Who shall get the preferential tax rate of 10%? In how many years?

The enterprise income tax shall normally apply to the tax rate of 20%. Besides, a number of enterprises can apply the preferential tax rate of 10% in consistent time or use it all the time of production and business.

The preferential tax rate of 10% for fifteen (15) years

Pursuant to Clause 1, Article 19, Circular No. 78/2014/TT-BTC which is amended and supplemented by Clause 1, Article 11 of Circular No. 96/2015/TT-BTC with the preferential tax rate of 10% for 15 years is applicable to:

(1) Incomes of enterprises from the implementation of new investment projects in:

-  Geographical areas with 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.

(2) 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;

- Investment in the development of water plants, power plants, water supply, and drainage systems; 

- Bridges, roads, railways;

- Airports, seaports, river ports;

- Air fields, stations, and other particularly important infrastructure facilities are decided by the Prime Minister;

- Production of software products;

- Manufacture composite materials light building materials, rare and precious materials;

- Generation of renewable energies, clean energy and energy from the waste disposal;

- Development of biotechnology.

(3) Incomes of enterprises from the implementation of new investment projects in the field of environmental protection, including: Covering manufacture of equipment for treating environmental pollution, equipment for environmental observation and analysis; environmental pollution treatment and protection; collection and treatment of wastewater, exhaust and solid wastes; recycling and reuse of wastes.

(4) Hi-tech enterprises and agricultural enterprises applying high technologies defined in the Law on High Technologies.

Hi-tech enterprises and agricultural enterprises applying high technologies defined in the Law on High Technologies may enjoy preferential tax rates from the year of grant of certificates of hi-tech enterprises or agricultural enterprises applying high technologies.

Hi-tech enterprises and agricultural enterprises applying high technologies may enjoy enterprise income tax incentives calculated on their total incomes, and other relevant incomes to high technologies having investment projects eligible for enterprise income tax incentives because of operating in the fields or located in geographical areas eligible for investment incentives prescribed in point a, Clause 2, Article 10 of the Circular No. 96/2015/TT-BTC.

Note: In case enterprises currently enjoying enterprise, income tax incentives or have enjoyed all enterprise income tax incentives under legal documents on enterprise income tax are granted certificates of hi-tech enterprises or agricultural enterprises applying high technologies, the incentive levels for such enterprises are equal to that applicable to hi-tech enterprises and agricultural enterprises applying high technologies specified in Clause 1, Article 15 and Clause 1, Article 16 of this Decree minus the enjoyed incentives (including tax rate incentives and exemption or reduction, if any);

(5) Incomes of enterprises from the implementation of new investment projects in the fields of production (except projects producing goods items liable to excise tax and mineral mining projects) which satisfy either of the following conditions:

- A project has an initial registered investment capital of at least VND 6 (six) trillion, fully disburses the capital within 3 years after being granted an investment license, and has a total turnover of at least VND 10 (ten) trillion/year from the 4^th year after the year when turnover is first generated

- A project has an initial registered investment capital of at least VND 6 (six) trillion, fully disburses the capital within 3 years after being granted an investment license, and regularly employs an average of over 3,000 laborers/year from the 4th year after the year when turnover is first generated.

Note: In case their investment projects fail to satisfy the conditions prescribed at this Point (except those with behind-schedule progress due to objective reasons in the stages of ground clearance, completion of administrative procedures by state agencies, natural disasters, enemy sabotage or fire and consent of the investment-licensing agency which shall be reported to the Prime Minister for approval) enterprises are not entitled to enterprise income tax incentives

At the same time, enterprises shall declare and pay enterprise income tax amounts declared for the enjoyment of incentives in the last year (if any) and a late tax payment interest as prescribed. However, they will not be sanctioned for false.

The preferential tax rate of 10% is applicable throughout the operation duration

Clause 3, Article 19 of the Circular No. 78/2014/TT-BTC (points a and e are amended and supplemented by the Circular No. 96/2015/TT-BTC) prescribes the preferential tax rate of 10% is applicable throughout the operation duration for

(1) Incomes of enterprises from socialized education and training, job training, health care, culture, sports and environmental protection activities (below referred to as socialized fields);

The list of types, sizes and standards of enterprises engaged in socialized fields is that promulgated by the Prime Minister.

(2) Incomes of publishing houses from publication activities in accordance with the Law on Publication.

Publication activities include publishing, printing and distribution of publications in accordance with the Law on Publication

(3) Incomes of press agencies from printed newspapers (including advertisements on printed newspapers) in accordance with the Law on Publication;

(4) Incomes of enterprises from the implementation of projects on investment and trading in social houses for sale or lease to or hire-purchase by the subjects specified in Article 53 of the Housing Law

(5) Enterprises’ incomes from:

- Forest planting, tending and protection;

- Cultivation, husbandry, aquaculture, and processing of agricultural and aquatic products in geographical areas with difficult socio-economic conditions;

- Afforestation in geographical areas with difficult socio-economic conditions.

- Production, propagation and hybridization of plant varieties and animal breeds;

- Salt production, exploitation and refining, except salt production mentioned in Clause 1, Article 4 of Decree No. 218/2013/ND-CP;

- Investment in the preservation of post-harvest farm produce, agricultural and aquatic products and food, including investment for direct preservation or leased preservation of agricultural and aquatic products and food.

(6) Incomes of cooperatives engaged in agriculture, forestry, fisheries or salt production and not located in geographical areas with difficult or particularly difficult socio-economic conditions. 

Here are the objectives applied with the preferential tax rate of 10% for fifteen (15) years and throughout the operation duration.