What corporate income tax rate shall apply to incomes of enterprises from the execution of new investment projects in scientific research and technology development in Vietnam?

What corporate income tax rate shall apply to incomes of enterprises from the execution of new investment projects in scientific research and technology development in Vietnam?

Based on Clauses 7, 8, and 12 of Article 1 of the Law on Amendments to Law on Corporate Income Tax of 2013, a corporate income tax rate incentive of 10 percent for a duration of 15 years is applied under the following conditions:

Case 1: Income derived from incomes of enterprises from the execution of new investment projects in regions with extremely difficult socio-economic conditions, economic zones, or high-tech zones;

Case 2: Income derived from incomes of enterprises from the execution of new investment projects, including: scientific research and technology development; high-tech application among prioritized high-tech fields for development as per the High Technology Law; high-tech incubation, high-tech enterprise incubation; venture investments for high-tech development among prioritized high-tech fields for development as per the High Technology Law; investment in constructing and operating high-tech incubation facilities, high-tech enterprise incubation facilities; investment in developing critical State infrastructure as stipulated by law; software production; production of composite materials, types of light construction materials, rare materials; production of renewable energy, clean energy, energy from waste destruction; biotechnology development; environmental protection;

Case 3: Income derived from high-tech enterprises, agricultural enterprises applying high technology as stipulated in the High Technology Law;

Case 4: Income derived from incomes of enterprises from the execution of new investment projects in the manufacturing sector (excluding projects producing goods subject to special consumption tax, mineral exploitation projects) meeting one of the following two criteria:

++ Projects with a minimum investment capital of six trillion dong, disbursed within no more than three years from the date of issuance of the Investment Certificate, and achieving a minimum total annual revenue of ten trillion dong, no later than three years from the first year of having revenue;

++ Projects with a minimum investment capital of six trillion dong, disbursed within no more than three years from the date of issuance of the Investment Certificate, and employing over three thousand workers.

Thus, based on the above cases, enterprises deriving income from new investment projects in scientific research and technology development will be eligible for a 10% corporate income tax rate incentive for a duration of 15 years.

When is the CIT rate of 10% applicable in Vietnam? (Image from Internet)

What is the corporate income tax rate for enterprises with annual total revenue not exceeding 20 billion dong in Vietnam?

According to Article 10 of Decree 218/2013/ND-CP, the provisions are as follows:

Tax Rate

The corporate income tax rate is implemented as stipulated in Clause 6, Article 1 of the Law amending and supplementing several articles of the Law on Corporate Income Tax:

1. The corporate income tax rate is 22%, except for enterprises subject to a 20% tax rate and tax rates from 32% to 50% as specified in Clauses 2 and 3 of this Article and those eligible for tax incentives under Articles 15 and 16 of this Decree.

From January 1, 2016, cases subject to a 22% tax rate as stipulated in this Clause will be applied with a 20% tax rate.

2. Enterprises established and operating under Vietnamese law, including cooperatives and public service providers engaged in the production and business of goods and services with an annual total revenue not exceeding 20 billion dong, are entitled to a 20% tax rate.

The basis for determining which enterprises are eligible for the 20% tax rate stated in this Clause is the total revenue from selling goods and providing services in the preceding year.

3. The corporate income tax rate for exploration and exploitation activities of oil, gas, and other precious resources in Vietnam ranges from 32% to 50%. For oil and gas exploration and exploitation activities, the specific tax rate applicable to each project and each business is determined by the Prime Minister of the Government of Vietnam upon proposal by the Minister of Finance. For mining resources such as platinum, gold, silver, tin, tungsten, antimony, precious stones, and rare earths, the applicable tax rate is 50%, except where mines have 70% or more of their allocated area in regions with extremely difficult socio-economic conditions covered by the preferential corporate income tax lists set out with this Decree, where the applicable corporate income tax rate is 40%.

Therefore, the corporate income tax rate for enterprises with an annual total revenue not exceeding 20 billion dong is 20%.

Are foreign-invested enterprises required to declare VAT in Vietnam?

Based on Article 3 of Circular 219/2013/TT-BTC, enterprises and households are required to declare and pay value-added tax (VAT) if they produce, trade goods, or provide services subject to VAT in Vietnam, regardless of their sector, form, or business organization, and enterprises and households that import goods or purchase services from abroad subject to VAT, specifically:

- enterprises and household enterprises established and registered under the Enterprise Law 2020 and other specialized business laws.

- Foreign-invested enterprises and foreign parties participating in business cooperation contracts under the Investment Law 2020.

- enterprises and household enterprises conducting production and business activities in Vietnam that purchase services (including cases involving services associated with goods) from foreign organizations without a permanent establishment in Vietnam, or individuals staying abroad who are non-residents in Vietnam, are the parties responsible for paying VAT unless exempt from tax declaration and payment as specified in Section 2 below.

- Branches of export processing enterprises established to conduct trading activities and activities directly related to the trading of goods in Vietnam as regulated by laws on industrial parks, export processing zones, and economic zones.

Therefore, foreign-invested enterprises are among the entities required to declare VAT.