Official Letter 762/TCT-CS 2025 on Tax Policy

MINISTRY OF FINANCE GENERAL DEPARTMENT OF TAXATION _____________ No: 762/TCT-CS Regarding Tax Policy

SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ________________________ Hanoi, February 21, 2025

 

 

To: Kon Tum Provincial Tax Department

 

The General Department of Taxation has received Official Letter No. 2043/CTKTU-TTKT dated November 27, 2024, from the Kon Tum Provincial Tax Department regarding the tax policy for DIG VN Investment and Development Co., Ltd. (hereinafter referred to as the Company). Regarding this issue, the General Department of Taxation provides the following opinions:

1. Regarding VAT Policy

• According to Clause 10, Article 3, and Article 9 of Decree No. 71/2007/ND-CP dated May 3, 2007, of the Government detailing and guiding the implementation of some provisions of the Information Technology Law on the Information Technology Industry:

"Article 3. Explanation of terms

10. Software services are activities directly supporting the production, installation, operation, usage, upgrade, maintenance, and troubleshooting of software and other similar activities related to software."

"Article 9. Software industry activities

1. Software industry activities include the design, production, and supply of software products and services, including the production of packaged software: customized software production; embedded software production; software outsourcing activities, and software service provision.

2. Software products include;

a) System software;

b) Application software;

c) Utility software;

d) Tool software;

đ) Other software products.

3. Software services include:

a) Management, maintenance, and repair services for software and information system operations;

b) Consultancy, evaluation, and software quality assessment services;

c) Consultancy services for software project development;

d) Software valuation consultancy services;

đ) Software technology transfer services;

e) System integration services;

g) Security and safety services for software products and information systems;

h) Software product distribution and supply services;

i) Other software services."

• According to Clause 21, Article 4 of Circular No. 219/2013/TT-BTC dated December 31, 2013, of the Ministry of Finance on the non-taxable subjects of VAT as follows:

"Computer software includes software products and software services as specified."

• According to Article 11 of Circular No. 219/2013/TT-BTC of the Ministry of Finance on the 10% tax rate as follows:

"Article 11. 10% tax rate

The 10% tax rate applies to goods and services that are not specified in Articles 4, 9, and 10 of this Circular.

The VAT tax rates specified in Articles 10 and 11 apply uniformly to each type of goods and services in the stages of import, production, outsourcing, or commercial business."

Based on the above regulations, since the file lacks a contract between Company A and B, between Company A and foreign partners, and does not include a business registration certificate, there is insufficient basis to determine the software services. Therefore, the determination of software services should be done according to the specialized legal regulations (Decree No. 71/2007/ND-CP dated May 3, 2007, of the Government and related implementation documents). The Kon Tum Provincial Tax Department should rely on the actual documents and the VAT law, as well as the information technology law, to determine the correct regulations.

2. Regarding CIT Policy

• The Corporate Income Tax Law and its implementing regulations provide tax incentives for new investment projects in areas with particularly difficult socio-economic conditions, and the income of enterprises from the implementation of new investment projects in the software product manufacturing field.

• According to Clause 3, Article 66 of Decree No. 118/2015/ND-CP dated November 12, 2015, of the Government guiding the Investment Law:

"3. If the law requires the submission of an investment registration certificate as part of the administrative procedure, but the investment project is not subject to the issuance of an investment registration certificate under the Investment Law, the investor is not required to submit an investment registration certificate."

According to Clause 3, Article 10 of Circular No. 96/2015/TT-BTC dated June 22, 2015, of the Ministry of Finance amending and supplementing Clause 5, Article 18 of Circular No. 78/2014/TT-BTC (as amended by Article 5 of Circular No. 151/2014/TT-BTC) as follows:

"5. Regarding new investment projects:

a) A new investment project entitled to CIT incentives according to Articles 15, 16 of Decree No. 218/2013/ND-CP is:

• A project that is granted the first investment certificate from January 1, 2014, and generates revenue after the investment registration certificate is issued.

• A domestic investment project associated with the establishment of a new enterprise with capital below 15 billion VND and not falling under the list of conditional investment sectors, which is granted a business registration certificate from January 1, 2014.

• An independent investment project from the ongoing projects of the enterprise (including cases where the investment capital is below 15 billion VND and not in conditional investment sectors) with an investment registration certificate issued from January 1, 2014, for the independent investment project."

The new investment project entitled to CIT incentives must be granted an investment license or investment certificate by a competent state authority or permitted to invest under the investment law."

• The Annex on software products issued with Circular No. 20/2021/TT-BTTTT dated December 3, 2021, of the Ministry of Information and Communications.

• Circular No. 13/2020/TT-BTTTT dated July 3, 2020, of the Ministry of Information and Communications on determining software product manufacturing activities.

Based on the above regulations and the report from the Kon Tum Provincial Tax Department, the General Department of Taxation believes there is insufficient evidence to determine that the Company's investment project is a new investment project eligible for CIT incentives as stipulated.

The General Department of Taxation responds so that the Kon Tum Provincial Tax Department is informed and requests that the Kon Tum Provincial Tax Department, based on the actual situation of the unit and the relevant legal documents, proceed with post-audit checks in compliance with the law.

 

Recipients: As above; Deputy General Director Dang Ngoc Minh (for reporting); PC-TCT Department; Website-TCT; Save: VT, CS (3b).

On behalf of the GENERAL DIRECTOR, DEPUTY DIRECTOR OF THE POLICY DEPARTMENT,       Manh Thi Tuyet Mai

See details here.