Circular No. 03/2021/TT-BTC guides on tax exemption and reduction of corporate income tax for science and technology enterprises as stipulated in Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government on science and technology enterprises.

CIRCULAR
Guidelines on exemption from and reduction of corporate income tax for science and technology enterprises as stipulated in

Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government on science and technology enterprises

Pursuant to the Law on Corporate Income Tax No. 14/2008/QH12 dated June 3, 2008; the Law Amending and Supplementing Certain Provisions of the Law on Corporate Income Tax No. 32/2013/QH13 dated June 19, 2013; the Law Amending and Supplementing Certain Provisions of Laws on Taxation No. 71/2014/QH13 dated November 26, 2014;

Pursuant to the Law on Tax Administration No. 38/2019/QH14 dated June 13, 2019;

Pursuant to Decree No. 218/2013/NĐ-CP dated December 26, 2013 of the Government detailing certain provisions of the Law on Corporate Income Tax and the Law Amending and Supplementing Certain Provisions of the Law on Corporate Income Tax; Decree No. 91/2014/NĐ-CP dated October 1, 2014 of the Government amending and supplementing certain provisions of decrees on taxation; Decree No. 12/2015/NĐ-CP dated February 12, 2015 of the Government detailing the Law Amending and Supplementing Certain Provisions of Laws on Taxation;

Implementing the guidance of the Prime Minister in Official Document No. 4377/VPCP-KTTH dated June 2, 2020 of the Government Office on corporate income tax policy for science and technology enterprises:

At the proposal of the Director General of the State Revenue Service:

Pursuant to Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government on science and technology enterprises;

Pursuant to Decree No. 87/2017/NĐ-CP dated July 26, 2017, issued by the Government, stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

The Minister of Finance issues this Circular guiding on exemption from and reduction of corporate income tax for science and technology enterprises as stipulated in Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government on science and technology enterprises.

Article 1. Scope of application: This Circular guides on preferential exemptions from and reductions in corporate income tax for science and technology enterprises as stipulated in Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government on science and technology enterprises.

Article 2. Applicability: Science and technology enterprises as defined under the Law on Science and Technology and Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government on science and technology enterprises and related agencies, organizations, and individuals.

Article 1. Scope of Regulation and Applicability

In cases where a science and technology enterprise has a branch that operates independently and meets the conditions stipulated in Article 2 of this Circular, the income from products formed from scientific and technological results of such branch shall also be entitled to preferential corporate income tax as provided for in Clause 1, Article 12 of Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government.

Article 3. Conditions for applicability

Science and technology enterprises entitled to preferential exemptions from and reductions in corporate income tax as stipulated in Clause 1, Article 12 of Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government must meet the following conditions:

1. They must be granted a Certificate of Science and Technology Enterprise by the competent state management agency.

2. Annual revenue from production and business activities of products formed from scientific and technological results must account for at least 30% of the enterprise's total annual revenue.

a) Annual revenue from production and business activities of products formed from scientific and technological results refers to the total revenue from all products formed from scientific and technological results as stipulated in Clause 1, Article 2 of Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government.

b) Total annual revenue of the enterprise includes all revenue from production and business activities, services, financial operations, and other income of the enterprise (total revenue includes revenue from production and business activities of products formed from scientific and technological results in that year).

3. Revenue generated from services applying scientific and technological results in the field of information technology must be new services, excluding existing services on the market.

Criteria and basis for determining new services applying scientific and technological results in the field of information technology shall be implemented according to regulations of the Ministry of Science and Technology.

4. Science and technology enterprises must separately account for income from production and business activities of products formed from scientific and technological results during the period to enjoy preferential corporate income tax. If the enterprise cannot separately account for such income, it shall be allocated according to the provisions of Clause 2, Article 18 of the Law on Corporate Income Tax No. 14/2008/QH12.

To enjoy preferential corporate income tax, science and technology enterprises must comply with accounting, invoices, and documents as prescribed by law and declare taxes accordingly.

4. A science and technology enterprise must separately account for income from production and business activities of products formed from scientific and technological results during the period to be eligible for corporate income tax incentives. In cases where separate accounting is not possible, income from production and business activities of products formed from scientific and technological results that are eligible for corporate income tax incentives shall be allocated in accordance with the provisions of Clause 2, Article 18 of the Law on Corporate Income Tax No. 14/2008/QH12.

To be eligible for corporate income tax incentives, a science and technology enterprise must comply with accounting systems, invoices, and documents as prescribed by law and pay taxes based on declarations.

