What is the Vietnam's National Enterprise Registration Portal? Shall a new enterprise be entitled to corporate income tax exemption?

What is the Vietnam's National Enterprise Registration Portal?

The Vietnam's National Enterprise Registration Portal is explained in Clause 8, Article 4 of the Law on Enterprises 2020 as follows:

The Vietnam's National Enterprise Registration Portal is an electronic portal used to register businesses via electronic information networks, publish information on business registrations, and access information regarding business registrations.

Thus, the Vietnam's National Enterprise Registration Portal is an electronic portal used for business registration via electronic information networks, publishing business registration information, and accessing business registration information.

What is the Vietnam's National Enterprise Registration Portal? Shall a new enterprise be entitled to  corporate income tax exemption? (Image from the Internet)

Shall a new enterprise be entitled to corporate income tax exemption in Vietnam?

Based on Article 13 of the Law on Corporate Income Tax 2008 (amended by Clause 7, Article 1 of the Amended Law on Corporate Income Tax 2013 and supplemented by Clause 5, amended by Clauses 6 and 8, Article 1 of Law No. 71/2014 on Tax Amendments 2014), the regulations are as follows:

Tax rate incentives

1. Apply a tax rate of 10% for a period of fifteen years to:

a) Income of enterprises from implementing new investment projects in areas with extremely difficult socio-economic conditions, economic zones, high-tech zones;

b) Income of enterprises from implementing new investment projects, including: scientific research and technology development; application of high technology as per the prioritized high technology investment list under the Law on High Technology; incubation of high technology, incubation of high technology enterprises; venture investments in high technology development as per the prioritized high technology investment list under the Law on High Technology; investment in constructing and operating high technology incubation facilities, incubation of high technology enterprises; development of infrastructure particularly significant to the State as prescribed by law; production of software products; production of composite materials, various types of lightweight building materials, rare materials; production of renewable energy, clean energy, energy from waste disposal; development of biotechnology; environmental protection;

c) Income of high technology enterprises, agricultural enterprises applying high technology according to the Law on High Technology;

d) Income of enterprises from implementing new investment projects producing products belonging to the List of prioritized supporting industrial products that meet one of the following criteria:

- Supporting industrial products for high technology in accordance with the Law on High Technology;

- Supporting industrial products for the production of products in sectors: textiles-garments; leather-footwear; electronics-computing; automotive assembly; mechanical fabrication wherein these products have not been produced domestically as of January 1, 2015, or can be produced domestically but must meet technical standards of the European Union (EU) or equivalent.

The Government of Vietnam stipulates the List of prioritized supporting industrial products for development as mentioned at this point.

e) Income of enterprises from implementing investment projects in the manufacturing sector, excluding projects that manufacture goods subject to special consumption tax and mineral extraction projects, with a minimum investment capital scale of twelve trillion VND, using technologies must be appraised according to the Law on High Technology, Law on Science and Technology, implementing the disbursement of total registered investment capital no later than five years from the date of investment approval as provided by the investment law.

2. Apply a tax rate of 10% to:

a) Income of enterprises from conducting socialization activities in the fields of education - training, vocational training, healthcare, culture, sports, and environment;

b) Income of enterprises from implementing social housing projects for sale, rent, or purchase for lease to subjects as prescribed in Article 53 of the Law on Housing;

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Based on Article 14 of the Law on Corporate Income Tax 2008 amended and supplemented by Clause 8, Article 1 of the Amended Law on Corporate Income Tax 2013, it stipulates:

Tax exemption and reduction timelines

1. Income of enterprises from implementing new investment projects specified in Clause 1, Point a of Clause 2, Article 13 of this Law, and high technology enterprises, agricultural enterprises applying high technology, are exempt from tax for a maximum of four years and a 50% reduction of payable tax for a maximum of the following nine years.

2. Income of enterprises from implementing new investment projects as prescribed in Clause 3, Article 13 of this Law, and income of enterprises from implementing new investment projects in industrial zones, except industrial zones in areas with favorable socio-economic conditions as prescribed by law, are exempt from tax for a maximum of two years and a 50% reduction of payable tax for a maximum of the following four years.

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As per the aforementioned regulations, incentives are only applicable to new investment projects of enterprises in preferred fields and not contingent on whether the enterprise is newly established or not.

Thus, a newly established enterprise qualifies for Corporate Income Tax exemption if it is established to implement a new investment project subject to CIT exemption, and it is only exempted from CIT for a specified period.

What are the conditions to apply corporate income tax incentives in Vietnam?

Based on Article 18 of the Law on Corporate Income Tax 2008 amended and supplemented by Clause 12, Article 1 of the Amended Law on Corporate Income Tax 2013, it stipulates conditions to apply corporate income tax incentives as follows:

- Corporate income tax incentives apply to enterprises implementing accounting, invoicing, documentation policies, and tax payment by declaration.

- Corporate income tax incentives under new investment projects do not apply to cases of separation, division, merger, consolidation, conversion of business types, change of ownership, and other cases as prescribed by law.

- Enterprises must account separately for income from production and business activities eligible for tax incentives from income from production and business activities that are not eligible for tax incentives.

- If separate accounting is not possible, the income from production and business activities eligible for tax incentives is determined based on the proportion of revenue from production and business activities eligible for tax incentives to the total revenue of the enterprise.

- The 20% tax rate for tax incentives does not apply to:

+ Income from capital transfer, contribution rights transfer; income from real estate transfer, except social housing

+ Income from project transfer, right to participate in project transfer, right to explore and exploit mineral resources transfer; income from production, business activities outside Vietnam.

+ Income from activities of searching, exploring, extracting oil, gas, and other rare resources, and income from mineral resources exploitation.

+ Income from business services subject to special consumption tax as prescribed by the Law on Special Consumption Tax;

+ Other cases as prescribed by the Government of Vietnam.

- During the same period, if enterprises enjoy multiple different tax incentives for the same income, enterprises choose to apply the most favorable tax incentive rate.