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Vietnam Issues Decree Enacting Changes for Corporate Income Tax, VAT, and R&D and Investment Incentives

On 1 October 2014, Vietnam's Government issued Decree 91/2014/ND-CP, which enacts and provides guidance for previously approved changes in regard to corporate income tax, value added tax, the research and development an new technology tax exemptions, and investment incentives.

Corporate Income Tax

  • The requirement for the filing of a quarterly declarations is abolished, although quarterly payments of estimated tax is still required within 30 days of the end of each quarter based on current financial statements or the previous year's tax liability
  • If the final tax liability for the year exceeds the quarterly payments made by more than 20%, an interest penalty will apply on the difference calculated from the due date of the final quarterly payment until the outstanding amount is paid
  • Certain welfare expenses paid directly to employees such as allowances for public holiday travel, health care treatment additional training, etc. are deductible up to a cap equal to the average monthly salary for the tax year

Value Added Tax

  • Assets used as a guarantee for a loan are not subject to VAT when sold on the authorization of the lender to repay the guaranteed loan
  • The threshold for filing quarterly VAT declarations is increased from annual revenue in the previous year of VND 20 billion to VND 50 billion

Research and Development

  • The 1 year tax exemption on income from scientific research and technology development is increased to 3 years
  • The 1 year tax exemption on income from the sale of products manufactured by new technologies newly applied in Vietnam is increased to 5 years

Investment Incentives

  • For investment projects with multiple stages, each stage will now be entitled to tax incentives as provided for in the first stage (reduced rates of 10% or 20% depending on business type and location) - this applies for projects licensed from 2014, and for the remaining tax incentive period from 1 January 2014 for projects licensed before 2014
  • Companies enjoying investment incentives that made additional investment in machinery and equipment from 2009 to 2013 are able to enjoy the tax incentive on the additional income from that additional investment
  • The number of industrial zones in which tax incentives can apply is expanded to those located in all central cities and class 1 townships upgraded from sub-urban districts from 1 January 2009

Effective Date

The changes are effective 15 October 2014.

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