Decision No. 128/2000/QD-TTg On Certain Policies and Measures to Encourage Investment and Development of the Software Industry

 Pursuant to …;

On certain policies and measures to encourage investment

and develop the software industry

________________

PRIME MINISTER

Pursuant to the Government Organization Law dated September 30, 1992;

Pursuant to Resolution No. 07/2000/NQ-CP dated June 05, 2000 of the Government on building and developing the software industry for the period 2000-2005;

At the proposal of the Minister of Science, Technology, and Environment,

DECISION:

Article 1. Scope of regulation and applicable subjects

1. This Decision stipulates certain policies and measures to encourage domestic organizations and individuals of all economic sectors, overseas Vietnamese, and foreign organizations and individuals to invest in producing and providing software services in Vietnam (hereinafter referred to as software enterprises).

2. The incentives and benefits prescribed in this Decision shall apply to software enterprises. In cases where an enterprise engages in various types of activities, it shall only enjoy the benefits prescribed in this Decision for activities related to the production of software products and provision of software services.

Article 2. Terms used in the Decision

In this Decision, the following terms are understood as follows:

1. Software is understood as programs, program description documents, supporting documents, and digitalized information content.

a) Programs are a set of commands described in any language, code, or symbol system and expressed or stored on carriers of information (with or without related information), which are used directly or indirectly after undergoing one or both of the following steps:

- Conversion into another language, code, or symbol system;

- Reproduction onto another carrier of information; making a device capable of processing information perform a specific function.

b) Program description documents and supporting documents are documents expressed in any form containing descriptions of programs, introductions, instructions on installation, use, upgrading, troubleshooting, or other guidance related to the use and exploitation of programs.

c) Digitalized information content includes:

- Databases are collections of data arranged and stored in electronic digital form;

- Collections of digitized works are collections of works stored in electronic digital form.

2. Software products are software produced and expressed or stored in any physical form that can be purchased or transferred to another entity for use.

Types of software products include:

a) Embedded software is software pre-installed by the equipment manufacturer into devices and used immediately with the equipment without requiring user or third-party installation.

b) Packaged software is software that can be used immediately after installation by the user or service provider onto devices or systems. These software products are often provided through floppy disks, CDs, or any other information carriers or via computer networks. Packaged software is typically divided into two categories: system software and application software (for example: operating systems, development tools, programming languages, word processors, spreadsheets, antivirus software, accounting software, educational software, financial management software, material management software, scientific and technical calculation software, graphics software, etc.).

c) Customized software is software developed according to specific and unique customer requirements. Customized software may be developed from scratch or designed based on existing market-available software.

d) Digitized information products are digitalized information content stored on some physical medium.

3. Software services refer to all direct activities serving the production of software products, exploitation, research, use, training, dissemination, and similar activities related to software.

Software services include the following services: software consulting; integration and system supply; professional software services; software outsourcing; data processing services; training and education services; and organizing labor export services in the software sector.

a) Software consulting services include advising, providing information, guiding, exchanging knowledge about software, researching needs, solutions, and experiences in designing, installing, upgrading computer network systems.

b) Integration and system supply services include advising, connecting hardware, network devices, and specialized software into a complete system, along with accompanying training and education.

c) Professional software services include developing customized software for customers, technical support, training, management, installation, upgrading, maintenance, warranty, and maintenance of information technology systems.

d) Data processing services involve entering and processing digitized data for clients.

đ) Software training and education services involve training and educating on expertise related to the software industry.

Article 3. Corporate income tax rate

1. Vietnamese software enterprises and foreign software enterprises operating in Vietnam that are not subject to the Law on Foreign Investment in Vietnam shall enjoy corporate income tax rates as follows:

a) A tax rate of 25%.

b) A tax rate of 20% for enterprises investing in areas with difficult socio-economic conditions.

c) A tax rate of 15% for enterprises investing in areas with particularly difficult socio-economic conditions.

The investment areas mentioned in points b and c of this clause are defined in Appendix B and C issued together with Decree No. 51/1999/NĐ-CP dated July 8, 1999, of the Government detailing the implementation of the Law on Encouraging Domestic Investment (amended).

2. Software enterprises subject to the Law on Foreign Investment in Vietnam shall enjoy a corporate income tax rate of 10%.

