Circular No. 03/2021/TT-BTC enterprise income tax exemption for science and technology enterprises

CIRCULAR

Guiding enterprise income tax exemption or reduction for science and technology enterprises specified in the Government’s Decree No. 13/2019/ND-CP of February 1, 2019, on science and technology enterprises^[1]

Pursuant to June 3, 2008 Law No. 14/2008/QH12 on Enterprise Income Tax; June 19, 2013 Law No. 32/2013/QH13 Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax; and November 26, 2014 Law No. 71/2014/QH13 Law Amending and Supplementing a Number of Articles of the Laws on Taxes;

Pursuant to June 13, 2019 Law No. 38/2019/QH14 on Tax Administration;

Pursuant to the Government’s Decree No. 218/2013/ND-CP of December 26, 2013, detailing a number of articles of the Law on Enterprise Income Tax and Law Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax; the Government’s Decree No. 91/2014/ND-CP of October 1, 2014, amending and supplementing a number of articles of the decrees on taxes; and the Government’s Decree No. 12/2015/ND-CP of February 12, 2015, detailing the Law Amending and Supplementing a Number of Articles of the Laws on Taxes ;

Pursuant to the Government’s Decree No. 13/2019/ND-CP of February 1, 2019, on science and technology enterprises;

Pursuant to the Government’s Decree No. 87/2017/ND-CP of July 26, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

In furtherance of the Prime Minister’s instructions in the Government Office’s Document No. 4377/VPCP-KTTH of June 2, 2020, on enterprise income tax policies for science and technology enterprises;

At the proposal of the General Director of Taxation,

The Minister of Finance promulgates the Circular guiding enterprise income tax exemption or reduction for science and technology enterprises specified in the Government’s Decree No. 13/2019/ND-CP of February 1, 2019, on science and technology enterprises.

Article 1. Scope of regulation and subjects of application

1. Scope of regulation: This Circular guides enterprise income tax exemption or reduction for science and technology enterprises specified in the Government’s Decree No. 13/2019/ND-CP of February 1, 2019, on science and technology enterprises (below referred to as Decree No. 13/2019/ND-CP).

2. Subjects of application: Science and technology enterprises specified in the Law on Science and Technology and Decree No. 13/2019/ND-CP, and related agencies, organizations and individuals.

In case a science and technology enterprise has independent cost-accounting branches that satisfy the conditions specified in Article 2 of this Circular, such branches’ incomes from products turned out from scientific and technological outcomes are also eligible for enterprise income tax incentives specified in Clause 1, Article 12 of Decree No. 13/2019/ND-CP.

Article 2. Conditions for application

To be eligible for enterprise income tax exemption or reduction specified in Clause 1, Article 12 of Decree No. 13/2019/ND-CP, a science and technology enterprise must satisfy the following conditions:

1. It is granted a science and technology enterprise certificate by a competent state management agency.

2. Its annual turnover from the production of and trading in products turned out from scientific and technological outcomes accounts for at least 30% of the enterprise’s total annual turnover.

a/ Annual turnover from the production of and trading in products turned out from scientific and technological outcomes means the turnover from all products turned out from scientific and technological outcomes specified in Clause 1, Article 2 of Decree No. 13/2019/ND-CP.

b/ Total annual turnover of an enterprise means the whole of the turnover from production, business and service provision activities, turnover from financial activities and other incomes of that enterprise (including also the turnover from the production of and trading in products turned out from scientific and technological outcomes in the year).

3. Turnover from services provided with the application of scientific and technological outcomes in the field of information technology is gained from new services, excluding services available on the market.

Criteria and grounds for identifying whether services provided with the application of scientific and technological outcomes in the field of information technology are new services must comply with regulations of the Ministry of Science and Technology.

4. The enterprise shall separately account incomes from the production of and trading in products turned out from scientific and technological outcomes in the period to enjoy enterprise income tax incentives. In case the enterprise cannot separately account the incomes eligible for enterprise income tax incentives, such incomes shall be distributed under Clause 2, Article 18 of Law No. 14/2008/QH12 on Enterprise Income Tax.

To enjoy enterprise income tax incentives, the enterprise shall comply with regulations on accounting, invoices and documents and pay enterprise income tax as declared.

