I. What is Corporate Income Tax (CIT)?
Corporate Income Tax (CIT) is a type of indirect tax applied to businesses with taxable income in Vietnam.
CIT includes:
Standard tax rate: 20% Preferred tax rates: 10% for specific sectors eligible for incentives (agriculture, forestry, fisheries, and handicrafts...) 15% for scientific and technological enterprises. 17% for high-tech enterprises and agricultural enterprises applying advanced technology. Cases eligible for tax exemptions or reductions include:
Exemption for 4 years and a 50% reduction of the payable tax for the next 9 years for income generated from new investment projects in economically and socially disadvantaged areas. Exemption for 2 years and a 50% reduction of the payable tax for the next 4 years for income generated from new investment projects in areas that are particularly economically and socially challenging. Tax exemptions and reductions for projects investing in industrial support product manufacturing. Therefore, CIT is a significant source of revenue for the state budget. The application of CIT incentive policies encourages businesses to invest in eligible sectors and regions, contributing to socio-economic development."
II. What is Industrial support products
Industrial support products are items, components, parts, details, or technological processes designed to aid in the manufacturing of products.
Industrial support products include:
Materials, components, and semi-finished products directly used in the production process. Tools, equipment, and spare parts. Directly related services such as maintenance, servicing, inspection, calibration, and testing. Production support services like consulting, design, and technology transfer. The list of prioritized industrial support products is determined by the government alongside Decree No. 111/2015/ND-CP and includes product groups:
Product groups supporting processing and manufacturing industries. Product groups supporting high-tech industries. Product groups supporting key industries (textiles, leather and footwear, electronics, automotive, etc.). Developing industrial support products helps enhance the localization rate, reduce dependence on imported materials and components, and gradually improve the competitive capacity of domestic manufacturing sectors."
III. Tax incentives for CIT on which industrial support products?
Corporate Income Tax (CIT) incentives for investment projects in the production of industrial support products are regulated under Article 13, Clause 1, of Law on Corporate Income Tax No. 14/2008/QH12 and are specifically guided by Decree No. 12/2015/ND-CP.
According to these regulations, enterprises generating income from the implementation of new investment projects in the production of products listed in the prioritized industrial support product category will enjoy CIT incentives as follows:
To qualify for CIT incentives, investment projects in the production of industrial support products must meet the following conditions:
Therefore, investment projects in the production of industrial support products that meet these criteria can benefit from CIT incentives, contributing to the promotion of the industrial support sector in Vietnam
Article: List of 55 Industrial Support Product Sectors Eligible for Incentives
IV. Procedures for CIT Incentives with Industrial Support Products
The procedures to enjoy CIT incentives for an industrial support product manufacturing investment project include the following key steps:
V. Beneficiaries of Incentives
As per the regulations in Decree No. 12/2015/ND-CP, the following entities are eligible for CIT incentives when investing in the production of industrial support products:
The scope of entities eligible for CIT incentives when investing in the production of industrial support products is quite extensive and includes most types of legally operating businesses and economic organizations in Vietnam.
VI. Tax Incentive Guidelines
For businesses seeking to enjoy CIT incentives when investing in the production of industrial support products, it's important to consider the following issues:
1. Thoroughly research the conditions regarding the type of incentives, beneficiaries, and qualifying criteria to ensure the project meets all requirements.
2. Prepare all necessary legal documents to register the investment project and request the issuance of a Certificate of Incentives.
3. Develop a sound financial plan and budget, avoiding scattered investments to ensure investment effectiveness.
4. Ensure sufficient investment capital to prevent project delays.
5. Comply with regulations on investment, construction, and project management to ensure project progress and quality.
6. Maintain regular communication with regulatory authorities to address any emerging issues promptly.
7. Expeditiously commence production and business operations after project completion to maximize the duration of tax incentives.
Therefore, adherence to regulations, thorough preparation, and resolute execution are key factors for businesses to fully enjoy tax incentives when investing in the production of industrial support products.
Tam Viet Tax's Opinion on CIT Incentives for Industrial Support Products
The policy of offering CIT incentives to enterprises investing in the production of industrial support products is considered a well-founded and necessary policy in light of the existing limitations in the development of the support industry. Specifically:
1. This policy demonstrates the state's concern and commitment to creating favorable conditions for the development of the support industry, a sector of significant importance.
2. The policy serves as encouragement and motivation for enterprises to actively invest in the support industry.
3. It promotes industry linkages and creates conditions for the development of domestic supply chains, thus increasing value-added.
4. This policy contributes to enhancing the competitive capacity of major production sectors by providing high-quality, cost-effective products and support services.
However, there are still many concerns among businesses regarding issues like the product codes eligible for incentives when submitting documents to the Ministry of Industry and Trade. Many enterprises also face challenges in determining whether their business meets the requirements for CIT incentives. If you need advice, you can contact the experts at Thuế Tâm Việt!
We are confident, with years of experience, in helping numerous Vietnamese and international businesses, including those from Japan, South Korea, Taiwan, China, successfully receive tax incentives and obtain tax refunds as quickly as possible. 100% of our clients are satisfied with the services provided by Tam Viet Tax and are willing to recommend us to other partners.
Contact Hotline for Business Support and Consultation: 0911.95.8838
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