3. Overseas Vietnamese investing in Vietnam in the software industry under the Law on Foreign Investment, and foreign investors in the software industry, shall enjoy a tax rate for repatriation of profits abroad on income from software production and service activities as prescribed in Article 50 of Decree No. 24/2000/NĐ-CP dated July 31, 2000, of the Government detailing the implementation of the Law on Foreign Investment in Vietnam.

Article 4. Exemption from corporate income tax

Software enterprises are exempt from corporate income tax for a period of four years, starting from when they generate taxable income, and shall not be required to pay additional corporate income tax on income derived from software production and service activities.

The Minister of Finance shall provide detailed guidance on the implementation of the exemption from corporate income tax as stipulated herein.

Article 5. Income Tax for High-Income Individuals

Professional workers are Vietnamese individuals directly participating in software production and service activities, who shall be subject to the same tax threshold and progressive rates as those applicable to foreign nationals.

Article 6. Value-added Tax

Software products and services shall enjoy the highest preferential treatment regarding value-added tax.

The Minister of Finance shall provide detailed guidance on the implementation of value-added tax as stipulated herein.

Article 7. Export taxes, import taxes

1. Exemption from import duties applies to raw materials directly serving software product manufacturing that are not yet produced domestically. The Ministry of Science, Technology, and Environment shall issue a list of raw materials for software production that are already domestically produced, serving as the basis for determining import duty preferences. Such a list shall be reviewed annually.

2. Exemption from export duties applies to software products.

Article 8. Credit incentives

Vietnamese enterprises engaged in software production and service activities shall benefit from investment support forms from the State Development Fund according to Decree No. 43/1999/NĐ-CP dated June 29, 1999, of the Government on state investment credit development.

Article 9. Land use and land rental incentives

1. Vietnamese software enterprises are exempted or reduced from land use fees; land rental fees; and land use taxes according to Decree No. 51/1999/NĐ-CP dated July 8, 1999, of the Government.

2. Software enterprises falling within the scope regulated by the Law on Foreign Investment in Vietnam shall enjoy benefits under current regulations concerning land rental fees.

Article 10. Copyright protection for software

The Ministry of Culture and Information shall take the lead and coordinate with relevant ministries and sectors to review existing legal documents to promulgate, within their authority, or submit to competent authorities for issuance of legal documents related to copyright protection for software products; enhance the capacity and effectiveness of agencies managing and enforcing software copyrights.

Article 11. Training and human resource development

1. Organizations and individuals from all economic sectors may establish training institutions for information technology. These institutions shall enjoy the same incentives for information technology training activities as software enterprises.

2. The Ministry of Education and Training shall take the lead and coordinate with the Ministry of Science, Technology, and Environment, the General Post Office, and relevant ministries and sectors to present to the Government plans for implementing human resource training to meet the requirements of building and developing the software industry and internet projects serving education and training.

3. The General Post Office shall take the lead and coordinate with the Ministry of Finance, the Ministry of Education and Training, and relevant ministries and sectors to issue policies enabling lecturers, teachers, students, and pupils at educational institutions in the national education system to enjoy exemptions and reductions in internet access fees at training facilities.

Article 12. Creating favorable telecommunications infrastructure

The General Post Office shall take the lead and coordinate with relevant ministries and sectors to issue policies and specific regulations to ensure promotion of competitive environments, creating conditions for software enterprises to participate in telecommunications and internet service activities; providing sufficient and convenient telecommunications and internet services to users at high speed and quality, with lower or equivalent tariffs compared to other countries in the region; allowing software industrial parks to connect to dedicated internet gateways with the international internet system, enabling all software enterprises within these parks and those registering internet services through these parks to fully and easily use internet services at competitive tariffs with other countries in the region.

Article 13. Publishing and inspecting software imports and exports

The Ministry of Culture and Information shall take the lead and coordinate with relevant ministries and sectors to guide and improve procedures to facilitate the rapid publication, import, and export of software, especially program documentation and supporting materials, without causing inconvenience, delays, or damage to organizations and individuals with rights and interests; while also taking comprehensive and synchronized measures to prevent actions exploiting such activities that could affect national security and the preservation of national cultural identity.

Article 14. Effectiveness

This Decision takes effect fifteen days after the date of signature.

The Ministers, Heads of ministerial-level agencies, Heads of government agencies, and Chairpersons of provincial People's Committees and municipal People's Committees directly under the Central Government are responsible for enforcing this Decision./.