CIRCULAR Guiding the application of investment incentives in accordance with the Law on Investment and the Government’s Decree No. 118/2015/ND-CP of November 12, 2015, detailing and guiding the implementation of a number of articles of the Law on Investment ____________________________ Pursuant to November 26, 2014 Law No. 67/2014/QH13 on Investment; Pursuant to June 3, 2008 Law No. 14/2008/QH12 on Enterprise Income Tax, and June 19, 2013 Law No. 32/2013/QH13 Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax; Pursuant to November 26, 2014 Law No. 71/2014/QH13 Amending and Supplementing a Number of Articles of the Laws on Taxes; Pursuant to November 14, 2008 Law No. 27/2008/QH12 on Excise Tax, and November 26, 2014 Law No. 70/2014/QH13 Amending and Supplementing a Number of Articles of the Law on Excise Tax; Pursuant to June 14, 2005 Law No. 45/2005/QH11 on Export Duty and Import Duty; Pursuant to June 17, 2010 Law No. 48/2010/QH12 on Non-Agricultural Land Use Tax; Pursuant to November 29, 2006 Law No. 78/2006/QH11 on Tax Administration, and November 20, 2012 Law No. 21/2012/QH13 Amending and Supplementing a Number of Articles of the Law on Tax Administration; Pursuant to the Government’s Decree No. 118/2015/ND-CP of November 12, 2015, detailing and guiding the implementation of a number of articles of the Law on Investment; Pursuant to the Government’s Decree No. 218/2013/ND-CP of December 26, 2013, detailing and guiding the implementation of a number of articles of the Law on Enterprise Income Tax, and the Government’s Decree No. 91/2014/ND-CP of October 1, 2014, amending and supplementing a number of articles of the Decrees on taxes; Pursuant to the Government’s Decree No. 12/2015/ND-CP of February 12, 2015, detailing the implementation of the Law Amending and Supplementing a Number of Articles of the Laws on Taxes and amending and supplementing a number of articles of the Decrees on taxes; Pursuant to the Government’s Decree No. 87/2010/ND-CP of August 13, 2010, detailing the implementation of a number of articles of the Law on Export Duty and Import Duty; Pursuant to the Government’s Decree No. 53/2011/ND-CP of July 1, 2011, detailing and guiding the implementation of a number of articles of the Law on Non-Agricultural Land Use Tax; Pursuant to the Government’s Decree No. 83/2013/ND-CP of July 22, 2013, detailing the implementation of a number of articles of the Law on Tax Administration and the Law Amending and Supplementing a Number of Articles of the Law on Tax Administration; Pursuant to the Government’s Decree No. 215/2013/ND-CP of December 23, 2013, defining the functions, duties, powers and organizational structure of the Ministry of Finance; At the proposal of the Director of the Tax Policy Department, The Minister of Finance promulgates the Circular guiding the application of investment incentives in accordance with the Law on Investment and the Government’s Decree No. 118/2015/ND-CP of November 12, 2015, detailing and guiding the implementation of a number of articles of the Law on Investment. Article 1. Scope of regulation 1. This Circular guides the application of enterprise income tax, import duty and non-agricultural land use tax incentives applicable to subjects entitled to investment incentives in accordance with Law No. 67/2014/QH13 on Investment and the Government’s Decree No. 118/2015/ND-CP of November 12, 2015, detailing and guiding the implementation of a number of articles of the Law on Investment (below referred to as Decree No. 118/2015/ND-CP). 2. Land rental and land use levy incentives provided in Clause 1, Article 16 of Decree No. 118/2015/ND-CP must comply with the Ministry of Finance’s guidance on land rental and land use levy. Article 2. Subjects of application 1. Investment projects, enterprises and organizations specified in Clauses 2, 3 and 4, Article 15 of Law No. 67/2014/QH13 on Investment and Article 16 of Decree No. 118/2015/ND-CP. 2. Investors, competent state agencies and organizations and individuals involved in the application of investment incentives as guided in this Circular. Article 3. Interpretation of terms In this Circular, the terms below are construed as follows: 1. Investment project capitalized at VND 6 trillion or more means a project capitalized at a level stated in the investment registration certificate or investment policy decision. 