Official Letter 245/CTHNA-TTHT on Tax Policy.

General Department of Taxation Ha Nam Provincial Tax Department No: 245/CTHNA-TTHT Regarding: Tax Policy		SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness Ha Nam, February 10, 2025
To:	Kim Bang Industrial Park Investment and Development Construction Co., Ltd. Tax Code: 0700836304 Address: 02.08 Viglacera Urban Area, Tan Tuu Ward, Kim Bang Town, Ha Nam Province.

Response to Document No. 01.09/CV-KB from Kim Bang Industrial Zone Development Construction Investment Co., Ltd. (the Company) regarding tax policies:

The Tax Department of Ha Nam Province provides the following comments:

1. Regarding Question 1:

Based on Circular No. 219/2013/TT-BTC dated December 31, 2013, guiding the implementation of the Value Added Tax (VAT) Law and Decree No. 209/2013/ND-CP dated December 18, 2013, detailing and guiding the implementation of certain provisions of the VAT Law:

• Article 9 stipulates the 0% tax rate (Section 3 of this article was amended by Clause 2, Article 1 of Circular 130/2016/TT-BTC):

“Article 9. 0% Tax Rate

1. The 0% tax rate applies to exported goods and services; construction, installation of projects abroad or in non-taxable zones; international transport; goods and services not subject to VAT when exported, except in cases specified under Section 3 of this article.

Exported goods and services are those sold and supplied to organizations or individuals abroad and consumed outside Vietnam; sold to organizations or individuals in non-taxable zones; goods and services provided to foreign customers as prescribed by law.

a) Exported goods include:

• Goods exported abroad, including goods for export under trust contracts;
• Goods sold to non-taxable zones as prescribed by the Prime Minister; goods sold to duty-free shops;
• Goods sold where the delivery point is outside Vietnam;
• Spare parts and materials for repair and maintenance of vehicles and machinery for foreign parties, consumed outside Vietnam;

... b) Exported services include services directly provided to organizations or individuals abroad and consumed outside Vietnam; services directly provided to organizations or individuals in non-taxable zones and consumed within those zones.

...2. Conditions for applying the 0% tax rate:

a) For exported goods:

• There is a contract for the sale or processing of export goods; a contract for export agency;
• Payment for exported goods through banks and other documents as prescribed by law;
• There is a customs declaration as prescribed in Clause 2, Article 16 of this Circular.

... b) For exported services:

• There is a contract for the provision of services to organizations or individuals abroad or in non-taxable zones;
• Payment for exported services through banks and other documents as prescribed by law;

...3. Cases where the 0% tax rate does not apply include:

• Reinsurance abroad; technology transfer, intellectual property rights transfer abroad; capital transfer, credit, and investment in securities abroad; derivative financial services; postal and telecommunications services to foreign countries (including postal and telecommunications services provided to organizations or individuals in non-taxable zones; provision of pre-paid mobile phone cards with codes and values to foreign countries or non-taxable zones); export of raw materials and minerals as specified in Clause 23, Article 4 of this Circular; tobacco, alcohol, beer imported and then exported; goods and services provided to non-business registered individuals in non-taxable zones, except in other cases as prescribed by the Prime Minister.

Imported tobacco, alcohol, and beer that are exported are not subject to output VAT upon export but are not eligible for input VAT deductions.

• Fuel sold to vehicles in non-taxable zones purchased domestically;

• Vehicles sold to organizations or individuals in non-taxable zones;

• Services provided by businesses to organizations or individuals in non-taxable zones include: leasing houses, conference rooms, offices, hotels, warehouses; transportation services for workers; catering services (except industrial catering services and catering in non-taxable zones);

• The following services provided in Vietnam to organizations or individuals abroad are not subject to the 0% VAT rate:

• Sports competitions, arts, culture, entertainment performances, conferences, hotels, training, advertising, tourism services;
• Online payment services;
• Services linked to the sale, distribution, and consumption of goods in Vietnam.”

“Article 11. 10% Tax Rate

The 10% tax rate applies to goods and services not covered under Articles 4, 9, and 10 of this Circular.”

