Amendments and supplements to corporate income tax

(Baonghean) - Question: It is known that on October 1, the Government issued Decree No. 91/2014/ND-CP amending and supplementing a number of articles of decrees regulating taxes. There are many contents, please let the Tax Department know the amendments and supplements regarding corporate income tax (CIT)?

Reply:On October 1, the Government issued Decree No. 91/2014/ND-CP amending and supplementing a number of articles of decrees regulating taxes. This Decree takes effect from November 15, 2014. The Decree has important changes compared to previous tax decrees. The issue you asked about is regulated in Article 1 of the Decree applicable to corporate income tax calculation from 2014. Here are the main changes:

1/ Supplementing the regulation of not calculating corporate income tax on the difference due to revaluation of assets of state-owned enterprises upon equitization (Clause 1, Article 1, Decree 91).

2/ Amend the tax exemption period from 1 year or more to no more than 3 years for income from performing scientific research and technology development contracts; income from selling products made from new technology applied for the first time in Vietnam according to the provisions of law and instructions of the Ministry of Science and Technology, which is exempted from tax from 1 year to a maximum of no more than 5 years from the date of revenue from product sales; income from selling experimentally produced products during the experimental production period according to the provisions of law (Clause 2, Article 1, Decree 91);

3/Supplementing regulations allowing enterprises to deduct expenses for welfare expenses paid directly to employees for which the enterprise has invoices and documents as prescribed, such as: (expenses for funerals and weddings of the employee and his/her family; vacation expenses, treatment support expenses; expenses to support additional knowledge and study at training facilities; expenses to support employees' families affected by natural disasters, war, accidents, illness; expenses to reward employees' children with good academic achievements; expenses to support travel expenses on holidays and Tet.) and other welfare expenses according to the guidance of the Ministry of Finance; the total amount of expenses must not exceed 1 month's average actual salary in the tax year. (Clause 4, Article 1, Decree 91);

4/ Supplementing regulations allowing businesses to deduct depreciation based on actual value for cars with nine (9) seats or less used for sampling and test driving by car dealerships (currently only allowing depreciation and calculating into expenses the original price from 1.6 billion VND) (Clause 5, Article 1, Decree 91);

5/ Supplementing regulations on areas with favorable socio-economic conditions does not include districts of special-class urban areas, centrally-run type I urban areas and newly-established type I urban areas from districts since January 1, 2009. Accordingly, enterprises with investment projects in industrial parks in these areas are entitled to incentives according to regulations (Clause 6, Article 1, Decree 91);

6/ Supplementing regulations for investment phase projects and projects to equip additional machinery regularly to enjoy tax incentives according to the incentive levels currently applied to first-time investment projects; for investment projects granted investment licenses before January 1, 2014, tax incentives are enjoyed for the remaining incentive period calculated from January 1, 2014 (Clause 7, Article 1, Decree 91)

7/Supplementing the provision on transitional corporate income tax incentives for textile and garment enterprises that meet the export criteria and have had their tax incentives suspended due to implementation of WTO commitments, which can be selected to enjoy tax incentives according to the conditions that the enterprise meets (in addition to the preferential conditions due to meeting the export ratio conditions) for the remaining preferential period according to the provisions in previous legal documents on corporate income tax at the time of being granted the Establishment License or in previous legal documents on corporate income tax at the time of adjustment due to WTO commitments (Clause 8, Article 1, Decree 91).

8/ Update information on some locations in the Appendix of List of locations with preferential corporate income tax to suit the reality (from town to city) (Clause 9, Article 1, Decree 91).

Nghe An Tax Department