Document No. 18/CTHAG-TTHT on Corporate Income Tax Incentives

 

GENERAL TAX DEPARTMENT HAU GIANG PROVINCIAL TAX DEPARTMENT No: 18 /CTHAG-TTHTSố: 18 /CTHAG-TTHT Re: Corporate Income Tax Incentives

SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness Hau Giang, January 6, 2025

To:	Vietnam Flour Mill Joint Stock Company Tax Identification Number: 0302556989 Address: Lot 32C/I, Road No. 2G, Vinh Loc Industrial Park, Vinh Loc A Commune, Binh Chanh District, Ho Chi Minh City

In response to Official Letter No. 36/KT-VIKY/2024 dated December 26, 2024 from Vietnam Flour Mill Joint Stock Company (hereinafter referred to as the Company) regarding the procedure to enable the business to benefit from new investment incentives, Hau Giang Provincial Tax Department provides the following comments:

Pursuant to Clauses 3 and 4, Article 10 of Circular No. 96/2015/TT-BTC dated June 22, 2015 of the Ministry of Finance on corporate income tax guidance:

"Article 10. Amendments and supplements to certain provisions in Article 18 of Circular No. 78/2014/TT-BTC... as follows:

3. Amending and supplementing Clause 5, Article 18 of Circular No. 78/2014/TT-BTC (as amended in Article 5 of Circular No. 151/2014/TT-BTC) as follows:

“5. On new investment projects:

a) New investment projects eligible for corporate income tax incentives as specified in Articles 15 and 16 of Decree No. 218/2013/ND-CP include:

• Projects granted the first investment certificate from January 1, 2014, and generating revenue from the project after the investment certificate is issued.

...

b) New investment projects eligible for corporate income tax incentives do not include the following cases:

...

• Projects originating from ownership conversion (including cases where a new investment project is carried out but inherits the assets, business locations, and business activities of the old business to continue production and business activities; or projects acquiring an active investment project).

Businesses formed or businesses with investment projects arising from conversion of business type, ownership changes, division, merger, or consolidation are entitled to retain corporate income tax incentives from the previous business or investment project prior to the conversion, division, merger, or consolidation for the remaining period, provided the business continues to meet the conditions for corporate income tax incentives..."

4. Amending and supplementing Point a, Clause 6, Article 18 of Circular No. 78/2014/TT-BTC (as amended in Article 5 of Circular No. 151/2014/TT-BTC) as follows:

“6. On expansion investment

a) Enterprises with projects aimed at expanding existing projects such as production scale enlargement, capacity enhancement, or technological upgrades (collectively referred to as expansion investment projects) in fields or locations eligible for corporate income tax incentives according to Decree No. 218/2013/ND-CP (including economic zones, high-tech zones, industrial zones except for industrial zones located in the inner districts of special-class urban areas, Class I urban areas directly under the central government, and industrial zones in Class I urban areas of provinces) if they meet one of the three criteria specified in this point may choose to enjoy corporate income tax incentives for the remaining time for the project in operation (including tax rate, exemption or reduction period if applicable), or apply the tax exemption or reduction period for the additional income from the expansion investment (not eligible for preferential tax rates) based on the exemption or reduction period for new investment projects in the same area or tax-advantaged fields.

If the business chooses to enjoy corporate income tax incentives for the ongoing project for the remaining period, the expansion investment project must be in the same field or location as the ongoing project.

Expansion investment projects must meet one of the following criteria:

• The added value of fixed assets when the expansion investment project is completed and operational must be at least VND 20 billion for projects in fields enjoying corporate income tax incentives under Decree No. 218/2013/ND-CP, or at least VND 10 billion for expansion projects in difficult or particularly difficult socio-economic areas as specified in Decree No. 218/2013/ND-CP.

• The proportion of the increase in fixed asset value must be at least 20% compared to the total fixed asset value before the investment.

• The designed capacity of the expansion project must increase by at least 20% compared to the original technical-economic feasibility study.

If the business opts for expansion investment incentives, the additional income from the expansion investment must be recorded separately. If the business cannot account for the additional income from the expansion investment separately, the income from the expansion activity will be determined based on the ratio of the added fixed asset value used for production and business to the total fixed asset value of the business..."

Pursuant to Articles 18 and 22 of Circular No. 78/2014/TT-BTC dated June 18, 2014 of the Ministry of Finance:

"Article 18. Conditions for Applying Corporate Income Tax Incentives

1. Corporate income tax incentives apply only to enterprises that implement accounting, invoicing, and tax declaration and payment according to the declaration system.

...

7. In the same tax period, if there is income eligible for preferential corporate income tax rates and tax exemption/reduction periods under different cases, the enterprise may choose the most beneficial tax incentive case."

Article 22. Procedures for Applying Corporate Income Tax Incentives

Enterprises self-assess the eligibility for tax incentives, the preferential tax rates, tax exemption/reduction periods, and the losses deductible from taxable income and declare and settle tax directly with the tax authorities..."

Pursuant to Point c.2, Clause 3, Article 17 of Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance providing guidance on the implementation of certain provisions of the Law on Tax Administration and Decree No. 126/2020/ND-CP dated October 19, 2020 of the Government.

"Article 17. Tax Declaration, Tax Calculation, Tax Finalization, Allocation, and Corporate Income Tax Payment

3. Tax Declaration, Tax Finalization, Tax Payment:

c.2) Tax Finalization:

...

For activities benefiting from corporate income tax incentives, the taxpayer must declare the tax finalization according to Form No. 03/TNDN issued with Annex II of this Circular at the directly managing tax authority, determining the corporate income tax payable for the incentivized activity according to forms 03-3A/TNDN, 03-3B/TNDN, 03-3C/TNDN, 03-3D/TNDN issued with Annex II of this Circular, and submit them to the tax authority where the incentivized unit is located if it is in a different province."

Based on the above provisions, the Company is requested to compare its actual situation and choose the most beneficial corporate income tax incentive case, declare and self-settle the tax with the tax authorities.

Hau Giang Provincial Tax Department responds to Vietnam Flour Mill Joint Stock Company for its implementation.

Recipient: As above; Leadership of the Tax Department; NVDTPC Department; KK&KTT Department; TTKT1 Department; TTKT2 Department; KTNB Department; Tax Department Website; Archive: VT, TTHT.

On behalf of the DIRECTOR GENERAL THE DEPUTY DIRECTOR GENERAL       Nguyen Thanh Tam

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