Official Dispatch No. 2512/TCT-CS dated June 24, 2015 of the General Department of Taxation on introduction of new contents of the Circular No. 96/2015/TT-BTC

THE MINISTRY OF FINANCE
THE GENERAL DEPARTMENT OF TAXATION

Official Dispatch No.2512/TCT-CS dated June 24, 2015 of the General Department of Taxation on introduction of new contents of the Circular No. 96/2015/TT-BTC

To:Provincial Departments of Taxation

The Ministry of Finance issued Circular No. 96/2015/TT-BTC dated June 22, 2015 on guidelines for enterprise income tax in the Government s Decree No. 12/2015/ND-CP dated February 12, 2015 on guidelines for the law amending laws on taxation and amendments to degrees on taxation; amending some articles of Circular No. 78/2014/TT-BTC dated June 18, 2014, Circular No. 119/2014/TT-BTC dated August 25, 2014, and Circular No. 151/2014/TT-BTC dated October 10, 2014 of the Ministry of Finance . General Department of Taxation hereby requests Provincial Departments of Taxation to notify tax officials and disseminate new contents of the Circular, which takes effect on August 06, 2015 and applies to tax period 2015 onwards, among local taxpayers. Some new contents of Circular No. 96/2015/TT-BTC:

1. Method for calculation of enterprise income tax (EIT) in Article 1, which amends Clause 1 Article 3 of Circular No. 78/2014/TT-BTC)

Amendment to some regulations on declaration, payment of EIT by Vietnamese enterprises making investment overseas:

- In case of a Vietnamese enterprise who makes investment in a foreign country that has signed a Double Taxation Agreement and transfers income to Vietnam after paying EIT overseas, regulations of such Agreement shall apply. If the foreign country has not signed a Double Taxation Agreement with Vietnam and the rate of EIT incurred in the foreign country is lower, the difference in enterprise income tax shall be collected in accordance with the EIT Law of Vietnam.

- Income from the overseas project shall be included in the annual EIT statement of the year in which income in transferred to Vietnam as prescribed by regulations of law on ODI. Income (profit) from or loss on the overseas project must not be deducted from the loss incurred or income (profit) earned in Vietnam by the enterprise when calculating enterprise income tax.

- In case a Vietnamese ODI enterprise transfers its income to Vietnam without declaring, paying tax on such income, the tax authority shall impose tax on overseas business under the Law on Tax Administration.

- Documents for declaration and payment of tax on income from overseas projects of Vietnamese enterprises making investment overseas are simplified to ensure compliance when applying International Agreements, including: (i) A photocopy of the declaration of overseas income tax certified by the taxpayer; (ii) A photocopy of the receipt for overseas tax payment certified by the taxpayer, or the original copy of the foreign tax authority of tax payment, or a photocopy of an equivalent document certified by the taxpayer.

In the old Circular:

- Income from overseas projects shall be included in the annual EIT statement of the year succeeding the fiscal year in which such income is earned, or included in the annual EIT statement of the same fiscal year in which such income is earned if the enterprise has ample evidence and documents proving the income and that payment of income tax on the overseas project.

- Income from an overseas project is classified as other incomes; loss on the overseas projects must not be deducted from income earned by the enterprise in Vietnam.

- Documents for declaring and paying tax incurred by a Vietnamese enterprise making investment overseas include: (i) The enterprise’s document on the division of the offshore investment project’s profit; (ii) The enterprise’s financial statement certified by an independent audit organization; (iii) The enterprise’s income tax return for the overseas project (certified by the project’s competent representative); (iv) The enterprise’s tax finalization written record (if any); (v) Document certifying or proving the tax amount paid overseas.

2. Taxable income in Article 2, amending Clause 2 Article 4 of Circular No. 78/2014/TT-BTC

More specific instructions on loss carry forward between various kinds of incomes: In a tax period, if a enterprise makes a transfer of real estate, project of investment, or right to participate in a project of investment (except for mineral exploration and extraction) and suffers from a loss, such loss shall be offset against the profit from the business operation (including other incomes prescribed in Article 7 of Circular No. 78/2014/TT-BTC). The loss that remains after offsetting shall carried forward to the next years within the carry forward time limit.

