corporate income tax based on declarations.
...
Thus, for an enterprise to apply corporate income tax incentives, the first condition must be that the enterprise implements policies on accounting, invoicing, documentation, and paying corporate income tax based on declarations.
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