Resolution No. 41/NQ-CP dated May 26, 2016 of the Government on tax incentive policies for boosting information technology development and application in Vietnam

RESOLUTION

On tax incentive policies for boosting information technology development and application in Vietnam[1]

The Government

Pursuant to the June 19, 2015 Law on Organization of the Government;

To implement Resolution No. 36-NQ/TW of July 1, 2014, of the Political Bureau of the Communist Party of Vietnam Central Committee, on stepping up information technology application and development to meet the requirements of sustainable development and international integration;

At the proposal of the Minister of Finance,

RESOLVES:

I. ASSESSMENT OF SITUATION

Over the past years, the Party’s and State have always paid attention and attached importance to information technology (IT) development and application with a view to turning the IT sector into an effective tool to create a new development mode and for national defense; a fast and sustainably growing economic-technical sector with a leading role, laying a foundation for developing a knowledge-based economy; and to developing Vietnam’s IT sector to reach regional and global levels.

To implement the Party’s and State’s IT development policy, the tax policy system has had many incentive and support policies, making contributions to the IT sector’s important development achievements. However, if comparing with developed countries in the region and around the world, Vietnam’s IT sector remains small. Although developing fast, the software-digital content industry remains scattered and lacks resources. The sector’s research and development capability remains low and its staff remains inadequate in number and weak in specialized skills; the hardware and electronic industry is based largely on assembly with a low localization rate and added value content and remains uncompetitive.

In order to enhance the competitiveness of IT enterprises and attract more investment in IT development according to the targets set in the process of deeper and wider international integration, it is necessary to introduce more support policies, including tax incentives, to further promote the IT application and development in Vietnam.

II. TAX INCENTIVE POLICY SOLUTIONS UNDER THE NATIONAL ASSEMBLY’S COMPETENCE

1. To add enterprises’ income from implementing projects on manufacturing digital content products, providing software services, manufacturing key IT products, and providing services to remedy information security incidents and protect information security to be eligible for the enterprise income tax rate currently applicable to software production projects in accordance with the Law on Enterprise Income Tax.

2. To reduce 50% of personal income tax on wages and remuneration for hi-tech employees in the field of IT, who possess qualifications and skills satisfying hi-tech research, development and application requirements of the IT sector; hi-tech services and the management of hi-tech activities in IT; operation of hi-tech product manufacturing equipment and assembly lines in IT; and management of the safety of the information system.

II. TAX INCENTIVE POLICY SOLUTIONS UNDER THE PRIME MINISTER’S COMPETENCE

1. To add IT activities that need special encouragement, including software production and services; IT design and consultancy services; the system integration service; IT system management and maintenance service (application, network and equipment); IT system outsourcing services; information system security service without using civil ciphers; database processing and exploitation service; Internet search service; data center service; business process outsourcing (BPO) and knowledge process outsourcing (KPO) services for export; and electronic signature certification service to the list of scientific research and technology development activities; the list of high technologies prioritized for development investment, and the list of hi-tech products encouraged for development.

2. A new investment project in the field of IT that needs special investment encouragement as prescribed at Point 1 of this Section and regularly employs over 1,000 workers (including projects whose 15-year period of eligibility for a tax rate of 10% has expired) will enjoy a tax rate of 10% for another 15 years.

IV. ORGANIZATION OF IMPLEMENTATION

1. The Ministry of Finance shall:

a/ Guide the implementation of enterprise income tax incentives for IT activities on the list of scientific research and technology development activities, the list of high technologies prioritized for development investment, and the list of hi-tech products encouraged for development under the Prime Minister’s regulations in October 2016;

b/ Assume the prime responsibility and coordinate with the Ministry of Justice, the Ministry of Information and Communications and relevant ministries and sectors in submitting to the Government for reporting to the National Assembly amendments and supplements to the Law on Enterprise Income Tax and the Law on Personal Income Tax to realize the solutions mentioned in Section II of this Resolution at an appropriate time;

c/ Promote the dissemination of tax solutions mentioned in this Resolution for the public to know, monitor and supervise the implementation.

2. The Ministry of Information and Communications shall:

a/ Draft a decision on experimental management of the import and export of software products and service and digital contents and submit it to the Prime Minister for promulgation in August 2016;

b/ Assume the prime responsibility and coordinate with relevant ministries and sectors in further studying and developing criteria and conditions for specific determination of a number of important software services to enjoy enterprise income tax incentives when submitting to the Government and the National Assembly amendments and supplements to the Law on Enterprise Income Tax;

c/ Coordinate with the Ministry of Finance to step up the dissemination of tax solutions mentioned in this Resolution.

3. The Ministry of Science and Technology shall:

a/ Submit to the Prime Minister for decision the addition of IT activities that need special encouragement mentioned at Point 1, Section III of this Resolution to the list of scientific research and technology development activities, the list of high technologies prioritized for development investment, and the list of hi-tech products encouraged for development in August 2016;

b/ Assume the prime responsibility for, and coordinate with the Ministry of Finance, the Ministry of Information and Communications and relevant ministries and sectors in, developing criteria and conditions for specific determination of hi-tech staffs to be entitled to personal income tax incentives when submitting to the Government and the National Assembly amendments and supplements to the Law on Personal Income Tax to meet practical requirements and ensure the application of tax incentive policies to proper subjects.

4. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, shall, according to their assigned functions and tasks, concentrate on guiding, organizing and coordinating the implementation of the solutions mentioned in this Resolution in order to promptly remove difficulties for production and business. They shall enhance the inspection and supervision of agencies, organizations and individuals in performing their tasks; timely and strictly commend or discipline the performance of assigned tasks. They shall closely follow the reality, proactively monitor and evaluate in order to adopt flexible and timely solutions or propose prompt and effective direction and administration solutions to competent authorities.-

On behalf of the Government
Prime Minister
NGUYEN XUAN PHUC