According to Vietnam’s tax laws, the current standard CIT rate is 20%, which may vary depending on the industry, sector, and business area.

Article 18 of Circular 78/2014/TT-BTC stipulates several industries, sectors, or investment projects in specific areas are entitled to CIT incentives. It should be noted that enterprises are only entitled to preferential tax rates when they implement accounting regimes, invoices, vouchers, and payment of CIT according to declarations.

Apply the CIT rate of 10% during the operation period to the income of enterprises in the following areas:

• Conducting socialization activities in education, vocational training, culture, sports, environment, and healthcare;
• Selling, leasing, and lease-purchasing social housing;
• Planting, caring for, and protecting forests; aquaculture and processing agricultural and aquatic products in areas with difficult socio-economic conditions;
• Cultivating forest products in areas with difficult socio-economic conditions; producing, multiplying, and breeding plants and animals; producing, extracting, and refining salt, except for salt production under the Cooperative Law;
• Cooperatives operating in agriculture, forestry, fishery, and salt industries, not in areas with difficult or extremely difficult socio-economic conditions;
• Investing in the preservation of agricultural products post-harvest, preserving agricultural products, fisheries, and foodstuffs.

Apply the CIT rate of 10% for 15 years to the income of enterprises implementing new investment projects under the following conditions:

• In areas with extremely difficult economic conditions, economic zones, and hi-tech parks, including concentrated information technology parks established under the Prime Minister’s decision;
• In fields such as:
  • Scientific research and technological development;
  • Application of high technologies on the list of high technologies prioritized for development investment under the Law on High Technologies;
  • High-tech incubation, high-tech business incubation;
  • High-tech venture capital for high-tech development on the list of high technologies prioritized for development under the High Technology Law;
  • Investment in constructing and operating high-tech incubation facilities, high-tech business incubation facilities;
  • Investment in the development of water plants, power plants, and water supply and drainage systems;
  • Roads, bridges, railways;
  • Airports, seaports, river ports;
  • Airports, terminals, and other particularly important infrastructure projects decided by the Prime Minister;
  • Software production;
  • Production of composite materials, light construction materials, and rare materials;
  • Production of renewable energy, clean energy, and energy from waste destruction;
  • Biotechnology development;
• Environmental protection projects, including the production of environmental pollution treatment equipment, environmental monitoring and analysis equipment; pollution treatment and environmental protection; wastewater, gas, solid waste collection, and treatment; waste recycling and reuse;
• Hi-tech enterprises, high-tech application agricultural enterprises under the Law on High Technology;
• New investment projects in manufacturing (except projects producing goods subject to special consumption tax, mineral exploitation projects) meeting the scale of investment capital and the number of employees;
• New investment projects producing products on the list of prioritized supporting industry products.

Please note that a new investment project is one implemented for the first time or a project operating independently from the ongoing business investment activities.

Application of a 17% CIT Rate for 10 Years for the Income of Enterprises:

• Implementing new investment projects in areas with difficult socio-economic conditions;
• Implementing new investment projects in:
  • High-grade steel production;
  • Production of energy-saving products;
  • Manufacturing machinery and equipment for agriculture, forestry, fishery, and salt production;
  • Manufacturing irrigation equipment;
  • Producing and refining animal feed, poultry, and aquatic products;
  • Development of traditional trades (including constructing and developing traditional trades in handicraft production, agricultural and food product processing, and cultural products).
• Microfinance institutions established and operating under the Law on Credit Institutions (applying a preferential CIT rate of 17% throughout the operation period).

Other Tax Reduction Cases:

According to Article 21 of Circular 78/2014/TT-BTC, the following enterprises will be considered for tax reduction:

• Enterprises operating in production, construction, and transportation employing from 10 to 100 female employees, where the number of female employees accounts for more than 50% of the total regular employees, or employing more than 100 female employees, where the number of female employees accounts for more than 30% of the total regular employees. These enterprises are entitled to a reduction in payable CIT proportional to the actual additional expenditure on female employees if separately accounted for according to regulations.
• Enterprises employing ethnic minority employees are entitled to a reduction in payable CIT proportional to the actual amount spent on ethnic minority employees;
• Enterprises transferring technology in priority domains to organizations and individuals in areas with difficult socio-economic conditions are entitled to a 50% reduction in payable CIT on income from technology transfer.

Vu Ho