Encourage businesses to invest and expand through tax incentives

According to the General Department of Taxation, from January 1, 2014, domestic and foreign enterprises will enjoy many tax incentives when investing in expanding production and business. Accordingly, the scope of incentives for new investments will be wider than the current Corporate Income Tax Law. The new regulations will have an impact on budget revenue but have the advantage of clear policies, consistent with the provisions of the law on investment.

The Law amending and supplementing the Law on Corporate Income Tax has added provisions on tax exemption and tax reduction for FDI projects.

Speaking to reporters of the Customs Newspaper, Deputy Director General of the General Department of Taxation Cao Anh Tuan said that the current Corporate Income Tax Law does not provide tax incentives for enterprises' investment projects, only stipulates that investment projects that establish new legal entities in investment incentive fields and areas will enjoy investment incentives. However, most enterprises do not want to form new legal entities due to procedures and increased costs.

To meet practical requirements and encourage and attract investment, contributing to the effective allocation of resources, the Law amending and supplementing the Law on Corporate Income Tax (effective from January 1, 2014) has added provisions on tax exemption and reduction for FDI. In particular, it clearly stipulates the scope of incentives, incentive levels, and criteria for FDI to receive tax incentives.

Specifically, enterprises must meet one of three criteria such as: The original value of fixed assets increased when the investment project is completed and put into operation reaches at least 20 billion VND for investment projects in the field of corporate income tax incentives according to the provisions of this Law or from 10 billion VND for investment projects implemented in areas with difficult or especially difficult socio-economic conditions according to the provisions of the law on corporate income tax; The proportion of the original value of fixed assets increased reaches at least 20% compared to the total original value of fixed assets before investment; The design capacity increases at least 20% compared to the design capacity before investment).

At the same time, supplement the regulation that if the FDI enterprise enters the tax incentive field or area under this Law and meets one of the three criteria above, the additional income from the FDI enterprise can be selected to enjoy tax incentives according to the operating project for the remaining time (if any) or be exempted from tax or have tax reduced according to the FDI enterprise. In case the FDI enterprise does not meet one of the three criteria above, the tax incentives will be implemented according to the operating project for the remaining time (if any).

In addition, in order to create maximum convenience for enterprises to enjoy preferential policies when investing in Vietnam. The Law amending and supplementing the Law on Corporate Income Tax clearly stipulates the principle of transitional incentives for enterprises with investment projects that, by the end of the 2013 tax period, are still enjoying corporate income tax incentives, they will continue to enjoy them for the remaining period or can choose incentives according to the provisions of this Law if they meet the incentive conditions according to the provisions of this Law for the remaining period. Accordingly, in case an enterprise implements a new investment project before January 1, 2014 and is not in the incentive period, it will not be allowed to switch to enjoy corporate income tax incentives according to the provisions of this Law.

Also from January 1, 2014, additional preferential fields, industries, and locations will be added (in addition to the preferential fields and locations as prescribed by the current Law on Corporate Income Tax) such as: Adding to the scope of application of the preferential tax rate of 10% for 15 years, tax exemption for up to 4 years and 50% reduction of payable tax for up to 9 subsequent years for enterprise income from implementing new investment projects, applying high technology in the list of high technologies prioritized for investment and development as prescribed by the Law on High Technology; Venture investment for high technology development in the list of high technologies prioritized for development as prescribed by the law on high technology...

Enterprise income from implementing new investment projects in the manufacturing sector (except for projects producing goods subject to special consumption tax and mineral exploitation projects) that meet one of the following two criteria: The project has a minimum investment capital of VND 6 trillion, disbursement is made no later than 3 years from the date of investment license issuance and has a total revenue of at least VND 10 trillion/year no later than 3 years from the year of revenue generation.

The project has a minimum investment capital of 6 trillion VND, disbursed within no more than 3 years from the date of investment license issuance and employs over 3,000 workers. Income of high-tech enterprises and high-tech agricultural enterprises according to the provisions of the Law on High Technology.

At the same time, add to the list of businesses applying preferential tax rate of 20%, tax exemption for up to 2 years and 50% reduction of tax payable for up to 4 subsequent years for: Income of enterprises from implementing new investment projects: Production of high-grade steel; production of energy-saving products... In addition, tax incentives for Industrial Parks are also implemented: Income of enterprises from implementing new investment projects in Industrial Parks (except for Industrial Parks located in areas with favorable socio-economic conditions). Accordingly, enterprises are exempted from tax for 2 years, reduced by 50% of tax payable for the next 4 years.

According to (HQ Online)- PH