Incentives of tax exemption and reduction durations for enterprises

Enterprises receive not only a preferential tax rate but also have a long reduction duration, some enterprises receive this incentive for over 10 years.

In accordance with Circular No. 78/2014/TT-BTC (a number of articles are amended and supplemented by Circular No. 151/2014/TT-BTC and Circular No. 96/2015/TT-BTC), the incentives for tax exemption and reduction durations are prescribed as follows:

(1)  Tax exemption for 4 years and 50% reduction of payable tax amounts for 9 subsequent years are applicable to:

- Incomes of enterprises from the implementation of new investment projects specified in Clause 1, Article 19 of the Circular No. 78/2014/TT-BTC amended, supplemented in Clause 1, Article 11, Circular No. 96/2015/TT-BTC, in particulars, the preferential tax rate of 10% for fifteen (15) years:

+ Incomes of enterprises from the implementation of new investment projects in:

• The socialized fields in geographical areas with difficult or particularly difficult socio-economic conditions are specified in the Appendix to Decree No. 218/2013/ND-CP.
• Economic zones and hi-tech zones, including information technology parks established under the Prime Minister’s decisions.

+ Incomes of enterprises from the implementation of new investment projects in the fields of:

• Scientific research and technological development;
• Application of high technologies on the list of high technologies prioritized for development investment in accordance with the Law on High Technologies;
• Nursery of high technologies and hi-tech enterprises;
• Venture investment in the development of high technologies on the list of high technologies prioritized for development in accordance with the Law on High Technologies;
• Construction investment and commercial operation of establishments nursing high technologies and hi-tech enterprises;

Therefore, it can be seen that the above enterprises receive many incentives on taxes, in particular, have the preferential tax of 10% in 15 years but get tax exemption for 4 years and 50% reduction of payable tax amounts for 9 subsequent years.

(2) Tax exemption for 4 years and 50% reduction of payable tax amounts for 5 subsequent years are applicable to incomes of enterprises from the implementation of new investment projects in the socialized fields in geographical areas outside the list of those with difficult or particularly difficult socio-economic conditions specified in the Appendix to Decree No. 218/2013/ND-CP

(3) Tax exemption for 2 years and 50% reduction of payable tax amounts for 4 subsequent years are applicable to incomes from the implementation of new investment projects specified in Clause 4, Article 19 of the Circular 78/2014/TT-BTC and incomes of enterprises from the implementation of new investment projects in industrial parks (except industrial parks in urban districts with good conditions). 

Here are the regulations for incentives of tax exemption and reduction durations for enterprises.