Vietnam: State enterprises shall deduct 3% - 10% of the income to set up its science and technology development fund

According to the Decree No. 95/2014/NĐ-CP of Vietnam’s Government, funding sources of enterprises for science and technology investment include: science and technology development funds of enterprises and other lawful capital sources of enterprises.

Deduction for setting up science and technology development funds of enterprises is prescribed as follows:

- A state enterprise shall annually deduct between 3% and 10% of the income liable to enterprise income tax to set up its science and technology development fund.

- A non-state enterprise may make deductions for setting up its science and technology development fund at an appropriate level not exceeding 10% of the income liable to enterprise income tax.

- The Prime Minister shall promulgate regulations to encourage enterprises to make deductions for setting up science and technology development funds to invest in promoting scientific and technological potential for enterprises themselves and their production and business sectors, contributing to raising effectiveness and competitiveness.

Spending items of science and technology development funds of enterprises include:

- Performance of national-, ministerial- and provincial-level scientific and technological tasks;

- Performance of enterprises’ scientific and technological tasks

- Support for science and technology development of enterprises

- Amounts to be transferred between science and technology development funds as prescribed in Clause 2, Article 11 of this Decree, except for foreign-invested enterprises with overseas parent companies.

- Amounts to be transferred to state-run science and technology development funds as prescribed at Point a, Clause 5, Article 11 of this Decree.

- Fund management expenses.

- Payments from science and technology development funds of enterprises must have documents as prescribed by the fund spending and use regulation. In case an enterprise wishes to use an amount higher than the existing balance of its science and technology development fund for scientific and technological activities in a year, it may use the to-be-deducted amount of the subsequent year or include the excessive amount into deductible expenses when determining enterprise income tax in the tax period.

View more details at Decree No. 95/2014/NĐ-CP of Vietnam’s Government, effective from December 01, 2014.

Le Hai

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