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Regulations on tax incentives

15 August 2016

VGP – The Ministry of Finance issued Circular 83/2016/TT-BTC (Circular 83) guiding the implementation of incentives of corporate income tax (CIT), import duties and non-agricultural land-use taxes in favor of subjects that are entitled to investment incentives as prescribed by the Law on Investment 2014 and Decree 118/2015/ND-CP.

Question: What are the regulations on corporate income tax incentive and import duty incentive?


Corporate income tax incentive

According to Circular 83, enterprises which conduct new investment projects satisfying the conditions on sectors entitled to corporate income tax incentives, areas entitled to incentive investment, carry out new investment projects in economic and high-tech zones except for industrial zones within the socio-economically favorable areas, in areas of export processing zones, or have projects manufacturing goods subject to special consumption tax (some types of automobiles), they will enjoy CIT incentives with corresponding rates applicable to the sectors and areas as prescribed.

Circular 83 also prescribes that if a new investment project can satisfy several conditions for enjoying CIT incentives at the same time, it will be entitled to the most favorable rate of CIT incentive. High-tech enterprises and scientific and technological enterprises, which satisfy the prescribed conditions about scientific and technological revenue, are also entitled to preferential rates.

Import duty incentive

The investment projects in rural areas employing 500 employees or more (excluding part-time employees and those with a labor contract of less than 12 months) are entitled to import duty incentives like those in areas with difficult socio-economic conditions. For those in both rural and non-rural areas, it will be based on the quantity of employees working for any works, work items in the rural locality to determine if these projects are entitled to import duty incentives.

The investment projects of the business lines entitled to special investment incentives, investment incentives or in the areas with any socio-economic difficulties will be exempted from import duties on imports to generate fixed assets, and for five years on materials, equipment and components which cannot be manufacture through these investment projects in case of special investment incentives.

Circular 83 does not apply import duty incentives to those in exploiting minerals; manufacturing and trading goods and services, which are subject to special consumption tax, except for the manufacture of automobiles.

Circular 83/2016/TT-BTC comes into effect from August 1, 2016./.
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