Circular No. 21/2016/TT-BTC dated February 05, 2016 of the Ministry of Finance guiding on declaration of value added tax and priorities of enterprise income tax as stipulated under the Decree No. 111/2015/ND-CP dated November 03, 2015 on development of supporting industries

CIRCULAR

Guiding value-added tax declaration and enterprise income tax incentives under the Government’s Decree No. 111/2015/ND-CP of November 3, 2015, on development of supporting industries[1]

Pursuant to Law No. 78/2006/QH11 on Tax Administration and Law No. 21/2012/QH13 Amending and Supplementing a Number of Articles of the Law on Tax Administration;

Pursuant to Law No. 13/2008/QH12 on Value-Added Tax and Law No. 31/2013/QH13 Amending and Supplementing a Number of Articles of the Law on Value-Added Tax;

Pursuant to Law No. 14/2008/QH12 on Enterprise Income Tax and Law No. 32/2013/QH13 Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax;

Pursuant to Law No. 71/2014/QH13 Amending and Supplementing a Number of Articles of the Laws on Taxes;

Pursuant to the Government’s Decree No. 83/2013/ND-CP of July 22, 2013, detailing the implementation of a number of articles of the Law on Tax Administration and the Law Amending and Supplementing a Number of Articles of the Law on Tax Administration;

Pursuant to the Government’s Decree No. 209/2013/ND-CP of December 18, 2013, detailing and guiding the implementation of a number of articles of the Law on Value-Added Tax;

Pursuant to the Government’s Decree No. 218/2013/ND-CP of December 26, 2013, detailing and guiding the implementation of a number of articles of the Law on Enterprise Income Tax;

Pursuant to the Government’s Decree No. 12/2015/ND-CP of February 12, 2015, detailing the implementation of the Law Amending and Supplementing a Number of Articles of the Laws on Taxes and amending and supplementing a number of articles of the decrees on taxes;

Pursuant to the Government’s Decree No. 215/2013/ND-CP of December 23, 2013, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Government’s Decree No. 111/2015/ND-CP of November 3, 2015, on development of supporting industries;

At the proposal of the General Director of Taxation,

The Minister of Finance guides value-added tax declaration and enterprise income tax incentives for projects to manufacture supporting industry products in Vietnam as follows:

Article 1. Scope of regulation

This Circular guides value-added tax declaration and enterprise income tax incentives for projects to manufacture supporting industry products on the list of supporting industry products prioritized for development promulgated together with the Government’s Decree No. 111/2015/ND-CP of November 3, 2015, on development of supporting industries.

Article 2. Subjects of application

1. Organizations and individuals that manufacture supporting industry products on the list of supporting industry products prioritized for development in the Vietnamese territory.

2. Tax agencies and related agencies, organizations and individuals.

Article 3. Value-added tax declaration

1. Value-added tax declaration

- For institutional taxpayers:

A taxpayer shall declare value-added tax (VAT) on a quarterly basis for turnover from supporting industry products on the list of supporting industry products prioritized for development (regardless of whether such turnover is over or under VND 50 billion per year).

A taxpayer that has turnover both from supporting industry products on the list of supporting industry products prioritized for development and from other production and business activities shall declare VAT on a quarterly basis or may declare VAT on a monthly basis and notify such to the tax agency under the law on tax administration.

- An individual taxpayer that has turnover from supporting industry products on the list of supporting industry products prioritized for development shall declare VAT on an annual basis and pay VAT on a quarterly basis. If paying VAT upon each time of arising of turnover from supporting industry products on the list of supporting industry products prioritized for development, the taxpayer shall declare and pay VAT upon each time of arising of turnover or may declare and pay VAT on a monthly basis.

2. Tax declaration dossier

- A tax declaration dossier for an institutional taxpayer must comply with the Ministry of Finance’s Circular No. 156/2013/TT-BTC of November 6, 2013, and Circular No. 26/2015/TT-BTC of February 27, 2015.

- A tax declaration dossier for an individual taxpayer must comply with the Ministry of Finance’s Circular No. 92/2015/TT-BTC of June 15, 2015.

Article 4. Enterprise income tax incentives

Enterprise income tax incentives apply from January 1, 2015, to income of enterprises from projects to manufacture supporting industry products which satisfy the conditions provided in Law No. 71/2014/QH13 of November 26, 2014, and guiding documents, and for which a competent agency has granted an incentive certificate for manufacture of supporting industry products.

The order and procedures for certification of incentives and inspection after incentives are granted for projects to manufacture supporting industry products on the list of supporting industry products prioritized for development must comply with the Ministry of Industry and Trade’s Circular No. 55/2015/TT-BCT of December 30, 2015.

An incentive certificate for manufacture of supporting industry products prioritized for development serves as a basis for application of enterprise income tax incentives. Incentive levels, time of starting the application of incentives, and transition of incentives must comply with the law on enterprise income tax.

Example 1:

In the 2015 tax period, enterprise A is granted an investment registration certificate for implementing a new investment project to manufacture supporting industry products. In the 2016 tax period, the project has turnover from the manufacture of supporting industry products. In the 2017 tax period, the project gets an incentive certificate for manufacture of supporting industry products. In the 2018 tax period, the project has income from the manufacture of supporting industry products. The times of starting the calculation of enterprise income tax incentives for this project are as follows: 2017 is the first year of application of preferential tax rates, and 2018 is the first year of tax exemption if the project actually satisfies the law-prescribed conditions for enjoyment of incentives.

Example 2:

In the 2016 tax period, enterprise B is granted an investment registration certificate for implementing a new investment project to manufacture supporting industry products. In the 2017 tax period, the project has turnover from the manufacture of supporting industry products. In the 2018 tax period, the project has income from the manufacture of supporting industry products. In the 2019 tax period, the project gets an incentive certificate for manufacture of supporting industry products. The time of starting the calculation of enterprise income tax incentives for this project is as follows: 2019 is the first year of application of preferential tax rates and also the first year of tax exemption if the project actually satisfies the law-prescribed conditions for enjoyment of incentives.

While enjoying enterprise income tax incentives, if an enterprise conducts different production and business activities, it shall separately determine income from the project to manufacture supporting industry products prioritized for development in order to enjoy enterprise income tax incentives under regulations.

Article 5. Effect

1. This Circular takes effect on April 1, 2016. Enterprise income tax incentives provided in this Circular apply from the 2015 enterprise income tax period onward.

2. Tax agencies at all levels shall disseminate, and guide organizations and individuals in implementing, this Circular.

3. Organizations and individuals regulated by this Circular shall comply with the guidance of this Circular.

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

For the Minister of Finance
Deputy Minister
DO HOANG ANH TUAN