What are eligibility requirements for science and technology enterprises (STE) eligible for corporate income tax (CIT) remission in Vietnam?
What are eligibility requirements for science and technology enterprises (STE) eligible for corporate income tax (CIT) remission in Vietnam? What does CIT remission of STE in Vietnam comprise?
My enterprise is a science and technology enterprise with a profit from scientific and technological products of 35% of the total annual revenue, is it eligible for tax exemption or CIT remission?
1. What are eligibility requirements for science and technology enterprises (STE) eligible for corporate income tax (CIT) remission in Vietnam?
Pursuant to Article 2 of Circular 03/2021/TT-BTC stipulating the following eligibility requirements for application:
An STE will be eligible for CIT remission as prescribed in Clause 1 Article 12 of the Government’s Decree No. 13/2019/ND-CP dated February 01, 2019 if it meets all of the following requirements:
1. It has been issued with an STE certificate by a competent authority.
2. Its annual revenue from production and trading of science and technology products is accounted for at least 30% of its total annual revenue.
a) The STE’s annual revenue from production and trading of science and technology products is total revenue from all of its science and technology products as defined in Clause 1 Article 2 of the Government’s Decree No. 13/2019/ND-CP dated February 01, 2019.
b) The STE's total annual revenue is total revenue from its production, trading, service provision, financial income and other incomes (total revenue includes the revenue earned from production and trading of science and technology products in the year).
3. The revenue from provision of IT services that apply scientific and technological findings is the revenue earned from new services only.
Criteria and grounds for determining new IT services that apply scientific and technological findings shall comply with regulations adopted by the Ministry of Science and Technology.
4. The STE must separately record the revenue from production and trading of science and technology products in the period in order to receive CIT incentives. If the STE is unable to separately record its revenue from production and trading of science and technology products for receiving CIT incentives, this revenue shall be determined according to Clause 2 Article 18 of the Law on corporate income tax No. 14/2008/QH12.
In order to receive CIT incentives, the STE must follow accounting, invoice and invoicing regulations and pay CIT by declaration.
Thus, in order to enjoy CIT incentives exemption and reduction, an enterprise must satisfy the following conditions: the enterprise must be granted a STE certificate; revenue from production and trading of science and technology products is accounted for at least 30% of its total annual revenue in Vietnam.
2. What does CIT remission of STE in Vietnam comprise?
Pursuant to Article 3 of Circular 03/2021/TT-BTC providing for CIT remission as follows:
1. CIT remission rate and duration
a) An STE will receive CIT remission as prescribed in Clause 1 Article 12 of the Government’s Decree No. 13/2019/ND-CP dated February 01, 2019. To be specific: The STE will have its CIT payable exempted in 04 years and reduced by 50% in the subsequent 09 years.
b) The CIT remission duration shall be counted consecutively from the day on which the STE is issued with the STE certificate. If the STE has no taxable income within the first three years from the year in which it is issued with the STE certificate, the CIT remission duration shall commence from the fourth year.
c) During the CIT remission duration, the STE will not be entitled to CIT remission in the year in which its revenue from science and technology products fails to account for at least 30% of its total annual revenue as prescribed, and this period will be excluded in the STE’s CIT remission duration.
d) In case the STE has taxable income but its operating period during which it is eligible for CIT remission is less than 12 (twelve) months in the first year, the STE may decide whether it will receive CIT remission in the first year or register with the tax authority to receive CIT remission in the subsequent year. If the STE chooses to receive CIT remission in the subsequent year, it must calculate its CIT payable in the first year and pay it to the state budget as prescribed.
2. Cases of application
a) If the STE has received or is receiving CIT incentives under other conditions (in addition to incentives given to STEs) and is issued with an STE certificate, the duration during which it will receive CIT remission as an STE will be the CIT remission duration given to the STE minus the period during which it has received CIT remission under other conditions.
b) If additional science and technology products are added by a competent authority to the STE certificate of an STE that is operating and receiving CIT remission for an STE, the revenue from such additional science and technology products shall be also eligible for the CIT remission that the STE is receiving for the remaining CIT remission duration.
In the above case, your business is a STE with a profit from scientific and technological products of 35% of the total annual revenue in Vietnam, which is eligible for incentives for CIT remission. In order to enjoy corporate income tax incentives, your business must comply with the accounting regime, invoices and documents as prescribed by law and pay tax according to the declaration.
Best Regards!
