Software Production Enterprises and CIT Incentives

Short answer: There is no general mandatory procedure called “applying for software production confirmation.” An enterprise self-determines whether its activities constitute software production as prescribed, in order to apply corporate income tax incentives. Note on the managing authority: the Ministry of Information and Communications has been merged into the Ministry of Science and Technology — all documents and procedures previously under the Ministry of Information and Communications are now handled by the Ministry of Science and Technology (or authorised agencies).

Legal basis

• Information technology legislation — determining software production activities;
• Corporate income tax legislation — tax incentives for software production;
• Current state organisational structure: the Ministry of Information and Communications has merged into the Ministry of Science and Technology.

What is software production?

• Activities of designing, building and developing software products (excluding mere outsourcing under existing specifications in some cases);
• The enterprise self-checks against the prescribed software production process to determine;
• Correct determination is the basis for enjoying CIT incentives (preferential tax rates, time-limited exemption/reduction).

When is a document from the managing authority needed?

• When the tax authority requests clarification during tax incentive inspections or audits;
• When participating in state programmes or projects on the software industry;
• In such cases, the enterprise contacts the Ministry of Science and Technology or the local Department of Science and Technology — no longer the Ministry of Information and Communications or the former “Department of Information Technology.”

What should a software production enterprise do?

1. Review actual operations against the prescribed software production process;
2. Keep supporting documents: contracts, development processes, personnel, products;
3. Apply tax incentives only when conditions are met; declare transparently;
4. When confirmation is needed: file with the current state management authority for science and technology.

If you need to determine the appropriate approach for your specific situation, you should discuss it with a lawyer beforehand to have your file reviewed and a suitable solution advised.

For quick advice, you may contact a lawyer via 0966.475.966.

Related articles

• CIT incentives for newly established enterprises
• Conditions for CIT incentives
• What incentives do high-tech enterprises enjoy?