2. Rural area means an administrative area outside wards of a town or city or urban district of a city as prescribed in Clause 16, Article 2 of Decree No. 118/2015/ND-CP. 3. Excise tax-liable commodity means a commodity specified in Clause 1, Article 2 of the Law on Excise Tax. Article 4. Guidance on application of enterprise income tax incentives 1. New investment projects satisfying the condition on sectors eligible for enterprise income tax incentives prescribed in Law No. 14/2008/QH12 on Enterprise Income Tax, Law No. 32/2013/QH13 Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax, and Law No. 71/2014/QH13 Amending and Supplementing a Number of Articles of the Laws on Taxes (below referred to as the Law on Enterprise Income Tax), or on the geographical areas eligible for investment incentives specified in Appendix II to Decree No. 118/2015/ND-CP (excluding the geographical areas specified in Section 55 of Appendix II, which shall be implemented under the guidance in Clauses 2, 3 and 4 of this Article), may enjoy the enterprise income tax incentives at levels equivalent to those applicable to the sectors or geographical areas specified in the Law on Enterprise Income Tax. Example 1: New investment project A manufactures composite materials in Hoang Mai district, Hanoi city, and obtains an investment policy decision on January 1, 2016. Under the provisions of the Law on Enterprise Income Tax and Decree No. 118/2015/ND-CP and the guidance in Clause 1 of this Article, project A is not on the list of geographical areas eligible for investment incentives specified in Appendix II to Decree No. 118/2015/ND-CP but is in a sector eligible for enterprise income tax incentives specified at Point b, Clause 1, Article 13 of the Law on Enterprise Income Tax. Accordingly, income of an enterprise generated from project A is subject to the tax rate of 10 percent for 15 years and eligible for tax exemption for no more than 4 years and 50-percent reduction of payable tax amounts for no more than 9 subsequent years. Example 2: New investment project B manufactures fertilizers in Quan Son district, Thanh Hoa province, and obtains an investment policy decision on January 1, 2016. Under the provisions of the Law on Enterprise Income Tax and Decree No. 118/2015/ND-CP and the guidance in Clause 1 of this Article, project B is not in a sector eligible for enterprise income tax incentives but is located in a geographical area with particularly difficult socio-economic conditions specified in Appendix II to Decree No. 118/2015/ND-CP. Accordingly, income of an enterprise generated from project B shall be subject to the tax rate of 10 percent for 15 years and eligible for tax exemption for no more than 4 years and 50-percent reduction of payable tax amounts for no more than 9 subsequent years. 2. New investment projects in economic zones and hi-tech parks (including information technology parks established under the Prime Minister’s decisions) are eligible for the tax incentives at the levels equivalent to those applicable to new investment projects in economic zones and hi-tech parks in accordance with the law on enterprise income tax. 3. New investment projects in industrial parks (excluding industrial parks located in geographical areas with favorable socio-economic conditions specified in Clause 3, Article 16 of the Government’s Decree No. 91/2014/ND-CP of October 1, 2014) other than those specified in Clauses 1 and 2 of this Article are eligible for the tax incentives at the levels equivalent to those applicable to new investment projects in industrial parks in accordance with the law on enterprise income tax. 4. New investment projects in export processing zones must comply with the guidance provided in Clause 3 of this Article. 5. New investment projects that concurrently satisfy multiple conditions for enjoying the enterprise income tax incentives may choose to enjoy the most favorable enterprise income tax incentive. Example 3: New investment project C manufactures software products in Ly Nhan rural district, Ha Nam province, and obtains an investment registration certificate on January 15, 2016. Under the provisions of the Law on Enterprise Income Tax and Decree No. 118/2015/ND-CP and the guidance in Clause 1 of this Article, project C is in a sector eligible for the enterprise income tax incentives specified in Point b, Clause 1, Article 13 of the Law on Enterprise Income Tax, and is concurrently located in a geographical area with difficult socio-economic conditions specified in Appendix II to Decree No. 118/2015/ND-CP. Under the guidance in Clause 5 of this Article, project C concurrently satisfies multiple conditions for enjoying the enterprise income tax incentives and therefore may choose to enjoy the most favorable enterprise income tax incentive. Specifically, it may choose to enjoy the incentives based on the sectors eligible for incentives in accordance with the law on enterprise income tax: Income of an enterprise generated from project C is subject to the tax rate of 10 percent for 15 years and eligible for tax exemption for no more than 4 years and 50-percent reduction of payable tax amounts for no more than 9 subsequent years. 