Circular 83/2016/TT-BTC governs in detail several cases subject to incentives as follows:
• New investment projects in economic zones and hi-tech zones (including the centralised information technology zones established in accordance with the decision of the Prime Minister) are entitled to tax incentives in accordance with the Law of Corporate Income Tax.
• New investment projects in industrial zones (except those located in areas with favorable socio-economic conditions as prescribed by the Government), which are not covered by the incentive investment fields or the new investment projects in economic zones and hi-tech zones, are entitled to tax incentives under the provisions of the Corporate Income Tax Law. This also applies to the new investment projects in the export processing zones.
• Expansion of investment projects: If such projects meet the criteria prescribed by the Corporate Income Tax Law, the enterprise is entitled to select the tax incentives for the remaining time (if any) of the project or a tax exemption and reduction on the increased income due to the expansion of investments. The duration of tax exemption and tax reduction for the increased income should be equal to the duration of tax exemption and tax reduction applicable to new investment projects in the same investment incentive fields or areas under the regulations of the corporate income tax law.
Preferential import duty
Projects with operational sectors subject to special investment incentives; projects operating in areas with extremely difficult socio-economic conditions, or projects with capital of VNĐ6 trillion or more will be entitled to the following incentives:
• Import duty exemption for imported goods as fixed assets such as equipment, machinery and specialized means of assembly line technology which cannot be domestically produced, as prescribed in detail in the Law on Export Duty and Import Duty.
• Import duty exemption for 5 years for materials, supplies and components which cannot be domestically produced; imported for production activities of investment projects (except for the projects of manufacture and assembly of automobiles, motorcycles , air conditioners, electric heaters, refrigerators, washing machines, electric fans, dishwashers)
Projects under the category of investment incentives, such as manufacture of automobiles, auto parts, shipbuilding; projects operating in areas with difficult socio-economic conditions such as Kon Tum, Son La, Lai Chau, or projects using 500 or more workers in rural areas: import duty exemption for imported goods as fixed assets.
Preferential non-agricultural land use tax
Tax exemption for investment projects:
• under the sectors subject to special investment incentives; or
• operating in areas with extremely difficult socio-economic conditions; or
• with capital from VNĐ6 trillion or more, capital disbursement within at least three years from the date of issuance of the Investment Registration Certificate and operating in areas with extremely difficult socio-economic conditions; or
• the investment projects under the stipulated sectors subject to investment incentives and operating in areas with difficult socio-economic conditions.
A 50-per cent tax rate reduction for investment projects:
• under the sectors subject to investment incentives as stipulated in Section B Annex I Decree 118/2015/NĐ-CP; or
• under areas with difficult socioe-conomic conditions as defined in Annex II Decree 118/2015/NĐ-CP; or
• having 500 employees or more operating in rural areas with difficult socio-economic conditions.
In order to obtain such incentives, investment projects must meet one of the following conditions:
• The investment sectors of the project is in the field of manufacturing new materials, new energy; manufacturing electronic products and key mechanical products; high-tech activities, and many other sectors as prescribed in Clause 2 Article 15 of 2014 Investment Law, Clause 1 Article 16 of Decree 118/2015 / NĐ-CP;
• The capital scale of the projects should be from VNĐ6 trillion or more, and the disbursement of at least VNĐ6 trillion within three years commencing from the date of issuance of the Investment Registration Certificate or the investment policy decisions;
• At least 500 employees or more in rural areas;
• The operating area of the project has difficult or extremely difficult socio-economic conditions.
In addition, there are two cases that should be noted:
The investment projects for mineral exploitation are not entitled to preferential import duty and non-agricultural land use tax.
For projects producing goods and services subject to excise tax:
• Only new investment projects of under 24-seat cars (including cars for both passengers and cargoes transportation with two or more rows of seats, with fixed bulkhead design between compartments of passengers and cargoes) are subject to preferential corporate income tax.
• Other types of goods and services subject to special consumption tax cannot enjoy preferential corporate income tax, import duty and non-agricultural land use tax.
PLF Law Firm