Preferential corporate income tax rates

Corporate income tax is an obligation of the business; It is also a source of state revenue. However, Vietnam is in the process of encouraging investors, especially foreign investment, so corporate income tax is also a way to call for investment.

From January 1, 2016, the corporate income tax rate is 20%. However, there are preferential cases where corporate income tax rates are only 10% and 17%; As follows:

The tax rate of 10% for a period of 15 years shall be applied in the following cases:

  • Enterprises implementing new investment projects in areas with extremely difficult socio-economic conditions, economic zones, high-tech zones;
  • Enterprises implementing new investment projects include: scientific research and technological development; high-tech applications on the list of hi-tech prioritized for development investment in accordance with the Law on High Technology; high-tech incubation, high-tech enterprise incubation; venture capital investment for high-tech development on the list of high-tech prioritized for development investment under the provisions of the Law on High Technology; investment in construction and business of hi-tech incubators, hi-tech enterprise incubation; invest in the development of especially important infrastructure of the State according to the provisions of law; software product production; production of composite materials, all kinds of light construction materials, rare and precious materials; produce renewable energy, clean energy, energy from waste destruction; biotechnology development; environmental protection;
  • Hi-tech enterprises, agricultural enterprises applying high technology;
  • Enterprises implementing new investment projects in the field of production (except for production of goods subject to excise tax, mining projects) that meet one of the following two criteria:
    • The minimum investment capital is six thousand billion dong, disbursed within three years from the date of issuance of the investment certificate and has a total turnover of at least ten thousand billion dong/year, no later than three years from the year of revenue;
    • The minimum investment capital is six trillion dong, disbursed within three years from the date of issuance of the Investment Certificate, and employs more than three thousand employees.
  • Enterprises implementing new investment projects to produce products on the list of supporting industrial products prioritized for development;
  • Enterprises implementing investment projects in the field of production, excluding projects to produce goods subject to excise tax and mining projects, with a minimum investment capital of twelve thousand billion dong, using technology must be appraised according to the provisions of the Law on High Technology, Law on Science and Technology, disbursed the total registered investment capital within 5 years from the date of investment permit in accordance with the law on investment. invest.

The 10% tax rate applies in the following cases:

  • Enterprises carrying out socialization activities in the fields of education – training, vocational training, health, culture, sports and environment;
  • Enterprises implementing investment projects – social housing business for sale, lease, lease purchase for the subjects specified in Article 53 of the Law on Housing;
  • Press agencies operating in printing press, publishing agencies;
  • Enterprises planting, tending and protecting forests; farming and processing agricultural and aquatic products, cultivating forest products in areas with difficult socio-economic conditions, producing, multiplying and cross-breeding plant and animal breeds; producing, exploiting and refining salt, preserving agricultural products after harvest, preserving agricultural products, aquatic products and food;
  • Cooperatives operating in the fields of agriculture, forestry, fishery and salt production are not located in areas with difficult socio-economic conditions or areas with extremely difficult socio-economic conditions.

The tax rate of 17% (from January 1, 2016) will be applied for a period of 10 years in the following cases:

  • Enterprises implementing new investment projects in areas with difficult socio-economic conditions;
  • Enterprises implement new investment projects, including: production of high-grade steel; produce energy-saving products; production of machinery and equipment for agriculture, forestry, fishery and salt production; production of irrigation equipment; producing and refining animal, poultry and aquatic feed; traditional industry development.

The tax rate of 17% (from January 1, 2016) will be applied to people’s credit funds and microfinance institutions.

Conditions for application of corporate income tax incentives:

  • Enterprises shall implement the accounting, invoice and voucher regime and pay tax according to the declaration;
  • Enterprises must separately account income from production and business activities eligible for tax incentives with the income not eligible for tax incentives. If it is not possible to do separate accounting, the income from production and business activities eligible for tax incentives shall be determined according to the ratio between the turnover of production and business activities eligible for tax incentives to the total turnover of the enterprise. ;
  • The 17% tax incentive will not apply to:
    • Income from transfer of capital, transfer of the right to contribute capital; income from real estate transfer, excluding social housing; incomes from the transfer of investment projects, the transfer of the right to participate in investment projects, the transfer of the right to explore and exploit minerals; income from production and business activities outside Vietnam;
    • Incomes from activities of prospecting, exploration and exploitation of oil, gas and other rare and precious natural resources and income from mineral extraction activities;
      Income from service business is subject to excise tax under the provisions of the Law on Special Consumption Tax.

Note: In the same period, if an enterprise enjoys different tax incentives for the same income, the enterprise may choose to apply the most favorable tax incentive.