3. Determination time for revenue to calculate EIT in Article 3, amending Clause 2 Article 5 of Circular No. 78/2014/TT-BTC

To amend regulations on determination time revenue for calculating taxable income from service provisions as follows:

Determination time of revenue for calculating taxable income from service provision is the time of completion of service provision or part of service provision except for the case in Clause 3 Article 5 of Circular No. 78/2014/TT-BTC (revenue for calculating taxable income in certain cases) and Clause 1 Article 6 of Circular No. 119/2014/TT-BTC (revenue for calculating taxable income from goods/services exchanged).

In the old Circular:

Time for determination of revenue for calculating taxable income from service provision is the time of completion of service provision for the buyer or issuance of the invoice for service provision. If the invoice is issued before the completion of service provision, the time for determination of revenue for calculating taxable income is the time when the invoice is issued.

4. Deductible and non-deductible expenses when calculating taxable income in Article 4, amending Article 6 of Circular No. 78/2014/TT-BTC

4.1. Documents for damage determination caused by natural disasters, epidemics, conflagration, and other force majeure events (hereinafter referred to as calamities) without compensation:

a) Documents about assets/goods damaged by calamities that may be included in deductible expenses include:

- A statement of value of damaged assets/goods made by the enterprise.

A statement of value of damaged assets/goods must specify the value of damaged assets/goods, causes, responsibilities for such damage, categories, quantity, value of recoverable assets/goods (if any); statement of inventory of damaged goods certified by legal representative of the enterprise.

- A compensation claim upheld by the insurer (if any).

- Documents about responsibility for provision of compensation (if any).

b) Expired goods and goods damaged because of natural deterioration that are not compensated will be deductible expenses when calculating taxable income.

Documents about expired goods and goods damaged because of natural deterioration and that are included in deductible expenses include:

- Statement of damaged goods made by the enterprise.

A statement of value of damaged goods must specify the value of damaged goods, causes; categories, quantity, and values of recoverable goods (if any) enclosed with a statement of inventory of damaged goods certified by the legal representative of the company.

- A compensation claim upheld by the insurer (if any).

- Documents about responsibility for provision of compensation (if any).

The aforementioned documents shall be retained at the enterprise and presented to the tax authority on request.

In the old Circular:

In addition to the aforesaid documents, the enterprise must have the following documents:

a) With regard to assets/goods damaged by natural disaster, epidemic, conflagration that may be included in deductible expenses:

- An explanation for damage caused by calamities sent by the company to the supervisory tax authority.

- A written certification of the calamity made by the People’s Committee of the commune, the management board of the industrial zone, export-processing zone, or economic zone where the calamity happens.

b) With regard to assets/goods damaged by natural disaster, epidemic, conflagration that may be included in deductible expenses:

- Explanation for goods damaged because of expiration or natural deterioration made by the company and sent to the supervisory tax authority.

The enterprise shall send a written explanation for assets/goods damaged by calamities, goods damaged because of expiration or natural deterioration that are not compensable not later than the submission of the annual EIT declaration of the year in which assets/goods are damaged. Other documents (including statement of value of damaged assets/goods; certification by the People’s Committee of the commune, management board of the industrial park/export-processing zone/economic zone; application for indemnity granted by the insurer (if any); documents about responsibility for compensation (if any) and other documents) kept by the enterprise and presented to the tax authority on request.

4.2. Depreciation of fixed assets

More fixed assets of the enterprise serving employees and vocational education are deductible when calculating enterprise income tax, including: library, kindergarten, sports facilities, furniture, and equipment classified as fixed assets in the works serving employees working at the enterprise; infrastructure, machinery and equipment that are fixed assets serving vocational education.

4.3.Expenditure on excess consumption of raw materials, fuel, energy, and goods

The regulation that requires the enterprise to impose its own limits on consumption of raw materials, fuels, energy, and goods for its business operation, which is the basis for determination of non-deductible expenditure on consumption of raw materials, fuels, energy, and goods beyond reasonable limits, is removed

Expenditure on consumption raw materials, fuel, energy, and goods beyond limits on reasonable expenses imposed by the State is not deductible when calculating taxable income.

