What are regulations on classification of public investment projects in Vietnam starting January 1, 2025? When are enterprises entitled to corporate income tax incentives for new investment projects in Vietnam?

What are regulations on classification of public investment projects in Vietnam starting January 1, 2025?

Based on Article 6 of the 2024 Public Investment Law (effective from January 1, 2025), the classification of public investment projects is stipulated as follows:

(1) Based on the nature of the project, public investment projects are classified as follows:

- A project with a construction component is a project using public investment capital for new construction, renovation, upgrading, or expansion of already constructed projects, including the acquisition of assets and equipment for the project;

- A project without a construction component is a project using public investment capital to purchase assets, acquire land use rights, buy, repair, upgrade equipment, machinery, and other projects not stipulated in item a of this clause;

- In the case of using funds outside the public investment plan to perform tasks, projects specified in points a and b of clause 1, Article 6 of the 2024 Public Investment Law, they are implemented according to the provisions of the law on state budget and other relevant legal provisions.

(2) Based on the importance and scale, public investment projects are classified as follows:

- National important projects, Group A projects, Group B projects, Group C projects according to the criteria stipulated in Articles 8, 9, 10, and 11 of the 2024 Public Investment Law;

- The authority approving national important projects, Group A, B, or C projects is entrusted with the decision to separate or not separate compensation, support, resettlement, and land clearance components into independent subprojects.

The implementation time of the independent subproject for compensation, support, resettlement, and land clearance is calculated within the total time for capital allocation for the project as stipulated in Article 57 of the 2024 Public Investment Law;

- Public investment projects involving multiple sectors and fields shall be grouped by sector based on the largest investment ratio in the total project investment;

- Projects not meeting the criteria stipulated in Articles 8, 9, 10, and 11 of the 2024 Public Investment Law shall be classified according to the total investment level specified in clause 5, Article 9, clause 4, Article 10, and clause 4, Article 11 of the 2024 Public Investment Law.

What are regulations on classification of public investment projects in Vietnam starting January 1, 2025? When are enterprises entitled to corporate income tax incentives for new investment projects in Vietnam? (Image from the Internet)

When are enterprises entitled to corporate income tax incentives for new investment projects in Vietnam?

Based on point a, clause 5, Article 18 of Circular 78/2014/TT-BTC supplemented by clause 5, Article 10 of Circular 96/2015/TT-BTC and amended by clause 3, Article 10 of Circular 96/2015/TT-BTC, enterprises are eligible for corporate income tax incentives for new investment projects as follows:

- The project is issued an Investment Certificate for the first time from January 1, 2014, and generates revenue after the Investment Certificate is issued.

- A domestic investment project associated with establishing a new enterprise has a capital investment of less than 15 billion VND and is not in the list of conditional investment sectors and is issued an Enterprise Registration Certificate from January 1, 2014.

- An independent investment project from an operating enterprise (including projects with capital investment of less than 15 billion VND and not in the list of conditional investment sectors) has an Investment Certificate from January 1, 2014, to implement this independent investment project.

- Notary offices established in areas with difficult or especially difficult socio-economic conditions.

Note: New investment projects entitled to corporate income tax incentives must be licensed or issued an Investment Certificate by a competent state authority or must comply with the investment law's provisions.

What asre cases where enterprises enjoy a preferential tax rate of 10% for 15 years for new investment projects in Vietnam?

Based on clause 1, Article 19 of Circular 78/2014/TT-BTC supplemented by clause 5, Article 11 of Circular 96/2015/TT-BTC, amended by clause 1, Article 11 of Circular 96/2015/TT-BTC, and corrected by Article 1 of Decision 2465/QD-BTC 2015, enterprises enjoy a preferential tax rate of 10% for 15 years for new investment projects as follows:

- New investment projects in areas with especially difficult socio-economic conditions stipulated in the Appendix issued with Decree 218/2013/ND-CP, Economic Zones, High-tech Zones including concentrated information technology areas established by decision of the Prime Minister of Vietnam.

- New investment projects in fields such as scientific research and technology development; high-tech applications listed as priority investments in accordance with the High Technology Law; high-tech incubation, high-tech enterprise incubation; venture capital investments for high-tech development listed as priority in accordance with high technology law; investment in high-tech incubation facilities, high-tech enterprise incubation facilities; investment in the development of water plants, power plants, water supply and drainage systems; roads, railways; airports, seaports, river ports; airports, stations, and other particularly important infrastructure decided by the Prime Minister of Vietnam; software production; production of composite materials, types of lightweight construction materials, rare materials; production of renewable energy, clean energy, energy from waste destruction; biotechnology development.

New investment projects developing water plants, power plants, water supply and drainage systems; roads, railways; airports, seaports, river ports; airports, stations must generate revenue, income from the operation of these investment projects to be eligible for tax incentives. In cases where enterprises construct these facilities, income from construction activities will not be eligible for tax incentives.

- New investment projects in the field of environmental protection, including: production of environmental pollution treatment equipment, monitoring and analytical equipment; environmental pollution treatment and protection; collection, treatment of wastewater, exhaust gas, solid waste; recycling, reusing waste.

- New investment projects in the field of production (except projects producing goods subject to special consumption tax, mineral extraction projects) meet one of the following two criteria:

+ The project has a registered investment scale of at least 6 trillion VND, disbursed within no more than 3 years from the first allowed investment time according to the investment law and has a total minimum revenue of 10 trillion VND/year no later than 3 years from the year of revenue from the investment project (no later than the 4th year from the year of revenue the enterprise must achieve a total revenue of at least 10 trillion VND/year).

+ The project has a registered investment scale of at least 6 trillion VND, disbursed within no more than 3 years from the first allowed investment time according to the investment law and regularly employs over 3,000 laborers no later than 3 years from the year of revenue from the investment project (no later than the 4th year from the year of revenue the enterprise must achieve an average annual regular workforce exceeding 3,000 laborers).

- New investment projects producing products listed in the Priority Industrial Product Development List meeting one of the following criteria:

+ Supporting industrial products for high technology under the High Technology Law;

+ Supporting industrial products for manufacturing products in industries: textile - garment; leather - footwear; electronics - informatics; automobile assembly; mechanical engineering where these products as of January 1, 2015, are not yet produced domestically or produced but must meet European Union (EU) standards or equivalent.