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Tax incentives for company in Vietnam
Hi Dan Tri Law firm in Vietnam, I am a US citizen. I am considering to set up a company in Vietnam that specializing in equipment producing, located in Vietnam, by the form of 100% foreign-owned company in Vietnam. I would like lawyer to give advice on Vietnam’s tax incentives for 100% foreign-owned companies specializing in equipment producing.
Hi, given below is advice from Dan Tri Law firm in Vietnam for your enquiry:
Incentives for Enterprise Income Tax- EIT (Also known: Corporate Income Tax - CIT):
Circular No 78/2014/TT-BTC dated June18, 2014 guiding the implementation of the Law on Enterprise Income Tax (Point b Clause 1 Article 19), stipulates:
EIT preferential tax rate:
The preferential tax rate of 10% for fifteen (15) years is applicable to: Incomes of enterprises from the implementation of new investment projects in the fields of scientific research and technological development; application of high technologies on the list of high technologies prioritized or development investment in accordance with the Law on HighTechnologies; nursery of high technologies and hi-tech enterprises; venture investment in development of high technologies on the list of high technologies prioritized for development in accordance with the Law on HighTechnologies; construction investment and commercial operation of establishments nursing high technologies and hi-tech enterprises; investment in development water plants, power plants, water supply and drainage systems; bridges, roads, railways; airports, seaports, river ports; air fields, stations and other particularly important infrastructure facilities decided by The Prime Minister; production of software products; manufacture of composite materials, light building materials, rare and precious materials; generation of renewable energies, clean energy and energy from the waste disposal; development of biotechnology;
EIT tax exemption and reduction duration:
Circular No 78/2014/TT-BTC dated 18June2014 guiding the implementation of the Law on Enterprise Income Tax (Point a Clause 1 Article 20), stipulates:
Tax exemption for 4 years and 50% reduction of tax payable amount for 9 subsequent years are applicable to: Incomes of enterprises from the implementation of new investment projects specified in Clause 1, Article 19 of this Circular.
Therefore, a software producing company, from the date of establishment, will be entitled to enterprise income tax (EIT) incentives as follows:
From the first year to the fourth year: EIT Tax exemption;
From the fifth year to the thirteen year: 50% Reduction of the tax payable, i.e. the company only pays EIT tax at 5%;
The fourteenth year and fifteenth year: Pays EIT at 10%;
From the sixteenth year afterwards: the company will pay the normal tax rate applicable (20%).
Incentives for Value Added Tax (VAT):
Circular No 219/2013/TT-BTC dated 31 Dec2013 guiding the implementation of the Law on Value-Added Tax and the Decree No 209/2013/ND-CP dated December 18, 2013 of the Government on detailing and guiding implementation of several articles of Law on Value-Added Tax (Clause 21, Article 4), stipulates:
Goods and services not subjected to VAT: Computer software including software products and software services as prescribed by law.
Incentives for Personal Income Tax (PIT):
Resolution No 41/NQ-CP dated May26, 2016 regarding tax incentives to promote the development and application of information technology in Vietnam, stipulates:
50% reduction on personal income tax for income from employment of individuals who are high-tech human resources wokring in information technology, who are qualified and skilled people meeting requirements of research activities, development, application of hi-tech in information technology, managing hi-tech in information technology; operating equipment, production line for manufacturing of hi-tech products; managing security of information system.
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