In the old Circular:

The enterprise shall impose its own limits on consumption of raw materials, fuels, energy, and goods for its business operation. Such limits shall be imposed at the beginning of the year or the production period.

If limits on consumption of some raw materials, fuels, energy, or goods have been imposed by the State, such limits shall apply.

4.4.Expenditure on lease of property from individuals

Expenditure of lease of assets from individuals without sufficient documents is not deductible. To be specific:

- In case an enterprise leases assets from an individual, documents for determining deductible expenses is the lease contract and proof of rent payment.

- In case an enterprise leases assets from an individual and the lease contracts allow the enterprise to pay tax on such individual’s behalf, documents for determining deductible expenses are the lease contract, proof of rent payment, and proof of tax payment on the individual’s behalf.

- In case an enterprise leases assets from an individual where the lease contracts states that the rent is exclusive of tax (VAT, personal income tax) and allows the enterprise to pay tax on such individual’s behalf, the enterprise may include the total amount of rent in deductible expenses, including the tax paid on such individual’s behalf.

In the old Circular:

No regulation.

4.5.Amendments to some regulations on expenditures on wages and bonus for employees:

- Payment for life insurance premiums for employees that are not specified in one of the following documents is not deductible: employment contract, collective bargaining agreement, financial regulation of the company, general company, or corporation, reward scheme issued by the President of the Board of Directors, General Director, or Director in accordance with the financial regulation of the company or general company.

In the old Circular:Payment for life insurance which is part of payment for voluntary insurance for employees must not exceed VND 01 million/month/person.

- Additional regulation: In case a Vietnamese enterprise signs a contract with a foreign enterprise which states that the Vietnamese enterprise must incur the cost of accommodation of foreign experts during their working period in Vietnam, the house rent paid for foreign experts working in Vietnam by the Vietnamese enterprise will be deductible expenses when calculating enterprise income tax.

In the old Circular:

No regulation.

4.6. Amending regulations on employees’ clothing:

To remove the limit on deductible in-kind expenditure on employee’s clothing if there are satisfactory invoices.

Monetary expenditure on employees’ clothing that exceeds VND 05 million/person/year is not deductible.

In case the enterprise has both monetary and in-kind expenditures on employees’ clothing, the monetary expenditure must not exceed VND 05 million/person/year and the in-kind expenditure must have invoices in order to be deductible.

In the old Circular:

In-kind expenditure on employees’ clothing in that exceeds VND 05 million/person/year is not deductible. In case the enterprise has both monetary and in-kind expenditures on employees’ clothing, the expenditure must not exceed VND 05 million/person/year in order to be deductible when calculating taxable income.

4.7. Allowance for employees on business trips

- The limit on deductible allowance for employees on business trips is removed if there are satisfactory invoices. If the enterprise pays for the traveling, accommodation, and allowance of employees on business trips in accordance with its financial regulations or rules, such amounts will be deductible.

In the old Circular:

Allowance for employees on domestic and overseas business trips that exceeds 02 times the limits imposed by the Ministry of Finance upon officials and civil servants is not deductible when calculating EIT.

- Additional regulation: In case the enterprise sends an employee on a business trip (whether at home or overseas), every payment that reaches VND 20 million or above and payment for air tickets that are made with individuals’ banking cards will be considered non-cash payments deductible if all of the conditions below are satisfied:

+ There are valid invoices issued by the goods or service provider.

+ The enterprise has a business trip order.

- The enterprise’s financial regulations or rules allow its employees to pay the trip expenses, air tickets with their personal banking cards and get reimbursed by the enterprise.

4.8.Payment for electricity and water supply

Enterprises are no longer required to make statements of payment for electricity and water supply using form No. 02/TNDN enclosed with Circular No. 78/2014/TT-BTC.

4.9. Interest payment on loan equivalent to charter capital deficit according to the capital contribution schedule

- If the enterprise has contributed sufficient charter capital and, during its business operation, pays interest on a loan taken to make investment in another enterprise, such payment will be deductible when calculating taxable income.

