Decree No. 57/2021/ND-CP supplementing the Decree No. 218/2013/ND-CP on enterprise income tax incentives

DECREE

Adding Point g to Clause 2, Article 20 of Decree No. 218/2013/ND-CP (which was amended and supplemented under Decree No. 12/2015/ND-CP) on enterprise income tax incentives for projects on manufacture of supporting industry products^[1]

Pursuant to the June 19, 2015 Law on Organization of the Government; and the November 22, 2019 Law Amending and Supplementing a Number of Articles of the Law on Organization of the Government and the Law on Organization of Local Administrations;

Pursuant to the June 3, 2008 Law on Enterprise Income Tax; the June 19, 2013 Law Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax; and the November 26, 2014 Law Amending and Supplementing a Number of Articles of the Laws on Taxes;

Pursuant to the June 13, 2019 Law on Tax Administration;

Pursuant to the June 17, 2020 Law on Investment;

At the proposal of the Minister of Finance;

The Prime Minister promulgates the Decree adding Point g to Clause 2, Article 20 of Decree No. 218/2013/ND-CP (which was amended and supplemented under Decree No. 12/2015/ND-CP) on enterprise income tax incentives for projects on manufacture of supporting industry products.

Article 1. To add the following Point g to Clause 2, Article 20 of Decree No. 218/2013/ND-CP (which was amended and supplemented under Decree No. 12/2015/ND-CP) on enterprise income tax incentives for projects on manufacture of supporting industry products:

“g/ An enterprise that has an investment project (new or expanded investment project) on manufacture of products on the List of supporting industry products prioritized for development which was implemented before January 1, 2015, satisfies the conditions of projects on manufacture of supporting industry products specified in Law No. 71/2014/QH13, and is granted a certificate of eligibility for incentives for manufacture of supporting industry products by a competent authority, will be entitled to enterprise income tax incentives as follows:

g1/ In case the enterprise has a project to manufacture supporting industry products and has not yet enjoyed enterprise income tax incentives for the income it earns from this project, it will be entitled to enterprise income tax incentives under the conditions applicable to projects on manufacture of supporting industry products from the tax period when it is granted a certificate of eligibility for incentives for manufacturers of supporting industry products by a competent authority.

g2/ In case the enterprise has a project to manufacture supporting industry products and has enjoyed all enterprise income tax incentives under other conditions for enjoyment of incentives (other than conditions for enjoyment of incentives applicable to projects on manufacture of supporting industry products) for the income it earns from this project, it will be entitled to enterprise income tax incentives under the conditions applicable to projects on manufacture of supporting industry products for the remaining period, counted from the tax period when it is granted a certificate of eligibility for incentives for manufacturers of supporting industry products by a competent authority.

g3/ In case the enterprise has a project to manufacture supporting industry products and is enjoying enterprise income tax incentives under other conditions for enjoyment of incentives (other than conditions applicable to projects on manufacture of supporting industry products) for the income it earns from this project, it will be entitled to enterprise income tax incentives under the conditions applicable to projects on manufacture of supporting industry products for the remaining period, counted from the tax period when it is granted a certificate of eligibility for incentives for manufacturers of supporting industry products by a competent authority.

g4/ The method of determining the remaining period of entitlement to tax incentives mentioned at Points g2 and g3 is as follows:

The remaining period of entitlement to tax incentives shall be determined to be the period of entitlement to enterprise income tax incentives under the conditions applicable to projects on manufacture of supporting industry products minus the number of years of tax exemption, number of years of tax reduction and number of years of eligibility for preferential tax rates during the project has enjoyed under other conditions for enjoyment of incentives, specifically as follows:

- The remaining tax exemption period is equal to the tax exemption period under the conditions applicable to projects on manufacture of supporting industry products minus the tax exemption period already enjoyed under other conditions for enjoyment of incentives;

- The remaining tax reduction period is equal to the tax reduction period under the conditions applicable to projects on manufacture of supporting industry products minus the tax reduction period already enjoyed under other conditions for enjoyment of incentives;

- The remaining period of application of the preferential tax rate is equal to the period of enjoyment of tax incentives under the conditions applicable to projects on manufacture of supporting industry products minus the period of applying preferential tax rate already enjoyed under other conditions for enjoyment of incentives (if any).

g5/ Specific examples:

