Do businesses enjoying investment incentives receive corporate income tax incentives for financial profits?

Do businesses enjoying investment incentives receive corporate income tax incentives for financial interests?

1. Which areas are investment incentives applied to?

Pursuant to Clause 2, Article 16 of the Law on Investment 2020, regulations on investment incentive areas are as follows:

“Article 16. Investment incentive industries and areas and investment incentive areas

…

2. Investment incentive areas include:

a) Areas with difficult socio-economic conditions, areas with particularly difficult socio-economic conditions;

b) Industrial parks, export processing zones, high-tech zones, economic zones.

3. Based on industries, occupations, and investment incentive areas specified in Clauses 1 and 2 of this Article, the Government promulgates and amends Change and supplement the List of industries and occupations with investment incentives and the List of areas with investment incentives; identify industries and occupations with special investment incentives in the List of industries and occupations with investment incentives.”

2. What incentives will enterprises enjoying investment incentive areas receive?

Pursuant to the provisions of Clause 1, Article 15 of the Law on Investment 2020, enterprises enjoying investment incentives will enjoy the following incentives:

“Article 15. Forms and subjects of application of investment incentives

1. Forms of investment incentives include:

a) Corporate income tax incentives, including applying a corporate income tax rate lower than the normal tax rate for a term or the entire duration of investment project implementation; tax exemption, tax reduction and other incentives according to the law on corporate income tax;

b) Import tax exemption for goods imported to create fixed assets regulations; raw materials, supplies, and components imported for production according to the provisions of law on export tax and import tax;

c) Exemption or reduction of land use fees, land rent, land use tax;

d) Accelerated depreciation, increase in deductible expenses when calculating taxable income.”

3. Can enterprises enjoying investment incentives receive corporate income tax incentives for financial interests?

Pursuant to Clause 2, Article 10 of Circular 96/2015/TT-BTC, regulates the conditions for applying corporate income tax incentives as follows:

“Article 10. Amending and supplementing a number of contents in Article 18 of the Circular No. 78/2014/TT-BTC (amended and supplemented in Article 5 of Circular No. 151/2014/TT-BTC) as follows:

1. Amending and supplementing Clause 3, Article 18 of Circular No. 78/2014/TT-BTC as follows:

“3. Corporate income tax incentives and the 20% tax rate are not applied (including enterprises subject to the 20% tax rate as prescribed in Clause 2, Article 11 of Circular No. 78/2014/TT-BTC) for the following income:

a) Income from capital transfer, transfer of capital contribution rights; income from real estate transfer (except income from investment and business in social housing specified at Point d, Clause 3, Article 19 of Circular No. 78/2014/TT-BTC); income from transfer of investment projects, transfer of rights to participate in investment projects, transfer of rights to explore and exploit minerals; Income received from production and business activities outside Vietnam.

b) Income from search, exploration, and exploitation of oil, gas, other rare and precious resources and income from mineral exploitation activities.

c) Income from service business is subject to special consumption tax according to the provisions of the Law on Special Consumption Tax.”.

2. Amend and supplement Clause 4, Article 18 of Circular No. 78/2014/TT-BTC as follows:

“4. Enterprises with investment projects are entitled to corporate income tax incentives because they meet the conditions on investment incentive fields and investment incentive areas, the incentives are determined as follows:

a) Enterprises with investment projects that are entitled to corporate income tax incentives due to meeting the conditions for investment incentive fields, income from the investment incentive field and income such as liquidation of scrap and waste products of products in the investment incentive field, exchange rate differences directly related to the revenue and costs of the preferential field, interest on demand bank deposits, and directly related income Others are also entitled to corporate income tax incentives.

b) Enterprises with investment projects that are eligible for corporate income tax incentives because they meet preferential conditions for the area (including industrial parks, economic zones, high-tech zones), then the income eligible for corporate income tax incentives is all income arising from production and business activities in the preferential area, except for the income stated in Points a, b, c, Clause 1 of Article

– Enterprises with investment projects in the field of transportation business are entitled to corporate income tax incentives because they meet preferential conditions for the area (including industrial parks, economic zones, high-tech zones), then the enterprise is entitled to corporate income tax incentives for income from transportation service activities based on the area where the investment project is established in the area that enjoys tax incentives and has a departure or destination point in the city. establishment of investment projects.”

Accordingly, if financial profits are directly related to the revenue and expenses of the enterprise’s incentive fields, the enterprise will enjoy corporate income tax incentives for financial interests.