According to point b Clause 2 Article 10 of Circular No. 96/2015/TT-BTC , incomes eligible for tax incentives in terms favored areas only include incomes generated from business and production activities in such favored areas. Read more
Accordingly, in case a company earns incomes from goods sale and purchase activities outside favored areas, such incomes are not eligible for tax incentives.
According to Clause 5 Article 16 of Decree No. 218/2013/ND-CP , an expansion investment project shall be entitled to enterprise income tax (EIT) incentives only when there is increase in capital or increase at least 20% in fixed assets, design production. Read more
In case of failing to meet one of the above criteria but there is investment in upgrading, replacing, renewing technology of an operating project that is enjoying tax incentives, the incomes additionally brought about by the expansion investment shall be entitled to incentives according to the initial project for the remaining period.
Accordingly, in case a company that is enjoying EIT incentives in terms of meeting geological area - related conditions adds transportation business line without increasing capital, making additional investment in assets (mainly using leased autos) as well as without investing in upgrading, replacing, renewing technology, the income from this additional business line shall not be entitled to EIT incentives.
The Department of Taxation of Ha Noi city notes that a project of new investment in the sector of software production shall be only entitled to EIT incentives when it meets the software production process as regulated at Circular No. 16/2014/TT-BTTTT and products produced are the software products regulated at Circular No. 09/2013/TT-BTTTT . Read more
The invectives given to this type of project are regulated at Clause 1 Article 11 and Clause 1 Article 12 of Circular No. 96/2015/TT-BTC , to be specific: 10% duty rate applicable for 15 years; tax exemption for 4 years and 50% tax reduction for 9 subsequent years.
In case an enterprise performs various production and business activities, it has to separately account incomes from production and business activities eligible for tax incentives from incomes from those ineligible for tax incentives for separate declaration and payment of tax.
With regard to the activity of “computer programming (CPC 8424)", whether it is considered to be software production activity or not (for consideration of incentives), it is required to contact with specialized management agencies.
In which, there are 17 forms for investors, including:
1. Application for investment project execution (For projects proposed by investors - subject and not subject to approval for their investment guidelines).
2. Investment project proposal (For projects subject to approval for their investment guidelines – set up by competent authorities)
3. Investment project proposal (For projects subject to approval for their investment guidelines - proposed by investors)
4. Investment project proposal (For projects subject to approval for their investment guidelines - proposed by investors)
5. Registration form for capital contribution/purchase of shares/stakes by foreign investors.
6. Registration form for establishment of foreign investor’s executive office under BCC
7. Registration form for adjustment to certificate of registration of foreign investor’s executive office under BCC
8. Notice of shutdown of foreign investor’s executive office under BCC
9. Application for adjustment to investment project
10. Report on investment project’s progress by the time of adjustment
11. Notice of investment project suspension
12. Notice of investment project termination
13. Application for replacement of Investment Registration Certificate
14. Application for re-issuance of Investment Registration Certificate
15. Application for correction of information on Investment Registration Certificate
16. Application for permission to return Investment Registration Certificate
17. Report on investment project execution (For foreign-invested business entities subject to issuance of Investment Registration Certificate
The remaining 16 forms are for investment authorities.
According to point a Clause 1 Article 32 of the Law on Investment No. 67/2014/QH13 , with regard to projects that use land allocated or leased out by the State without auction or bidding or transfer; projects that require change of land purposes, it is required to apply for provincial People’s Committees’ approval of investment policies. Read more
Operation duration of an investment project is regulated at Article 43 of the Law on Investment No. 67/2014/QH13 .
Regarding conditions, procedures for using land of a terminated project in order to execute a new investment project, enterprises need to contact with the Ministry of Natural Resources and Environment for obtaining guidelines under its jurisdiction.
Relating to level of capital contribution of a project, the Ministry of Planning and Investment assumes that it is not required to be equivalent to an enterprise's charter capital. Read more
The concept “charter capital” now is regulated at Clause 29 Article 4 of the Law on Enterprises No. 68/2014/QH13 , means the total value of assets that are contributed or promised to be contributed by members/partners.
Meanwhile, “investment capital’ of a project refers to 2 capital sources: (1) capital contributed by the investor and (2) capital raised by the investor (Clause 15 Article 2 of Decree No. 118/2015/ND-CP).
Therefore, based on the aforesaid regulations, “investment capital’ of a project may be higher than the investor’s charter capital if in addition to the contributed capital, the investor also uses raised capital.
However, it is required to note that the investor must ensure that he is capable to execute the project according to the set target, contents, scale, progress and other conditions under the decision on investment guidelines and the Investment Registration Certificate (if any).
According to Clause 4 Article 40 of the Law on Investment No. 67/2014/QH13 , a project subject to the issuance of a decision on investment policies, upon arising changes in investor or conditions applied to the investor (if any), it is required to follow the procedures for issuance of the decision on investment policies before adjusting the Certificate of investment registration. Read more
The Ministry of Planning and Investment assumes that the enterprise separation and the transfer of rights and duties of the investment project from the separated enterprise to the to-be separated enterprise lead to the “change in investor” and “changes in conditions applied to the investor” of the project. As the result, it is required to re-issue the decision on investment policies and modify the Certificate of investment registration.
Regarding procedures for modifying to the Certificate of investment registration with regard to a project for which investment policies are decided by provincial people’s committee, they are regulated at Article 34 of Decree No. 118/2015/ND-CP .
The Ministry of Planning and Investment notes that the submission of the reports on supervision and assessment of investment (for projects funded by private capital) according to Article 34 of Decree No. 84/2015/ND-CP must be implemented until the expiration of the project execution period rather than only submission during the construction period. Read more
For example, an investor is leased land by the State for 50 years to execute Project A with the construction period of 4 years, the investor has to submit the reports on supervision and assessment of investment during the project execution period of 50 years (under the land lease decision) rather than 4 years of construction .
The reports must be submitted every 6 months and every year (Clause 10 Article 68 of Decree No. 84/2015/ND-CP ).
According to the General Department of Taxation’s opinions, the additional incomes brought about by expansion investment activity shall be entitled to EIT incentives according to actual-met conditions of enterprises. Read more
However, notably, in case enterprises add more business lines such as sub-lease of redundant offices, warehouses and factories without the increase in capital, without investment in expansion of properties, the incomes from additional business lines shall not be entitled to incentives (Official letter No. 17008/BTC-CST dated November 17th, 2015).
If a project of new investment in an industrial park meets the conditions specified at Clause 3 Article 10 of Circular No. 96/2015/TT-BTC and does not belong to a geographical area with advantage socio-economic conditions, the project shall be eligible for EIT incentives, including tax exemption for 2 years and 50% reduction in payable tax amounts for 4 subsequent years. Read more
The incentives shall be calculated from the first year the project generates taxable income (Clause 3 and Clause 4 Article 20 of Circular No. 78/2014/TT-BTC).
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