In the old Circular:

If the capital contributed or purchased by the enterprise is derived from a loan, the purchase price includes the payment of interest thereon.

4.10. Provision of sponsorship for education

Sponsorship for education (including sponsorship for vocational education) for illegitimate recipients or without documentary evidence will not be deductible when calculating EIT:

4.11. Provision of sponsorship for construction of gratitude houses, houses for the poor, or great unity houses

Amendments: If the sponsorship recipient is an organization permitted to raise sponsorship, documents include: Certification of sponsorship bearing the signature of the representative of the sponsoring enterprise and the receiving organization; invoices/receipts for purchase of goods (in case of in-kind sponsorship) or proof of payment (in case of monetary sponsorship). The certification of poor household issued by the local authority is no longer required.

4.12.Sponsorship under a State Program includes sponsorship for building new bridges in extremely disadvantaged residential areas under a project approved by a competent authority.

4.13.New deductible expenses that do not correspond with assessable revenues:

- Expenditures on provision of vocational education and training for employees, including:

+ Payment for teachers, learning materials, equipment serving vocational education, materials for practicing, and other aid for learners.

+ Expenditure on training employees recruited by the enterprise

- Direct expenditures on the employees’ welfare: payment for unemployment insurance, health insurance, and other voluntary insurance for employees (except for life insurance and voluntary pension insurance).

New regulation: In case the enterprise has not operated for 12 months, the practical average 1 month’s salary equals (=) wage fund released within the year divided (:) by the number of operating months.

4.14.Payment for the right to mineral extraction beyond the practical amount payable in the year is not deductible when calculating EIT. If a lump sum is paid, the practical amount payable in the year is based on the total amount of payment for the right to mineral extraction distributed over the remaining years. If the amount is paid annually, the practical payment is the payment for the right to mineral extraction of the year paid by the enterprise to state budget.

5. Other incomes in Article 5, amending Article 7 of Circular No. 78/2014/TT-BTC

- This regulation is removed: Other incomes are taxable incomes in the tax period that are not from enterprise’s the registered business lines as prescribed in the first paragraph of Article 7 of Circular No. 78/2014/TT-BTC.

- Incomes from an overseas project transferred to Vietnam are no longer considered other incomes.

- Amendments to regulations on exchange differences in Clause 9 Article 7 of Circular No. 78/2014/TT-BTC:

+ In case an exchange difference occurs in the period is not related to revenues, expenses of the enterprise’s main business operation shall be included in expenses or revenues of the enterprise’s main business operation, loss on exchange difference shall be included in financial expense, profit from exchange difference shall be included in other incomes when calculating taxable income.

+ Profit or loss because of reassessment of foreign currency debts payable at the end of the fiscal year that is not related to revenues, expenses of the enterprise’s main business operation shall be respectively included in other incomes or financial expense when calculating taxable income.

In the old Circular:

+ In case an exchange difference occurs in the period is not related to revenues, expenses of the enterprise’s main business operation, loss on exchange difference shall be included in operating cost, profit from exchange difference shall be included in other incomes.

+ Profit or loss because of reassessment of foreign currency debts payable at the end of the fiscal year that is not related to revenues, expenses of the enterprise’s main business operation shall be respectively included in other incomes or operating cost when calculating taxable income.

- Additional guidelines for other incomes:

In case the enterprise admits a new capital contributor whose contributed capital is higher than the value of capital he/she is obliged to contribute:

If such positive difference is owned by the enterprise and used to supplement the enterprise’s capital, it will not be deductible when calculating enterprise income tax incurred by the receiving enterprise.

If such positive difference is divided among old contributors, it will be considered incomes of old contributors.

6. Tax-free incomes in Article 6, amending Article 8 of Circular No. 78/2014/TT-BTC

- Incomes from processing of agriculture and aquaculture products of cooperatives; incomes from processing of agriculture and aquaculture products of enterprises in extremely disadvantaged areas are now exempt from EIT.