6. Hi-tech enterprises, science and technology enterprises, and science and technology organizations defined by the law on high technologies and law on science and technology as specified at Point dd, Clause 1, Article 16 of Decree No. 118/2015/ND-CP: a/ Hi-tech enterprises may enjoy the enterprise income tax incentives in accordance with the law on enterprise income tax; b/ Science and technology enterprises satisfying the condition of science and technology revenues prescribed by the law on science and technology and obtaining science and technology enterprise certificates may enjoy enterprise income tax exemption and reduction applicable to enterprises investing in hi-tech parks in accordance with the law on enterprise income tax; c/ Science and technology organizations having investment projects may enjoy the enterprise income tax incentives under the guidance in this Article if satisfying the condition on sector or geographical area of each specific project. 7. For new investment projects manufacturing excise tax-liable commodities: a/ New investment projects manufacturing under-24 seat cars, including cars for both passenger and cargo transportation with two or more seating rows and fixed partitions between passenger compartment and cargo hold, may enjoy the enterprise income tax incentives under the guidance in Clause 1 (excluding sectors eligible for enterprise income tax incentives specified in the Law on Enterprise Income Tax), and Clauses 2, 3, 4, 5 and 6 of this Article; b/ New investment projects manufacturing excise tax-liable commodities other than those specified at Point a of this Clause may not enjoy the enterprise income tax incentives under the guidance in this Article. Example 4: New investment project G manufactures cars of 9 seats or less in Chu Lai economic zone, Quang Nam province, and obtains an investment registration certificate on January 20, 2016. Under the guidance at Point a, Clause 7 of this Article, project G is a new investment project in an economic zone as specified at Point a, Clause 1, Article 13 of the Law on Enterprise Income Tax. Accordingly, income of an enterprise generated from project G is subject to the tax rate of 10 percent for 15 years and eligible for tax exemption for no more than 4 years and 50-percent reduction of payable tax amounts for no more than 9 subsequent years. Example 5: New investment project H manufactures cigarettes in Chu Lai economic zone, Quang Nam province, and obtains an investment registration certificate on January 20, 2016. Under the guidance at Point b, Clause 7 of this Article, project H may not enjoy the enterprise income tax incentives. 8. Expanded investment projects satisfying the criteria prescribed in Clause 4, Article 14 of the Law on Enterprise Income Tax may choose to enjoy the tax incentives for the remaining period (if any) of an operating project or to be entitled to tax exemption or reduction for income additionally generated from expanded investment. The period of tax exemption or reduction for income additionally generated from expanded investment specified in this Clause is equal to the tax exemption or reduction period applicable to new investment projects located in the same geographical area or sector eligible for the enterprise income tax incentives in accordance with the law on enterprise income tax. 9. Conditions and procedures for application of the enterprise income tax incentives guided in this Circular must comply with the Ministry of Finance’s Circular No. 78/2014/TT-BTC of June 18, 2014, guiding the implementation of the Government’s Decree No. 218/2013/ND-CP of December 26, 2013, guiding the implementation of the Law on Enterprise Income Tax; the Ministry of Finance’s Circular No. 119/2014/TT-BTC of August 25, 2014, amending and supplementing a number of articles of Circulars No. 156/2013/TT-BTC, No. 111/2013/TT-BTC, No. 219/2013/TT-BTC, No. 08/2013/TT-BTC, No. 85/2011/TT-BTC, No. 39/2014/TT-BTC and No. 78/2014/TT-BTC, on the reform and simplification of tax-related administrative procedures; the Ministry of Finance’s Circular No. 151/2014/TT-BTC of October 10, 2014, guiding the implementation of the Government’s Decree No. 91/2014/ND-CP of October 1, 2014, amending and supplementing a number of articles of the Decrees on taxes; the Ministry of Finance’s Circular No. 96/2015/TT-BTC of June 22, 2015, guiding enterprise income tax prescribed in the Government’s Decree No. 12/2015/ND-CP of February 12, 2015, and amending and supplementing a number of articles of the Ministry of Finance’s Circulars No. 78/2014/TT-BTC, No. 119/2014/TT-BTC and No. 151/2014/TT-BTC; and Circular No. 21/2016/TT-BTC of February 5, 2016, guides value-added tax declaration and enterprise income tax incentives under the Government’s Decree No. 111/2015/ND-CP of November 3, 2015, on development of supporting industries. Article 5. Guidance on import duty incentives 1. Investment projects in sectors or business lines eligible for special investment incentives specified in Section A, Appendix I, or implemented in geographical areas with particularly difficult socio-economic conditions specified in Appendix II, to Decree No. 118/2015/ND-CP, may enjoy import duty incentives as follows: a/ Import duty exemption for goods imported to create fixed assets under Clauses 6 and 8, Article 12 of the Government’s