If enterprises are entitled to a 30% reduction in enterprise income tax (EIT) under Resolution No. 116/2020/QH14 and Decree No. 114/2020/ND-CP (their total revenue in 2020 does not exceed VND 200 billion), the tax reduction is also applied to amounts considered to be “other incomes” as regulated at Clause 3 Article 18 of the Law on Enterprise income tax No. 14/2008/QH12 (which has been amended, supplemented at Clause 12 Article 1 Law No. 32/2013/QH13 and Clause 1 Article 1 of Law No. 71/2014/QH13 )
This Circular provides for conditions for and rate of EIT exemption, reduction for science and technology enterprises. Read more
Accordingly, science and technology enterprises shall be entitled to EIT exemption, reduction only when they meet all conditions regulated at Article 2 of this Circular, in which it is required to obtain the science and technology enterprise Certificate and annual revenue from science and technology products must account for at least 30% of total revenue.
EIT shall be exempted for 4 years and reduced 50% for the next 9 years. The tax exemption, reduction duration shall be calculated consecutively from the day on which the science and technology Certificate is granted (point a, b Clause 1 Article 3).
However, it should note that during the tax exemption, reduction period, an enterprise that fails to meet the minimum ratio (30%) of revenue from science and technology products shall not be entitled to tax exemption, reduction in such year and it shall be subtracted from the duration of EIT incentives (point c Clause 1 Article 3).
If an independent according branch of a science and technology enterprise meets the conditions at Article 2 of this Circular, it shall be also eligible for EIT exemption, reduction (Clause 2 Article 1).
This Circular takes effect from March 1st, 2021.
To annul point 1 Section III of Joint Circular No. 06/2008/TTLT-BKHCN-BTC-BNV dated June 18th, 2008; Clause 8, Clause 9 Article 1 of Joint Circular No. 17/2012/TTLT-BKHCN-BTC-BNV dated September 10th, 2012.
The Department of Taxation of Ha Noi city assumes that enterprises applying 2020’s tax year according to fiscal year (other than the Gregorian calendar) are still entitled the tax reduction policy according to Resolution No. 116/2020/QH14 and Decree No. 114/2020/ND-CP . Read more
The condition for reduction in 2020’s EIT is that the projected total revenue in 2020 (regardless of fiscal year or the Gregorian calendar) of each enterprise is less than VND 200 billion (Article 2 of Decree No. 114/2020/ND-CP).
This Decree regulates the application of the policy on 30% reduction in enterprise income tax (EIT) under Resolution No. 116/2020/QH14 of the National Assembly applicable to enterprises whose revenue in 2020 is less than VND 200 billion regardless forms of enterprises, scale Read more
- The total revenue to be determined includes the whole sales amount, income from processing, charges for provision of services covering price subsidies, surcharges, extra amounts.
- For an enterprise newly established in 2020, its total revenue shall be calculated by multiplying (x) the average monthly revenue by 12.
- At the time of making quarterly EIT declaration (now, it remains quarter 3 and quarter 4), enterprises shall themselves determine their total revenue in 2020, if it does not exceed VND 200 billion, they shall temporarily pay 70% of tax payable quarterly.
- When making EIT accounting for the year 2020, if actual total revenue does not exceed VND 200 billion, it is allowable to adjust for being entitled to a 30% reduction in EIT for the whole year.
- Enterprises that are enjoying EIT incentives (if any) shall be also entitled to 30% reduction calculated on the remaining EIT payable (if any).
This Decree takes effect from the date on which Resolution No. 116/2020/QH14 takes effect (August 3rd, 2020) and inclusively applies to the EIT period of 2020.
According to Article 1 of Resolution No. 116/2020/QH14, enterprises whose total revenue in 2020 is less than VND 200 billion shall be entitled to a 30% reduction in EIT payable in 2020. Enterprises shall themselves determine tax amount to be reduced when they temporarily pay EIT and make EIT accounting at the end of the year. Read more
In addition, according to this Official letter, the 30% reduction in EIT payable in 2020 shall be determined in line with the tax period each enterprise applies, either the Gregorian calendar or fiscal year.
The National Assembly decided to reduce 30% of EIT incurred by enterprises whose revenue in 2020 is less than VND 200 billion, regardless of small or large enterprises, domestic or foreign- invested enterprises. Read more
Enterprises shall themselves determine reduced tax amount in their quarterly tax periods of 2020 and make the tax accounting at the end of the year.
Because this Resolution takes effect from August 3rd, 2020, just EIT declaration from quarter 3/2020 shall be entitled to the 30% reduction – in other words, EIT shall be still paid 100% with regard to the EIT declaration of quarter 1 and quarter 2/2020.
This policy is only applied in 2020 exclusively.
According to Clause 2 Article 10 of Circular No. 96/2015/TT-BTC , with regard to an enterprise that is eligible for tax incentives in terms of geographical areas, its incomes entitled to incentives are all incomes generated in the geographical areas eligible for tax incentives, including interests on terms deposits at banks.
However, expenditures relating to the performance of the business cooperation contract, depreciation of fixed assets of partnership activities shall not be deducted upon calculation of EIT of other business activities in a company.
According to Clause 1 Article 15 and Article 16 of Decree No. 218/2013/ND-CP , agricultural enterprises applying high technologies shall be entitled to 4 - year tax exemption, 50% reduction of payable tax amount for 9 subsequent years. Read more
Incomes eligible for the incentives include incomes the activity of applying high technologies and incomes directly related to the activity of applying high technologies.
Such incentives shall be calculated from the year when the enterprise is granted the certificate of agricultural enterprises applying high technologies.
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