According to Decision 29/2021/QD-TTg, investment projects with a total registered capital of over VND 30,000 billion, or research and development center projects (R&D) with capital of more than 3,000 billion VND can enjoy special investment incentives in terms of corporate income tax rates, land rent, and water surface rent. As follows:
Article table of contents
Exemption and reduction of enterprise income tax with special investment projects (Artwork)
According to Article 5 of Decision 29/2021/QD-TTg of Vietnam, there are 3 levels of special investment incentives in terms of corporate income tax. Specifically:
(1) The preferential tax rate of 9% shall be applied within a period of 30 years to incomes earned by the business entity from the investment projects in industries or trades with special investment incentives with an investment capital of 30,000 or more. billion or more.
Period of enterprise income tax exemption and reduction: Tax exemption for 5 years, 50% reduction of payable tax for the next 10 years.
(2) The preferential tax rate of 7% shall be applied within a period of 33 years to incomes earned from one of the following investment projects:
- A project 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 billion of which at least VND 1.000 billion is disbursed within 03 years from the issuance date of the investment registration certificate or the decision on approval for investment guidelines.
- An investment project specified in Point b Clause 2 Article 20 of the Law on investment and meets any of the following criteria:
+ It is a level-1 high technology project;
+ There are Vietnamese enterprises joining the value chain at level 1;
+ The value added is accounted for more than 30% to 40% of the prime costs of total finished products of the business entity;
+ It meets level-1 technology transfer criteria.
Period of corporate income tax exemption and reduction: Tax exemption for 6 years, 50% reduction of payable tax for the next 12 years.
(3) The preferential tax rate of 5% shall be applied within a period of 37 years to incomes earned from activities of one of the following investment objects or projects:
- The national innovation center established under the Prime Minister’s decision.
- An investment project specified in Point b Clause 2 Article 20 of the Law on investment and meets any of the following criteria:
+ It is a level-2 high technology project;
+ There are Vietnamese enterprises joining the value chain at level 2;
+ The value added is accounted for more than 40% of the prime costs of total finished products of the business entity;
+ It meets level-2 technology transfer criteria.
Period of corporate income tax exemption and reduction: Tax exemption for 6 years, 50% reduction of payable tax for the next 13 years.
* Vietnamese enterprises joining the value chain at level 1 is the case where there are Vietnamese enterprises other than the entities specified in Clause 1 Article 23 of the Law on Investment of Vietnam joining the value chain and all of the following 2 conditions are satisfied:
- The number of Vietnamese enterprises joining the chain and performing contracts for assembly and supply of components, materials and services for production of products is accounted for 30% - 40% of total enterprises joining the chain;
- At least 30% of prime costs is related to Vietnamese enterprises joining the chain.
* Vietnamese enterprises joining the value chain at level 2 is the case where there are Vietnamese enterprises other than the entities specified in Clause 1 Article 23 of the Law on Investment of Vietnam joining the value chain and all of the following 2 conditions are satisfied:
- The number of Vietnamese enterprises joining the chain and performing contracts for assembly and supply of components, materials and services for production of products is accounted for more than 40% of total enterprises joining the chain;
- At least 40% of prime costs is related to Vietnamese enterprises joining the chain.
* Level-1 technology transfer
- Be issued with certificate of transfer of technology the transfer of which is encouraged in accordance with regulations of the Law on technology transfer.
- Have carried out technology transfer for less than 03 Vietnamese enterprises within a period of 05 years from the issue date of investment registration certificate or decision on approval for investment guidelines or written agreement by a competent authority.
* Level-2 technology transfer
- Be issued with certificate of transfer of technology the transfer of which is encouraged in accordance with regulations of the Law on technology transfer.
- Have carried out technology transfer for 03 or more Vietnamese enterprises within a period of 05 years from the issue date of investment registration certificate or decision on approval for investment guidelines or written agreement by a competent authority.
If an investment project uses land allocated or leased out by the State, or permitted by the State to repurpose, the period of 05 years specified in Point a and Point b of this Clause shall commence on the date on which the investor is issued with the decision on land allocation, decision on land lease or decision on land repurposing. If the investor has obtained the decision on land allocation, decision on land lease or decision on land repurposing but the transfer of land is delayed, the period of 05 years begins from the date on which land is transferred on site.
In addition, Decision 29/2021/QD-TTg of Vietnam also provides incentives for land rent and water surface rent as follows:
- Tax exemption for 5 years and 50% tax reduction for the subsequent 10 years shall be applied to incomes earned by the business entity from the investment project specified in Clause 1 Article 5 of this Decision.
- Tax exemption for 6 years and 50% tax reduction for the subsequent 12 years shall be applied to incomes earned by the business entity from the investment project specified in Clause 2 Article 5 of this Decision.
- Tax exemption for 6 years and 50% tax reduction for the subsequent 13 years shall be applied to incomes earned from activities of the object or the business entity from the investment project specified in Clause 3 Article 5 of this Decision.
Bao Ngoc