Article 3. Enterprise income tax exemption or reduction

1. Enterprise income tax exemption or reduction levels and period

a/ Science and technology enterprises are entitled to enterprise income tax exemption or reduction under Clause 1, Article 12 of Decree No. 13/2019/ND-CP; specifically, they are entitled to enterprise income tax exemption for 4 years and a 50% reduction of payable enterprise income tax amounts for the subsequent 9 years.

b/ The period of tax exemption or reduction for a science and technology enterprise shall be counted consecutively from the date the enterprise is granted a science and technology enterprise certificate. If no taxable income is generated in the first three years from the date the enterprise is granted a science and technology enterprise certificate, the tax exemption or reduction period shall be counted from the fourth year.

c/ In a certain year of the enterprise income tax exemption or reduction period, if an enterprise fails to satisfy the condition requiring that turnover from products turned out from scientific and technological outcomes must account for at least 30% of the total turnover, the enterprise will not be entitled to tax incentives in that year and that year shall be included in the enterprise’s incentive enjoyment period.

d/ If a science and technology enterprise has generated a taxable income but the production or business operation duration eligible for tax exemption or reduction in the first year is under 12 (twelve) months, the enterprise may choose to enjoy tax exemption or reduction right in the first year or register with the tax office for starting to enjoy tax exemption or reduction from the subsequent year. If the enterprise registers for enjoying tax exemption or reduction in the subsequent year, it is required to determine the payable tax amount of the first year when taxable income is generated for remittance into the state budget under regulations.

2. Some cases of application

a/ In case a science and technology enterprise that has enjoyed or is enjoying enterprise income tax incentives other than incentives for science and technology enterprises and is granted a science and technology enterprise certificate, the tax exemption or reduction period based on incentives applicable to science and technology enterprises is equal to the enterprise income tax exemption or reduction period applicable to science and technology enterprises minus the period during which the enterprise has enjoyed tax exemption or reduction period as other incentives.

b/ In case an operating science and technology enterprise that is enjoying enterprise income tax incentives applicable to science and technology enterprises has its science and technology enterprise certificate added with products turned out from scientific and technological outcomes by a competent agency, the income from the production of and trading in such products will be eligible for enterprise income tax exemption or reduction together with the current enterprise income tax exemption and reduction applicable to science and technology enterprises for the remaining incentive period.

Article 4. Procedures for application of enterprise income tax incentives

1. Procedures for application of enterprise income tax incentives must comply with the laws on enterprise income tax and tax administration.

2. Science and technology enterprises shall determine by themselves enterprise income tax amounts eligible for incentives and declare them in the lists of enterprise income tax incentives for science and technology enterprises attached to this Circular. Such lists shall be sent together with annual enterprise income tax finalization declarations.

Article 5. Effect

1. This Circular takes effect on March 1, 2021.

2. Enterprises that are granted science and technology enterprise certificates and generate turnover or incomes from the production of and trading in products turned out from scientific and technological outcomes on or after  the effective date of Decree No. 13/2019/ND-CP (March 20, 2019) are entitled to enterprise income tax exemption and reduction applicable to science and technology enterprises specified in Article 12 of Decree No. 13/2019/ND-CP and guided in Articles 1, 2, 3 and 4 of this Circular.

3. Transitional provisions

a/ In case an enterprise is granted a science and technology enterprise certificate before the effective date of Decree No. 13/2019/ND-CP and is enjoying enterprise income tax incentives specified in legal documents promulgated before the effective date of Decree No. 13/2019/ND-CP, it may continue to enjoy such incentives for the remaining incentive period, and may no longer enjoy enterprise income tax rate incentives from the effective date of this Circular.

b/ In case an enterprise is granted a science and technology enterprise certificate before the effective date of Decree No. 13/2019/ND-CP but has not yet enjoyed enterprise income tax incentives applicable to science and technology enterprises specified in legal documents promulgated before the effective date of Decree No. 13/2019/ND-CP, if the enterprise satisfies the conditions for enjoyment of enterprise income tax incentives for science and technology enterprises specified in Decree No. 13/2019/ND-CP it will be entitled to enterprise income tax exemption or reduction under Decree No. 13/2019/ND-CP for the remaining incentive period.

4. This Circular annuls:

a/ Point 1, Section III of Joint Circular No. 06/2008/TTLT-BKHCN-BTC-BNV of June 18, 2008, of the Ministry of Science and Technology, Ministry of Finance and Ministry of Home Affairs, guiding the implementation of the Government’s Decree No. 80/2007/ND-CP of May 19, 2007, on science and technology enterprises.

b/ Clauses 8 and 9, Article 1 of Joint Circular No. 17/2012/TTLT-BKHCN-BTC-BNV of September 10, 2012, of the Ministry of Science and Technology, Ministry of Finance and Ministry of Home Affairs, amending and supplementing Joint Circular No. 06/2008/TTLT-BKHCN-BTC-BNV of June 18, 2008, of the Ministry of Science and Technology, Ministry of Finance and Ministry of Home Affairs, guiding the implementation of the Government’s Decree No. 80/2007/ND-CP of May 19, 2007, on science and technology enterprises.

5. In case the legal documents referred to in this Circular are amended, supplemented or replaced by new ones, the latter shall apply.

6. Any problems arising in the course of implementation of this Circular should be promptly reported to the Ministry of Finance for study and settlement.-

For the Minister of Finance
Deputy Minister
TRAN XUAN HA

* The List of enterprise income tax incentives for science and technology enterprises attached to this Circular is not translated.