Example 1: In 2010, an enterprise implemented an expanded investment project in a geographical area not on the list of geographical areas eligible for tax incentives. In the 2011 tax period, the project generated turnover and taxable income. By the end of the 2016 tax period, income from the project had not yet enjoyed enterprise income tax incentives. In the 2017 tax period, the project was granted a certificate of eligibility for incentives for the manufacture of supporting industry products. Accordingly, the project was entitled to enterprise income tax incentives under the conditions applicable to expanded investment projects on manufacture of supporting industry products in accordance with Law No. 71/2014/QH13 and its guiding documents from the 2017 tax period. The tax incentive entitlement period shall be determined as follows: to enjoy exemption from enterprise income tax for 4 years from the 2017 tax period to the 2020 tax period and a 50%-reduction of the payable enterprise income tax amount for the subsequent 9 years, counted from the 2021 tax period.

Example 2: In 2010, an enterprise implemented a new investment project in an industrial park (outside inner districts of special-grade urban areas, centrally run grade-I urban areas and provincial-level grade-I urban areas, excluding those established since January 1, 2009, from rural districts). In the 2011 tax period, the project generated turnover. In the 2012 tax period, the project generated taxable income. In the 2015 tax period, the project became eligible for incentives under the conditions applicable to industrial park areas in accordance with Law No. 71/2014/QH13 and its guiding documents for the remaining period from 2015 (exemption from enterprise income tax for 2 years and a 50%-reduction of the payable enterprise income tax amount for the subsequent 4 years of the remaining period, counted from the 2015 tax period). Hence the enterprise was also entitled to a 50% reduction of the payable enterprise income tax for 3 years (from 2015 to 2017). By the end of the 2017 tax period, the project has enjoyed all incentives according to the conditions applicable to industrial parks.

In the 2018 tax period, the project was granted a certificate of eligibility for incentives for manufacture of supporting industry products. Accordingly, it may choose to enjoy enterprise income tax incentives under the conditions applicable to new investment projects on manufacture of supporting industrial products for the remaining period from the 2018 tax period. The remaining tax incentive entitlement period shall be determined as follows: to enjoy the enterprise income tax rate of 10% for 15 years from the 2018 tax period, exemption from enterprise income tax for 2 years from the 2018 tax period, and a 50%-reduction of the payable enterprise income tax amount for the subsequent 5 years.

Example 3: In 2014, an enterprise implemented a new investment project in a geographical area with difficult socio-economic conditions. In the 2014 tax period, it generated turnover. In the 2015 tax period, the project generated taxable income. The project was entitled to incentives under the conditions applicable to geographical areas with difficult socio-economic conditions, specifically: to enjoy  the tax rate of 20% for 10 years from the 2014 tax period (17% from the 2016 tax period), exemption from enterprise income tax for 2 years from the 2015 tax period, and a 50%-reduction of the payable tax amount for the subsequent 4 years. By the end of the 2017 tax period, the project had enjoyed the following incentives: 4 years of application of the preferential tax rate, 2 years of exemption from enterprise income tax exemption and 1 year of enterprise income tax reduction.

In the 2018 tax period, the project was granted a certificate of eligibility for incentives for manufacture of supporting industry products. Accordingly, the project was entitled to enterprise income tax incentives under the conditions applicable to projects on manufacture of supporting industrial products for the remaining period, counted from the 2018 tax period. The remaining tax incentive entitlement period shall be determined as follows: to enjoy the enterprise income tax rate of 10% for 11 years from the 2018 tax period, exemption from enterprise income tax for 2 years from the 2018 tax period, and a 50%-reduction of the payable corporate income tax amount for the subsequent 8 years.”

Article 2. Organization of implementation and effect

1. This Decree takes effect on the date of its signing.

2. In cases in which the application of the provisions of this Decree (including also cases in which a competent authority has carried out inspection or examination) leads to a decrease in a taxpayer’s payable enterprise income tax and late-payment interest amounts (if any), the taxpayer shall send a written request to its/his/her managing tax office for the latter to adjust the payable enterprise income tax amount that has been declared or has been inspected or examined by the competent authority, and the corresponding late-payment interest amount (if any). After making such adjustment, if there is still an overpaid tax and/or late-payment interest amount, the provisions of Article 60 of the June 13, 2019 Law on Tax Administration and guiding documents shall be complied with.

3. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, and related organizations and individuals shall implement this Decree.-

On behalf of the Government
For the Prime Minister
Deputy Prime Minister
LE MINH KHAI