Article 3. Tax Exemption and Reduction Benefits for Corporate Income Tax

1. Level and Duration of Tax Exemption and Reduction Benefits for Corporate Income Tax

a) Science and Technology Enterprises shall enjoy tax exemption and reduction benefits for corporate income tax in accordance with Clause 1, Article 12 of Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government, specifically: being exempted from tax for four years and having their corporate income tax reduced by 50% for the next nine years.

b) The period of tax exemption and reduction for science and technology enterprises shall be calculated continuously from the date of issuance of the Science and Technology Enterprise Certificate. In cases where there is no taxable income in the first three years, starting from the first year of issuance of the Science and Technology Enterprise Certificate, the first year of the tax exemption and reduction period shall be counted from the fourth year.

c) During the period of enjoying tax exemption and reduction benefits for corporate income tax, if a science and technology enterprise fails to meet the revenue condition of products formed from scientific and technological results accounting for at least 30% of the enterprise's total annual revenue in any given year, that year will not qualify for the benefit and the time for which the enterprise enjoys the tax exemption and reduction benefit will be deducted accordingly.

d) In cases where a science and technology enterprise has taxable income but the operational period of the first year under tax exemption and reduction is less than twelve months, the enterprise may choose to enjoy tax exemption and reduction immediately in the first year or register with the tax authority to start the tax exemption and reduction period in the following year. If the enterprise registers to start the tax exemption and reduction period in the following year, it must pay the corporate income tax due for the first year with taxable income into the State Budget according to regulations.

2. Certain Application Cases

a) In cases where a science and technology enterprise has already been or is currently enjoying corporate income tax benefits based on other favorable conditions (other than those for science and technology enterprises) and subsequently obtains a Science and Technology Enterprise Certificate, the duration of tax exemption and reduction for corporate income tax based on the science and technology enterprise condition shall be determined by subtracting the period of tax exemption and reduction already enjoyed under other favorable conditions from the period applicable to science and technology enterprises.

b) In cases where a science and technology enterprise is currently operating and enjoying corporate income tax benefits based on the science and technology enterprise condition, and the competent authority supplements products formed from scientific and technological results into the Science and Technology Enterprise Certificate, the income from the production and business activities of these supplementary products shall enjoy tax exemption and reduction benefits concurrently with the ongoing tax exemption and reduction benefits for the remaining period.

Article 4. Procedures for Implementing Corporate Income Tax Incentives

1. The procedures for implementing corporate income tax incentives shall be carried out in accordance with the laws on corporate income tax and tax administration.

2. Science and technology enterprises shall determine the amount of corporate income tax eligible for incentives and declare it on the Corporate Income Tax Incentive Declaration Form for Science and Technology Enterprises attached to this Circular. The Corporate Income Tax Incentive Declaration Form shall be submitted together with the annual corporate income tax settlement declaration form.

Article 5. Effective Date

1. This Circular takes effect from March 1, 2021.

2. Science and technology enterprises that have been granted a Science and Technology Enterprise Certificate and generate revenue from activities producing products derived from scientific and technological results since the effective date of Decree No. 13/2019/NĐ-CP dated February 1, 2019 (March 20, 2019) shall enjoy corporate income tax exemption and reduction benefits for science and technology enterprises as stipulated in Article 12 of Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government and guided by Articles 1, 2, 3, and 4 of this Circular.

3. Transitional Provisions

a) In cases where enterprises have been granted a Science and Technology Enterprise Certificate before the effective date of Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government and are currently enjoying corporate income tax incentives under previous legal regulations, they shall continue to enjoy tax exemption and reduction benefits for the remaining period but shall not continue to enjoy preferential corporate income tax rates from the effective date of this Circular.

b) In cases where enterprises have been granted a Science and Technology Enterprise Certificate before the effective date of Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government but have not yet enjoyed corporate income tax incentives for science and technology enterprises under previous legal regulations, if they meet the conditions for corporate income tax incentives for science and technology enterprises as stipulated in Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government, they shall enjoy tax exemption and reduction benefits according to Decree No. 13/2019/NĐ-CP dated February 1, 2019 of the Government for the remaining period.

4. This Circular abolishes the following provisions:

a) Abolishing Point 1, Section III of Joint Circular No. 06/2008/TTLT-BKHCN-BTC-BNV dated June 18, 2008 of the Ministry of Science and Technology, Ministry of Finance, and Ministry of Home Affairs guiding the implementation of Decree No. 80/2007/NĐ-CP dated May 19, 2007 of the Government on science and technology enterprises.

b) Abolishing Clause 8, Clause 9 of Article 1 of Joint Circular No. 17/2012/TTLT-BKHCN-BTC-BNV dated September 10, 2012 of the Ministry of Science and Technology, Ministry of Finance, and Ministry of Home Affairs amending and supplementing Joint Circular No. 06/2008/TTLT-BKHCN-BTC-BNV dated June 18, 2008 of the Ministry of Science and Technology, Ministry of Finance, and Ministry of Home Affairs guiding the implementation of Decree No. 80/2007/NĐ-CP dated May 19, 2007 of the Government on science and technology enterprises.

5. In case the legal regulations cited in this Circular are amended, supplemented, or replaced by new legal regulations, the new regulations shall apply.

6. During the implementation process, if there are any difficulties, organizations and individuals are requested to promptly report them to the Ministry of Finance for research and resolution./.