From January 01, 2021, the Law on Investment 2020 of Vietnam will officially take effect, thus, there will be many changes in investment policies compared to the current regulations. In which, cases of enterprise income tax exemption and reduction duration incentives are supplemented.
Article table of contents
According to Point b Clause 4 Article 75 of the Law on Investment 2020 of Vietnam, Article 14 of the Law on Enterprise Income Tax 2008 amended by the Law on Enterprise Income Tax 2013 and Law on Amendments to Tax Laws 2014 of Vietnam on enterprise income tax exemption and reduction duration incentives is supplemented as follows:
b) Clause 1a is added after Clause 1 of Article 14 as follows:
“1a. With respect to the investment projects specified in Clause 2 Article 20 of the Law on Investment, the Prime Minister shall decide to apply tax exemption for no more than 6 years and reduce 50% of the maximum tax payable for no more than the 13 subsequent years.”
Besides, according to Clause 2 Article 20 of the Law on Investment 2020 of Vietnam, objects eligible for special investment incentives and assistance with a view to encouraging the development of some investment projects that exert significant socio-economic effects include:
- Projects on investment in establishment (including the expansion of such establishment project) of innovation centers and research and development centers with a total investment capital of at least VND 3,000 and disbursing at least VND 1,000 billion within 03 years from the issuance date of the investment registration certificate or the approval for investment guidelines; the National Innovation Center established under the Prime Minister's decision;
- Investment projects in the business line eligible for special investment incentives with an investment capital of at least VND 30,000 billion and disbursing at least VND 10,000 billion within 03 years from the issuance date of the investment registration certificate or the approval for investment guidelines.
Thus, according to the above provisions, from January 01, 2021, the Law on Investment 2020 of Vietnam supplements cases on enterprise income tax exemption and reduction duration incentives for investment projects that exert significant socio-economic effects. The Prime Minister of Vietnam shall decide to apply tax exemption for no more than 6 years and reduce 50% of the maximum tax payable for no more than the 13 subsequent years for:
- Projects on investment in establishment of innovation centers and research and development centers with a total investment capital of at least VND 3,000 billion and disbursing at least VND 1,000 billion within 03 years;
- Investment projects in the business line eligible for special investment incentives with an investment capital of at least VND 30,000 billion and disbursing at least VND 10,000 billion within 03 years.
On the other hand, the Law on Investment 2020 of Vietnam also additionally stipulates that for the investment projects exerting significant socio-economic effects, the Prime Minister of Vietnam shall decide to apply a preferential tax rate reducing by no more than 50% the preferential tax rate of 10%. The duration of application of the preferential tax rate shall not exceed 1.5 times of 15 years and may be extended for no more than 15 years and must not exceed the duration of the investment project.
Ty Na
