SBLaw would like to provide some information about Tax Incentives in Vietnam as follows:
Tax incentives are granted for certain 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.
Two preferential CIT 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 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. Criteria for eligibility to these holidays and reductions are set out in the CIT regulations.
Tax incentives do not apply to ’other income’, which is broadly defined.
From 1 January 2012, according to Vietnam’s WTO commitments, tax incentives based on export criteria and domestic material usage ratio have been removed. Taxpayers which had tax incentives based on export criteria may select and notify the tax authorities of alternative CIT incentives based on other tax incentives criteria and apply them for the remaining period.
