Official Dispatch No. 3373/CTHNA-TTHT on Corporate Income Tax Incentives

Reply to Official Letter No. 01/2024-CV-CT dated December 12, 2024, from Miki CareTech Vietnam Co., Ltd. (hereinafter referred to as "the Company") regarding the application of Corporate Income Tax (CIT) incentives, the Ha Nam Tax Department provides the following opinions:

Based on Clause 6, Article 1 of Decree No. 91/2014/ND-CP, dated October 1, 2014, issued by the Government, which amends and supplements certain provisions of tax-related decrees:

“3. A CIT exemption for 2 years and a 50% reduction in CIT for the next 4 years shall apply to income generated from implementing a new investment project as stipulated in Clause 3, Article 15 of this Decree and income from carrying out a new investment project in industrial parks, except those located in areas with favorable socio-economic conditions.
Areas with favorable socio-economic conditions under this Clause refer to urban districts of special-class cities, first-class cities under central and provincial authority, except for first-class cities newly established from districts since January 1, 2009. If an industrial park spans both favorable and non-favorable areas, the actual location of the project will determine the applicable tax incentives. The classification of special-class and first-class cities is carried out under Government regulations on urban classification.”

Based on Circular No. 78/2014/TT-BTC, dated June 18, 2014, issued by the Ministry of Finance, guiding the implementation of Decree No. 218/2013/ND-CP, which regulates and guides the implementation of the Corporate Income Tax Law:

• Clause 1 and Clause 2, Article 18, regarding the conditions for applying CIT incentives:

“1. CIT incentives apply only to enterprises that follow accounting, invoicing, and documentation regulations and declare CIT based on the declaration method.
2. During the incentive period, if an enterprise conducts multiple business activities, it must separately calculate and declare taxable income for business activities eligible for CIT incentives and those that are not.”

• Article 22, regarding the procedure for CIT incentives:

“Enterprises must self-assess their eligibility, determine the incentive tax rate, tax exemption/reduction period, deductible losses, and self-declare and finalize taxes with the tax authority.”

Based on Circular No. 96/2015/TT-BTC, which amends and supplements Clause 5, Article 18 of Circular No. 78/2014/TT-BTC (as amended by Circular No. 151/2014/TT-BTC), guiding CIT regulations under Decree No. 12/2015/ND-CP:

• Clause 3, Article 10, on new investment projects:

“For enterprises enjoying CIT incentives as newly established businesses under investment projects, incentives apply only to income derived from business activities meeting investment incentive conditions, as stated in the initial business registration certificate or investment certificate. If an enterprise modifies its registration or investment certificate but remains eligible for the original tax incentives, it continues to receive them for the remaining duration or qualifies for expanded investment incentives if eligible.”

• Clause 4, Article 10, on expanded investment projects:

“Enterprises expanding their investment (increasing production capacity, upgrading technology, etc.) in incentivized sectors or locations, as per Decree No. 218/2013/ND-CP, may:

• Continue receiving incentives applicable to the original project for the remaining incentive period, or
• Apply new tax exemption/reduction incentives for the additional income from the expansion (without preferential tax rates).

To qualify, expanded investment projects must meet at least one of the following criteria:

• Fixed asset value increase: ≥ VND 20 billion for projects in incentivized sectors or VND 10 billion for projects in socio-economically disadvantaged areas.
• Increase in fixed asset value proportion: ≥ 20% of total fixed asset value before expansion.
• Increase in production capacity: ≥ 20% compared to the original project’s design capacity.”

Based on these regulations and the documents provided by the Company:

1. The Company was established to implement the "Miki CareTech Vietnam" investment project (Project Code: 6500760215) at Dong Van III Supporting Industrial Park, Hoang Dong Ward, Duy Tien Town, Ha Nam Province. This industrial park is not located in an area with favorable socio-economic conditions.

   - If the Company complies with the registered investment content in its Investment Registration Certificate issued by the Ha Nam Industrial Park Management Board on April 8, 2019, and meets the tax and legal requirements, the income generated from this new investment project qualifies for a 2-year CIT exemption and a 50% reduction for the following 4 years, depending on actual compliance.
   - However, if the Company extends the project duration, the extended period will not be eligible for CIT incentives applicable to new investment projects.

2. If the Company undertakes an expansion investment project (scaling production, increasing capacity, upgrading technology) in an incentivized sector or location but fails to meet the eligibility criteria in Clause 6, Article 18 of Circular No. 78/2014/TT-BTC (as amended in Clause 4, Article 10 of Circular No. 96/2015/TT-BTC), the project will not qualify for CIT incentives as an expanded investment project.

Important Notes:

• CIT incentives only apply to businesses that adhere to accounting, invoicing, documentation, and tax declaration requirements.
• The Company must self-assess its eligibility for incentives and declare and finalize taxes as per Article 22 of Circular No. 78/2014/TT-BTC.

Contact for Further Assistance:

If there are any further questions, the Company may contact:

• Taxpayer Communication & Support Department: S0226.3851.553
• Audit & Inspection Department No. 1: S0226.3851.545

The Ha Nam Tax Department responds for the Company’s acknowledgment and implementation.