Under Vietnam Law, tax incentives are granted based on regulated encouraged sectors and difficult socio-economic locations.
The sectors which are encouraged by the Vietnamese Government include education, health care, sport/culture, high technology, environmental protection, scientific research, infrastructural development and computer software manufacture.
The two preferential rates of 10% and 20% are available for 15 years and 10 years respectively, starting from the commencement of operating activities.
When the preferential rate expires, the Corporate income Tax (CIT) rate reverts to the standard rate.
Taxpayers may be eligible for tax holidays and reductions. The holidays take the form of a complete exemption from CIT for a certain period beginning immediately after the enterprise first makes profits, followed by a period where tax is charged at 50% of the applicable rate.
However, where the enterprise has not derived profits within 3 years of the commencement of operations, the tax holiday/tax reduction will start from the fourth year of operation.
Additional tax reductions may be available for engaging in manufacturing, construction, and transportation activities which employ many female staff, or employ ethnic minorities.
Tax incentives do not apply to other income, which is broadly defined.
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