Tax rate of corporate income tax in 2023? Subjects of corporate income tax incentives in Vietnam?
What subjects are the corporate income tax incentives in Vietnam applicable to?
According to the provisions of Article 13 of the 2008 Law on Corporate Income Tax of Vietnam, as amended by Clause 7, Article 1 of the 2013 Law on the amendments to the Law on Corporate Income Tax of Vietnam, as follows:
The tax rate of 10% for 15 years is applicable to:
- Incomes of enterprises from the execution of new projects of investment in localities facing extreme socio-economic difficulties, economic zones, and hi-tech zones;
- Incomes of enterprises from the execution of new projects of investment, including:
+ Scientific research and technology development;
+ Application of high technologies in the list of prioritized high technologies according to the Law on High Technologies;
+ Cultivation of high technologies, cultivation of hi-tech enterprises;
+ High-risk investment in the development of high technologies in the list of prioritized high technologies according to the Law on High Technologies;
+ Investment in crucial infrastructure of the State;
+ Software production;
+ Production of composite materials, light building materials, rare materials,
+ Production of renewable energy, clean energy, energy from waste destruction;
+ Development of biological technology;
+ Environment protection;
- Incomes of hi-tech enterprises and agricultural enterprises that apply high technologies according to the Law on High Technologies;
- Incomes of enterprises from the execution of new projects of investment in production (except for the production of articles subject to special excise duties and mineral extraction projects), which meet one of the two criteria below:
+ Any project of which the capital is at least 6,000 billion VND that is released within 3 years from the day on which the Investment certificate is issued, and the total revenue reaches at least 10,000 billion VND within 3 years from the first year in which revenue is earned;
+ Any project of which the capital is at least 6,000 billion VND that is released within 3 years from the day on which the Investment certificate is issued, and employ more than 3,000 workers.
+ Income of a company from execution of a project of investment in manufacturing of products on the List of ancillary products given priority and satisfying one of the following conditions:
++ Ancillary products supporting high-technology defined in the Law on High-technology;
++ Ancillary products serving the manufacturing of the following industries: textile – garment; leather - footwear; electronic - IT; automobile manufacturing & assembling; mechanical engineering, provided they cannot be manufactured in Vietnam up to January 01, 2015, or can be manufactured in Vietnam and satisfy technical standards established by EU or the equivalent.
- Income of a company from execution of a project of investment in manufacturing, except for manufacturing of products subject to special excise tax and mineral extraction, the capital investment in which is not smaller than VND 12,000 billion, the technologies applied are assessed in accordance with the Law on High-technology, the Law on Science and Technology, and the registered capital is disbursed within 05 years from the day on which the investment is permitted as prescribed by regulations of law on investment.
For investment projects specified in Clause 2, Article 20 of the Law on Investment, the Prime Minister shall decide to apply a preferential tax rate reduced by not more than 50% compared to the above preferential tax rate; the time of application of the preferential tax rate shall not exceed 1.5 times of the time of application of the above preferential tax rate and shall be extended for no more than 15 years and shall not exceed the duration of the investment project.
The tax rate of 10% is applicable to:
- Incomes of private enterprises from investment in education, vocational training, health, culture, sports, and environment;
- Incomes of enterprises from the investments in social housing that are for sale, for lease, or for hire purchase according to Article 53 of the Law on Housing;
- Incomes from press agencies from printing newspapers, including advertisements on printed newspapers according to the Law on Press; incomes of publishers from publishing according to the Law on Publishing;
- Incomes of enterprises from planting, cultivating, and protecting forests; from agriculture, forestry, and aquaculture in localities facing socio-economic difficulties; from the production, multiplication, and cross-breeding plants and animals; from the production, extraction, and refinement of salt, except for the production of salt in Clause 1 Article 4 of this Law; from investment in post-harvest preservation of agriculture products, aquaculture products, and food;
- Incomes of cooperatives from agriculture, forestry, fisheries, and salt production that are not in localities facing socio-economic difficulties or localities facing extreme socio-economic difficulties, except for incomes of the cooperatives defined in Clause 1 Article 4 of this Law.
