Corporate income tax incentives for businesses investing in new projects in industrial clusters

Do businesses investing in new projects in industrial clusters enjoy corporate income tax incentives? What size area must an industrial cluster have? 

1. Will an enterprise investing in a new project in an industrial cluster enjoy corporate income tax incentives?

Can an enterprise investing in a new project in an industrial cluster enjoy corporate income tax incentives? According to Appendix III Decree 31/2021/ND-CP guidance on the Investment Law, industrial clusters are entitled to tax incentives according to areas with difficult socio-economic conditions. difficulties

And according to Clause 3, Article 20 of Circular 78/2014/TT-BTC, amended by Article 6 of Circular 151/2014/TT-BTC as follows:

Incentives on tax exemption and tax reduction periods

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3. Tax exemption for 2 years and 50% reduction of tax payable in the next 4 years for income from implementing new investment projects specified in Clause 4, Article 19 of Circular No. 78/2014/TT-BTC dated June 18, 2014 of the Ministry of Finance and income of enterprises from implementing new investment projects in Industrial Parks (except for Industrial Parks located in areas with favorable socio-economic conditions). favorable).

Areas with favorable socio-economic conditions specified in this Clause are inner-city districts of special-type urban areas, type I urban areas directly under the central government and type I urban areas directly under the province, excluding districts of special type urban areas, type I urban areas directly under the central government and type I urban areas directly under the province that have been newly established from the district since January 1, 2009; In case an industrial park is located in both favorable and unfavorable areas, the determination of tax incentives for industrial parks is based on the actual location of the investment project on the ground.

The determination of special type and type I urban areas specified in this Clause is carried out in accordance with the provisions of Decree 42/2009/ND-CP dated May 7, 2009 of the Government stipulating the classification of urban areas and Amending document of this Decree (if any)

Corresponding to Clause 4, Article 19 of Circular 78/2014/TT-BTC stipulates as follows:

Preferential tax rates

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4. The preferential tax rate of 20% for a period of ten years (10 years) applies to:

a) Income of enterprises from implementing new investment projects in areas with difficult socio-economic conditions specified in the Appendix issued with Decree No. 218/2013/ND-CP of the Government.

b) Income of enterprises from implementing projects New investment: high-grade steel production; production of energy saving products; manufacturing machinery and equipment for agricultural, forestry, fishery and salt production; production of irrigation equipment; producing and refining animal, poultry and aquatic feed; developing traditional industries (including building and developing traditional industries of producing handicrafts, processing agricultural and food products, and cultural products).

Enterprises implementing new investment projects in fields and areas with tax incentives specified in this Clause from January 1, 2016 will apply a tax rate of 17%.

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Accordingly, Enterprises will be exempted from tax for 2 years and reduced by 50% of the tax payable in the next 4 years for income from implementing new investment projects.

2. What size area must an industrial cluster have?

According to Clause 1, Article 2 of Decree 68/2017/ND-CP, it is stipulated:

An industrial cluster is a place of production and provision of services for industrial production and handicrafts, has a defined geographical boundary, has no living population, and is invested and built to attract, Relocating small and medium-sized enterprises, cooperatives, and cooperative groups to invest in production and business.

Industrial clusters with an area of not more than 75 hectares and not less than 10 hectares. Particularly for industrial clusters in mountainous districts and craft village industrial clusters with an area of ​​not more than 75 hectares and not less than 5 hectares.

3. Which industries are encouraged to invest in industrial clusters?

Professions that are encouraged to invest and relocate to industrial clusters as stipulated in Article 3 of Decree 68/2017/ND-CP include:

– Production and business establishments that pollute or have the risk of polluting in craft villages, residential areas, urban areas and production establishments Other production needs to be relocated to industrial clusters;

– Manufacturing products, spare parts, assembling and repairing machinery and equipment for agricultural and rural production;

– Producing supporting industrial products on the List of supporting industrial products prioritized for development issued by the Government;

– Producing consumer products, using local raw materials and local labor;

– Potentially strong industries, occupations, and products of the locality, region, and other fields, industries, and occupations consistent with the development planning Development of local industries and handicrafts;

– Agricultural, forestry and fishery processing industry.

Organizations and individuals investing in production and business in industrial clusters in the fields, industries, occupations, production and business establishments that are encouraged to invest and relocate to the above-mentioned industrial clusters will be given priority consideration for investment incentives and support.