Specific guidelines: Incomes from cultivation (including also products from planted forests), husbandry, aquaculture, and processing of agriculture and aquaculture products of cooperatives and enterprises that are given tax incentives (including preferential tax rates, tax exemption, and reduction) as prescribed in this Circular are incomes from products that are result of their cultivation, husbandry, aquaculture and processing of agriculture and aquaculture products (including those purchased for further processing).

Incomes from processed products derived from agriculture and aquaculture products must satisfy all of the following conditions in order to be given tax incentives (including preferential tax rates, tax exemption, and reduction):

- The ratio of value of raw materials to production cost is at least 30%.

- Processed products are not subject to special excise tax, except for the cases decided by the Prime Minister at the request of the Ministry of Finance.

The enterprise must separate incomes from processed agriculture and aquaculture products in order to be provided with EIT incentives.

In the old Circular:

Incomes from processing of agriculture and aquaculture products are not exempt from EIT. If the enterprise fails to separate them, tax-free incomes from farming, husbandry, and aquaculture shall depend on the ratio of production cost of the farming, harvest, and preparation of products to total cost of the cooperative or enterprise (including administrative expense, selling expense) in the tax period.

Enterprises and cooperatives planting rubber plants have incomes from rubber tree planting and fresh latex harvest exempt from tax. If such incomes cannot be separated, tax-free income depends on the ratio of planting, harvesting cost to total cost of the enterprise or cooperative.

- Income from revenue-generating activities assigned by the State of Fund for Self-employment of Poor People is now tax-free.

- Incomes of bailiff offices (except for incomes from activities other than bailiff’s activities) during the experimental period are now tax-free. Relevant legislative documents shall apply to bailiff offices and bailiff’s activities.

7. Loss carry forward upon enterprise division in Article 7, amending Clause 3 Article 9 of Circular No. 78/2014/TT-BTC

Additional guidance: The loss that is incurred by the enterprise before partial division or full division and can be carried forward shall be divided among the enterprises after the division process according to the distribution ratio of charter capital.

8. Determination of buying price of contributed capital in Article 8, amending the second paragraph of Point a Clause 2 Article 14 of Circular No. 78/2014/TT-BTC

- In case of transfer of contributed capital for enterprise establishment, it is the accumulated value of contributed capital up to the date of capital transfer according to accounting books, invoices, and other documents and is certified by investors or participants in the business cooperation contract (or according to audit results provided by an independent audit company if the enterprise is a wholly foreign-owned enterprise).

- If the enterprise does accounting in VND and transfers contributed capital in a foreign currency, the transfer price must be converted into VND according to the buying rate announced by the commercial bank where the enterprise’s account it opened at the time of transfer.

- This regulation is removed: If the capital contributed or purchased by the enterprise is derived from a loan, the purchase price includes the payment of interest thereon.

In the old Circular:

The transfer price is expressed in VND at the average rate of inter-bank foreign exchange market announced by the State bank of Vietnam at the time of transfer.

9. Application conditions of EIT incentives in Article 10, amending  Article 18 of Circular No. 78/2014/TT-BTC and Article 5 of Circular No. 151/2014/TT-BTC

9.1. Additional contents in terms of determination of incentives for enterprises whose projects of investment are given EIT incentives because they are located in areas given investment incentives (hereinafter referred to as favored areas):

- In case of an enterprise whose project of investment in transport is given EIT incentives because it is located in a favored area (including industrial parks, economic zones, hi-tech zones), the enterprise will be given EIT incentives for incomes from transport services based in the favored area, whether the departure point or destination is located in the same area as the project.

- If an enterprise whose project of investment is given EIT incentives because it is located in a favored area earns incomes outside the area in which the project is located:

(i) If the area in which the income is earned is not a favored area, the income will not be given EIT incentives.

(i) If the area in which the income is earned is a favored area, the income will be given EIT incentives. EIT incentives for such income shall be determined according to the time and level of incentives in the area.

Examples are also provided.