Decree No. 87/2010/ND-CP of August 13, 2010, detailing a number of articles the Law on Export Duty and Import Duty (below referred to as Decree No. 87/2010/ND-CP); b/ Imported materials, supplies and parts which cannot be domestically produced for production of investment projects (except projects on manufacture and assembly of automobiles, motorbikes, air conditioners, electric heaters, refrigerators, washing machines, electric fans, dishwashers, disc players, amplifiers, electric irons, kettles, hair dryers, hand dryers and other commodity items under the Prime Minister’s decisions) are exempt from import duty for 5 (five) years from the date of production commencement under Clause 14, Article 12 of Decree No. 87/2010/ND-CP. 2. Investment projects in sectors or business lines eligible for investment incentives specified in Section B, Appendix I, or implemented in geographical areas with difficult socio-economic conditions specified in Appendix II, to Decree No. 118/2015/ND-CP are exempt from import duty for commodities imported to create fixed assets under Clauses 6 and 8, Article 12 of Decree No. 87/2010/ND-CP. 3. Investment projects eligible for import duty incentives, which invest in hotels, offices, apartments for lease, houses, trade centers, technical service facilities, supermarkets, golf courses, tourist sites, sport facilities, entertainment and leisure centers, medical examination and treatment establishments, training establishments, cultural centers, financial and banking sectors, insurance, audit and consultancy services, may enjoy the initial import duty exemption for equipment imported to create these projects’ fixed assets according to the list provided in Appendix II to Decree No. 87/2010/ND-CP. Projects having imported commodities eligible for initial duty exemption specified in this Clause may not enjoy import duty exemption under the guidance in other Clauses of this Article. 4. For investment projects capitalized at VND 6 trillion or more each and having at least VND 6 trillion in their investment capital disbursed within 3 years after being granted investment registration certificates or obtaining investment policy decisions: a/ They may enjoy the import duty incentives like those located in geographical areas with particularly difficult socio-economic conditions as guided in Clause 1 of this Article; b/ Within 3 years after being granted investment registration certificates or obtaining investment policy decisions, the application of import duty incentives must comply with the guidance at Point a of this Clause based on their owners’ declaration; c/ In case an investment project fails to have at least VND 6 trillion in its investment capital disbursed within 3 years after being granted an investment registration certificate or obtaining an investment policy decision, it may not enjoy import duty incentives under the guidance at Point a of this Clause. Example 6: Investment project I is granted an investment registration certificate on January 1, 2016, and capitalized at VND 6.5 trillion as stated in its investment registration certificate. If the project has at least VND 6 trillion in its investment capital disbursed within 3 years after being granted the investment registration certificate, it may be exempt from import duty under Clause 1 of this Article. From January 1, 2016, through December 31, 2018, if a project owner imports commodities to create the project’s fixed assets, or imports materials, supplies and parts which cannot be domestically produced for production of the project (in case the project has been put into operation (if any)), and at the time of importation, such commodities are exempt from import duty under Clauses 6 and 14, Article 12 of Decree No. 87/2010/ND-CP, then after December 31, 2018: (i) In case the project has disbursed at least VND 6 trillion in its investment capital, it may continue being exempt from import duty for commodities imported to create fixed assets (if any), and import duty for materials, supplies and parts which cannot be domestically produced for 5 years from the date of production commencement under Clauses 6, 8 and 14, Article 12 of Decree No. 87/2010/ND-CP. (ii) In case the project fails to have VND 6 trillion in its investment capital disbursed, its owner may not continue to enjoy the incentive of import duty exemption. 5. For investment projects implemented in rural areas employing at least 500 workers each (exclusive of part-time workers and workers under labor contracts of under 12 months): a/ They may enjoy the import duty incentive like those in geographical areas with difficult socio-economic conditions under the guidance in Clause 2 of this Article; b/ For investment projects employing at least 500 workers in both rural and non-rural geographical areas, the number of workers in construction works and items in rural areas (except workers in construction works and items in non-rural areas)

Circular 83/2016/TT-BTC