Based on the above provisions, the Tax Department of Ha Nam Province provides the following response:

• If the Company is a domestic enterprise selling goods and services directly to organizations in non-taxable zones and consumed within those zones, the 0% VAT rate can be applied if the conditions in Clause 2, Article 9 of Circular No. 219/2013/TT-BTC are met and it does not fall under the exceptions in Clause 3, Article 9 of Circular No. 219/2013/TT-BTC (amended by Clause 2, Article 1 of Circular 130/2016/TT-BTC).

Starting from July 1, 2025, the VAT Law No. 48/2024/QH15 passed by the National Assembly on November 26, 2024, will come into effect. The Company is advised to study VAT Law No. 48/2024/QH15 and related documents to align with the actual situation of the Company.

2. Regarding Question 2:

Based on Circular No. 78/2014/TT-BTC dated June 18, 2014, guiding the implementation of Decree No. 218/2013/ND-CP dated December 26, 2013, regarding the implementation of the Corporate Income Tax (CIT) Law:

• Article 5 stipulates:

“Article 5. Revenue

1. Revenue for tax calculation is determined as follows:

... c) In case the enterprise provides services and customers pay in advance for multiple years, the revenue for tax calculation will be allocated over the number of years paid in advance or determined based on the revenue paid in a lump sum. If the enterprise is benefiting from tax incentives, the tax amount entitled to such incentives should be based on the total CIT payable over the years paid in advance divided by the number of years paid in advance.”

• Article 17 stipulates:

“Article 17. Tax calculation basis

The taxable income from real estate transfer is determined by the revenue from the transfer minus the cost of real estate and deductible expenses related to the real estate transfer.

a) Revenue from real estate transfer.

... a.2) In certain cases, the revenue to determine taxable income will be calculated as follows:

• If the lessee pays rent in advance for multiple years, the revenue for tax calculation will be allocated over the number of years paid in advance or determined based on the revenue paid in a lump sum. The one-time revenue determination can only be applied when the enterprise has completed its financial obligations to the State and fulfilled all duties related to leased land for the full lease term.”

Based on the above regulations, the Tax Department of Ha Nam Province provides the following response:

• If the Company allocates revenue and expenses related to real estate transfer activities to determine taxable CIT income, the Company should follow the regulations in Articles 5 and 17 of Circular No. 78/2014/TT-BTC.

3. Regarding Question 3:

Based on Clause 3, Article 16 of Decree No. 218/2013/ND-CP dated December 26, 2013, detailing and guiding the implementation of the CIT Law (amended by Clause 6, Article 1 of Decree No. 91/2014/ND-CP dated October 1, 2014):

“3. Exemption from tax for 2 years and 50% reduction of the tax payable in the following 4 years for income from implementing new investment projects specified in Clause 3, Article 15 of this Decree, and income from investment projects in industrial zones (except for industrial zones in areas with favorable socio-economic conditions).

Favorable socio-economic areas are defined as urban districts of special-class cities, Type I urban areas under the central authority, and Type I urban areas under provincial authority, excluding newly established districts from January 1, 2009; if the industrial zone is located in both favorable and non-favorable areas, the tax incentive applies based on the actual location of the investment project. The classification of urban areas as special-class or Type I follows Government regulations on urban classification.”

Based on Circular No. 78/2014/TT-BTC dated June 18, 2014, the Tax Department of Ha Nam Province provides the following response:

If the Company implements the project “Investment in construction and business of infrastructure in Kim Bang I Industrial Zone” in accordance with Decision No. 1620/QD-TTg dated December 15, 2023, from the Prime Minister, then:

Revenue from land leasing with infrastructure is considered income from real estate transfer under Clause 2, Article 16 of Circular No. 78/2014/TT-BTC. Therefore, this income does not benefit from CIT incentives as specified in Clause 3, Article 18 of Circular No. 78/2014/TT-BTC (as amended by Clause 1, Article 10 of Circular No. 96/2015/TT-BTC).

The Company is advised to refer to the above legal provisions and apply them in accordance with the actual situation. Should there be any difficulties, the Company is welcome to contact the Tax Department's Support Center (Tel: 0226.3851.553); the Inspection Department (Tel: 0226.3851.545).

The Tax Department of Ha Nam Province responds to inform the Company for its implementation.

Recipients: As above; Director General; Deputy Director Nguyễn Quang Hệ; Inspection Department 2, NVDTPC; Tax Department Website; Archive: VT, TTHT.

ON BEHALF OF THE DIRECTOR GENERAL DEPUTY DIRECTOR GENERAL       Nguyen Quang He

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