9.2. Amending the regulations on new projects of investment given EIT incentives in Clause 5 Article 18 of Circular No. 78/2014/TT-BTC (amended in Article 5 of Circular No. 151/2014/TT-BTC):

- With regard to a new enterprise derived from a project of investment that is granted the investment license or certificate of investment before January 01, 2014 but still incomplete, yet to be put into operation and thus has not generated revenues, the enterprise will be given EIT incentives applied to new projects of investment according to the Law No. 32/2013/QH13, the Law No. 71/2014/QH13 and their guiding documents.

In the old Circular:

With regard to a project of investment that is granted the investment license or certificate of investment before January 01, 2014 but still incomplete, yet to be put into operation and thus has not generated revenues, if the investment license or certificate of investment is adjusted from January 01, 2014, the project will be given incentives as a new project

- Additional new projects given EIT incentives according to Article 15 and Article 16 of Decree No. 218/2013/ND-CP: private notary offices established in disadvantaged areas and extremely disadvantaged areas.

- More specific guidance is provided in Point a Clause 5 of Article 18: New projects of investment must be granted investment licenses or certificates of investment as prescribed by regulations of law on investment in order to be given EIT incentives.

- Amended regulations: If the Certificate of Enterprise Registration or Certificate of Investment of an operating enterprise is changed and such changes do not affect the fulfillment of conditions for tax incentives of the project, the enterprise is still given tax incentives for the remaining period or incentives for investment in expansion if conditions for incentives are satisfied.

- Additional regulations: With regard to private enterprises that make investment in the public sector, are derived from enterprise conversion, and satisfy conditions for private sector involvement according to the Prime Minister’s Decisions, if the enterprise was not given tax incentives applied to favored fields, it will be given tax incentives as if a new project of investment from the conversion date.

If an enterprise is converted, satisfies conditions for private sector involvement according to the Prime Minister’s Decisions, and is applying 10% EIT to incomes from investment in the public sector, it may keep applying this preferential rate.

9.3. To add Clause 8a to Article 18 of Circular No. 78/2014/TT-BTC as follows:

In the first tax period, if the enterprise’s projects of investment (including new projects, expansion projects, high-tech enterprises, agriculture enterprises applying high technologies) have a tax incentive duration of shorter than 12 months, the enterprise may choose to apply tax incentives to the project of investment from that first tax period or register the beginning date of tax incentive period to the tax authority from the next tax period. If the enterprise registers to apply tax incentives from the next tax period, tax payable in the first tax period must be calculated and paid to state budget as prescribed”.

In the old Circular:

Only applied to new projects.

10. Preferential tax rates in Article 11, amending Article 19 of Circular No. 78/2014/TT-BTC

10.1. To amend Clause 1 Article 19 of Circular No. 78/2014/TT-BTC on application of preferential 10% tax for 15 years and other contents as follows:

- Projects of investment in development of water plants, power plants, water supply and drainage system; bridges, roads, railroads, airports, seaports, air terminals, train stations must generate revenues or incomes from their operation in order to be given tax incentives. Income from construction of such works of the construction enterprise is not given the aforesaid tax incentives.

- Incomes from high-tech activities, application of high technologies, and incomes directly related to high-tech activities, application of high technologies of high-tech enterprises, agriculture enterprises applying high technologies are given EIT incentives applied to favored fields prescribed in Clause 4 Article 18 of Circular No. 78/2014/TT-BTC (amended in Point a Clause 2 Article 10 of Circular No. 96/2015/TT-BTC).

In the old Circular:

High-tech enterprises, agriculture enterprises are given EIT incomes for their entire income except for those mentioned in Points a, b, c Clause 3 Article 18 of Circular No. 78/2014/TT-BTC.

- More specific guidance on disbursement duration of projects whose initial capital is at least VND 6,000 billion: capital shall be disbursed within 03 years from the issuance date of the first investment license according to regulations of law on investment.

In the old Circular:

Capital is disbursed within 03 years from the issuance of the certificate of investment (it was not clear which certificate of investment).

- Additional cases in which preferential 10% tax is applied for 15 years:

“e) Incomes of an enterprise from execution of projects of investment in manufacturing (except for manufacturing of products subject to special excise tax and mineral extraction projects) whose capital is VND 12,000 billion or over, using high technologies that must be appraised in accordance with the Law on High Technologies, the Law on Science and Technology, and capital of which is disbursed within 05 years from the date of investment licensing”.

