How Does Decree 11/2024/ND-CP Provide CIT and PIT Exemptions in Ho Chi Minh City?

On 02/02/2024, the Government issued Decree 11/2024/ND-CP providing details for several articles of Resolution 98/2023/QH15 on piloting special mechanisms and policies for the development of Ho Chi Minh City, including corporate income tax and personal income tax exemptions for income from transferring capital contributions and capital contribution rights into innovative startups in Ho Chi Minh City.

1. Scope of regulation and subjects of application of Decree 11/2024/ND-CP

Decree 11/2024/ND-CP provides details for several articles of Resolution 98/2023/QH15 of the National Assembly on piloting special mechanisms and policies for the development of Ho Chi Minh City (hereinafter referred to as Resolution 98/2023/QH15), comprising:

• Post-construction loan interest, reasonable profits, payment methods and settlement of BT-contract investment projects (hereinafter referred to as BT projects) in Ho Chi Minh City under point d, Clause 5, Article 4 of Resolution 98/2023/QH15;
• Corporate income tax and personal income tax exemptions under points a and b, Clause 1, Article 8 of Resolution 98/2023/QH15.

Decree 11/2024/ND-CP does not regulate the following contents:

• Loan interest during the construction period of BT projects implemented under construction law;
• The ratio of investor equity mobilized to implement BT projects under Article 77 of the Law on Investment 2020 under the public-private partnership model.

Decree 11/2024/ND-CP applies to the following subjects:

• Parties to BT contracts, agencies, organizations and individuals involved in BT project investment activities in Ho Chi Minh City;
• Enterprises, agencies, organizations and individuals involved in innovative startup and creative startup activities in Ho Chi Minh City.

2. Are organizations with income from transferring capital contributions and capital contribution rights into innovative startups exempt from corporate income tax?

Pursuant to Clause 2, Article 13 of Decree 11/2024/ND-CP as follows:

Corporate income tax exemption

2. During the effective period of Resolution No. 98/2023/QH15, organizations with income from transferring capital contributions and capital contribution rights into innovative startups in Ho Chi Minh City shall be exempt from corporate income tax on such income.

Innovative startups in Ho Chi Minh City prescribed in this Clause must satisfy the regulations of the Ho Chi Minh City People’s Council on priority fields; criteria, conditions and contents of innovative startup activities.

Income from capital and capital contribution right transfers prescribed in this Clause is income derived from transferring part or all of the capital and capital contribution rights into innovative startups in Ho Chi Minh City (including the sale of enterprises), excluding income from transferring shares, bonds, fund certificates and other securities as prescribed.

Accordingly, during the effective period of Resolution 98/2023/QH15, organizations with income from transferring capital contributions and capital contribution rights into innovative startups in Ho Chi Minh City shall be exempt from corporate income tax on such income.

3. Are individuals with income from transferring capital contributions into innovative startups exempt from personal income tax?

Pursuant to Article 14 of Decree 11/2024/ND-CP as follows:

Personal income tax exemption

1. During the effective period of Resolution No. 98/2023/QH15, individuals with income from transferring capital contributions and capital contribution rights into innovative startups in Ho Chi Minh City shall be exempt from personal income tax on such income.

Innovative startups in Ho Chi Minh City prescribed in this Clause must satisfy the regulations of the Ho Chi Minh City People’s Council on priority fields; criteria, conditions and contents of innovative startup activities.

Income from capital and capital contribution right transfers prescribed in this Clause is income derived from transferring part or all of the capital and capital contribution rights into innovative startups in Ho Chi Minh City (including the sale of enterprises), excluding income from transferring shares, bonds, fund certificates and other securities as prescribed.

Note: Where an individual owner sells the entire enterprise in the form of capital transfer attached to real estate, personal income tax shall be declared and paid as real estate transfer activity.

2. The determination of income from capital and capital contribution right transfers and declarations to tax authorities shall be implemented under personal income tax law and tax administration law.

Accordingly, during the effective period of Resolution 98/2023/QH15, individuals with income from transferring capital contributions and capital contribution rights into innovative startups in Ho Chi Minh City shall be exempt from personal income tax on such income.

Notes on applying current legal regulations

This article belongs to the Enterprise & M&A Knowledge group and is presented for reference purposes, helping readers understand the legal issue at an overview level before preparing dossiers or conducting transactions. Legal regulations may vary depending on time, locality, dossier type and specific circumstances. Where it is necessary to determine the exact legal basis applicable to your dossier, please contact an ANT Legal lawyer at 0966.475.966 for review and advice before proceeding.

Common risks to note

• Applying a legal document that has been amended, supplemented or replaced.
• Misunderstanding the conditions and scope of application of the tax exemption policy (innovative startups must satisfy the criteria of the City People’s Council).
• Confusing tax-exempt capital contribution transfers with securities transfers (which are not exempt).
• Declaring, submitting dossiers or conducting transactions without fully assessing legal risks.

How can ANT Legal help?

ANT Legal helps review specific situations, check dossiers, identify applicable legal bases, advise on handling options, and represent clients in dealings with individuals, organizations or competent authorities when necessary. For quick advice, please contact our lawyers at 0966.475.966.

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