The tax rate of 17% for 15 years is applicable to:
- Incomes of enterprises from the execution of new projects of investment in localities facing socio-economic difficulties;
- Incomes of enterprises from the execution of new projects of investment, including: production of high-grade steel; production of energy-saving products; production of machinery and equipment serving agriculture, forestry, aquaculture, salt production; production of irrigation equipment; production and refinement of feed for livestock, poultry, and aquatic organism; development of traditional trades.
- Incomes of people's credit funds and microfinance institutions.
The tax rate of 15% is applicable to:
15% tax is applied to: income of the company from farming, breeding, processing of agriculture and aquaculture products in an area other than disadvantaged areas or particularly disadvantaged areas.
Extension of preferential tax period:
Extension of preferential tax period is stipulated as follows:
- With regard to any special project that needs to attract substantial investment and requires high technologies, the preferential tax period may be extended for up to 15 years.
- If a project mentioned in Point e Clause 1 Article 13 of the 2008 Law on Corporate Income Tax of Vietnam satisfy one of the following conditions:
+ The products are able to go into global competition and generate a revenue of more than VND 20,000 billion per year after not more than five years from the first year in which revenue is earned from the project;
+ More than 6,000 employees are hired;
+ The project of investment involves economic – technical infrastructure, including: investment in water plants, power plants, water supply and drainage systems, bridges, roads, railroad, airports, seaports, river ports, train stations, new energies, clean energies, energy-saving industry, oil refinery.
The Prime Minister shall decide the extension of preferential tax period mentioned in this Point, provided the extension is not longer than 15 years.
Tax rate of corporate income tax in 2023? Subjects of corporate income tax incentives in Vietnam?
What is the tax rate of corporate income tax in 2023?
According to the provisions of Article 10 of Decree 218/2013/ND-CP of Vietnam stipulating as follows:
The tax rate of corporate income tax is 20%
The tax rate of corporate income tax is 20%, except for case where the enterprise is subject to the tax rate from 32% to 50% and subject entitled to incentives of tax rate.
Note: Enterprises established and operating under the law of Vietnam, including cooperatives, non-business units operating the production and business of goods and services with the total annual revenue not exceeding 20 billion dong are entitled to the tax rate of 20%;
The total annual revenue as a basis for determination of enterprise subject to the tax rate of 20% specified in this Clause is the enterprise’s total revenue of sale of goods and services supply of the preceding year.
The tax rate of corporate income tax is from 32% to 50%
The tax rate of corporate income tax for the activities of search, exploration and extraction of oil and gas and other rare natural resources in Vietnam from 32% to 50%.
- For the search, exploration and extraction of oil and gas, based on the location and conditions for extraction and mine reserve, the Prime Minister shall decide on the tax rate consistently with each project and business establishment at the request of the Minister of Finance.
- For the platinum, gold, silver, tin, wolfram, antimony, precious stones, rare earth mines, the tax rate is 50%.
- Where the mines having an assigned area 70% or more in the areas with extremely difficult socio-economic conditions in the list of areas entitled to the incentives of corporate income tax issued together with this Decree, these areas shall be subject to the tax rate of corporate income tax rate of 40%.
What are the regulations on the period of preferential tax rates?
Pursuant to Clause 6, Article 13 of the 2008 Law on Corporate Income Tax of Vietnam (amended and supplemented by Clause 7 Article 1 of the 2013 Law on the amendments to the Law on Corporate Income Tax of Vietnam):
The period of preferential tax rates in this Article begins from the first year in which revenue from the new project of investment is earned; for hi-tech enterprises and agricultural enterprises that apply high technologies, this period begins from the day on which the certificate of hi-tech enterprise or certificate of hi-tech agricultural enterprise is issued; for projects of high technology application, this period begins from the day on which the certificate of hi-tech application project is issued.
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