- Additional cases in which preferential 10% tax is applied for 15 years:

“g) Incomes of an enterprise for execution of a new project of investment in manufacturing of products on the list of ancillary products given priority that satisfy any of the following criteria:

- Ancillary products are meant to support high technologies according to regulations of the Law on High Technologies;

- Ancillary products are meant to support manufacturing of: textile and garment; leather and footwear; electronics and IT products; manufacturing of cars; fabricating mechanics that, up to January 01, 2015, they cannot be manufactured in Vietnam or can be manufactured in Vietnam and satisfy technical standards of EU or equivalent standards.

List of ancillary products given priority and EIT incentives is promulgated together with the Prime Minister’s Decision No. 1483/QD-TTg dated August 26, 2011. In case legislative documents related to the list of ancillary products given priority are amended, the new documents shall apply”.

10.2. To amend Clause 2 Article 19 of Circular No. 78/2014/TT-BTC on extension of 10% tax period as follows:

“2. Cases in which period of preferential tax rates may be extended:

a) The projects of investment prescribed in Point b and Point c Clause 1 of this Article with large scale and high/new technologies that need investment.

b) Projects prescribed in Point e Clause 1 of this Article that satisfies any of the following criteria:

- The products manufactured are capable of global competition; the revenue exceeds VND 20,000 billion per year after not more than 05 years from the first year in which revenues are generated by the project;

- Over 6,000 employees are hired;

- The project involves economic-technical infrastructure, including: investment in development of water plants, power plants, water supply and drainage system; bridges, roads, railroads, airports, seaports, air terminals, train stations, new energy, clean energy, energy-saving industry, oil refinery.

c) At the request of the Minister of Finance, the Prime Minister shall decide extension of preferential tax rate duration prescribed in this Clause. Nevertheless, the extension shall not exceed 15 years.”

In the old Circular:

“2. With regard to the projects mentioned in Point b and Point c Clause 1 Article 10 of Circular No. 78/2014/TT-BTC with large scale and high/new technologies that need investment, the period of applying 10% tax may be extended. Nevertheless, the total period of applying 10% tax must not exceed 30 years under a Decision of Prime Minister at the request of the Minister of Finance.”

10.3. In Clause 3 Article 19 of Circular No. 78/2014/TT-BTC on application of 10% tax throughout the operating period:

Incomes of enterprises from investment in judicial expertise, incomes of enterprises from processing of agriculture and aquaculture products in extremely disadvantaged areas are now permitted to apply 10% tax throughout the enterprises’ operation.

Specific guidance on investment in post-harvest preservation of agriculture products; preservation of agriculture products, aquaculture products, and foods, including direct investment in preservation and lease of preservation equipment is provided.

10.4. To add Clause 3a to Article 19 of Circular No. 78/2014/TT-BTCto provides for entities applying 15% tax on enterprises’ incomes from farming, husbandry, processing of agriculture and aquaculture products in areas other than disadvantaged areas and extremely disadvantaged areas

11. To amend duration of tax exemption or tax reduction in Article 12, amending Article 20 of Circular No. 78/2014/TT-BTC

Additional regulation: “The period of tax exemption/reduction applied to high-tech enterprises, agriculture enterprises applying high technologies will begin from the year in which they are granted the Certificate of High-tech Enterprise or Certificate of Agriculture Enterprise Applying High Technologies.”

12. Incentive transfer in Article 13, amending Article 23 of Circular No. 78/2014/TT-BTC

To add Clauses 2a, 2b, 2c, 2d, 2dd to Article 23 as follows:

“2a.Enterprises that have expansion projects licensed by competent authorities, have made investment during 2009 – 2013, and satisfy conditions for tax incentives in the tax period 2014 (in terms of favored fields or favored areas, including industrial parks, economic zones, hi-tech zones) according to the Law No. 32/2013/QH13, the Law No. 71/2014/QH13 and their guiding documents shall be given tax incentives applied to expansion investment according to the Law No. 32/2013/QH13, the Law No. 71/2014/QH13 and their guiding documents for the remaining period from the tax period 2015.

With regard to enterprises that have projects in production expansion that are still incomplete on December 31, 2008, still under construction in 2009, finished and put into operation from 2010, if they satisfy conditions for tax incentives (in terms of favored fields or favored areas, including industrial parks, economic zones, hi-tech zones) according to regulations at the time expansion investment is decided, they may choose between incentives for increase in income from expansion investment according to legislative documents applicable at the time expansion investment is decided, or according to regulations of the Law No. 32/2013/QH13, the Law No. 71/2014/QH13 and their guiding documents for the remaining period from the tax period 2015.

2b.Enterprises that have projects of investment in industrial parks during 2009 – 2013 and satisfy conditions for tax incentives in the tax period 2014 (in terms of favored fields or favored areas) according to the Law No. 32/2013/QH13, the Law No. 71/2014/QH13 and their guiding documents shall be given tax incentives according to the Law No. 32/2013/QH13, the Law No. 71/2014/QH13 and their guiding documents for the remaining period from the tax period 2015.

2c.Enterprises that have projects of investment in areas that are not given tax incentives before January 01, 2015 (including industrial parks, economic zones, hi-tech zones) and are given tax incentives from January 01, 2015 according to the Law No. 32/2013/QH13, the Law No. 71/2014/QH13 and their guiding documents shall be given tax incentives according to the Law No. 32/2013/QH13, the Law No. 71/2014/QH13 and their guiding documents for the remaining period from the tax period 2015.

With regard to enterprises that have projects of investment in an area given tax incentives but receive lower incentives, if they satisfy conditions for higher tax incentives according to the Law No. 32/2013/QH13, the Law No. 71/2014/QH13 and their guiding documents, they shall be given tax incentives according to the Law No. 32/2013/QH13, the Law No. 71/2014/QH13 and their guiding documents for the remaining period from the tax period 2015.

2d.After January 01, 2015, if the area where the enterprise’s project is located is made eligible for tax incentives, the enterprise will receive tax incentives for the remaining period from the tax period in which such change is made.

2dd.In the cases mentioned in Clauses 2a, 2b, 2c of this Article, if revenue is yet to be generated by the project in the tax period 2015, the continuous period of application of preferential tax rate will begins in the first year in which revenue is generated by the project given tax incentives. In the cases mentioned in Clauses 2a, 2b, 2c of this Article, if income is yet to be generated by the project, the continuous period of tax exemption/reduction will begins in the first year in which taxable income is generated by the project given tax incentives (if the enterprise does not have taxable income in the first 03 years, the period of tax exemption/reduction will begin from the 4th year from the first year in which revenue is generated by the project)”.

13. Implementation effect prescribed in Article 14

-Circular No. 96/2015/TT-BTC comes into force from August 06, 2015 and applies to the EIT tax period 2015 onwards.

- With regard to enterprises whose fiscal year is not solar calendar year:

+ The transfer of EIT incentives (tax exemption/reduction period, preferential tax rate period) prescribed in Circular No. 96/2015/TT-BTC will apply to the remaining period from the tax period 2015.

+ Other amended and supplemented contents come into force from January 01, 2015.

- Enterprises shall declare and pay tax on incomes from overseas projects of investment that are generated from the tax period 2014 and earlier in accordance with the Circular on EIT applicable at that time. From 2015, transfer of such incomes to Vietnam is exempt from tax declaration and payment. Circular No. 96/2015/TT-BTC shall apply to incomes from overseas projects of investment from the tax period 2015.

-Point 21 of Clause 2 Article 6, Clause 5 Article 20 of Circular No. 78/2014/TT-BTC (limits on cost of advertising, marketing, years of tax exemption or and tax reduction) and guidance on EIT promulgated by the Ministry of Finance and other authorities that contravene Circular No. 96/2015/TT-BTC are annulled.

Above are some contents amended and supplemented in Circular No. 96/2015/TT-BTC. Any difficulties arising in the course of implementation of this Circular should be reported to General Department of Taxation timely consideration./.

For the Director

The Deputy Director

Cao Anh Tuan