Circular No. 146/1999/TT-BTC guides the implementation of tax exemptions and reductions as prescribed in Decree No. 51/1999/NĐ-CP dated July 8, 1999, detailing the enforcement of the Law on Encouraging Domestic Investment (amended) No. 03/1998/QH10.

CIRCULAR

Guidelines for implementing tax exemptions and reductions as prescribed in Decree No. 51/1999/NĐ-CP dated July 8, 1999 of the Government detailing the implementation of the Law on Encouraging Domestic Investment (amended) No. 03/1998/QH10

Based on current tax laws and tax ordinances;

Based on Decree No. 51/1999/NĐ-CP dated July 8, 1999 of the Government detailing the implementation of the Law on Encouraging Domestic Investment (amended) No. 03/1998/QH10, the Ministry of Finance provides guidelines for implementing tax exemptions and reductions as prescribed in this Decree as follows:

This Circular applies to the subjects specified in Article 2 of Decree No. 51/1999/NĐ-CP dated July 8, 1999 of the Government detailing the implementation of the Law on Encouraging Domestic Investment (amended) No. 03/1998/QH10, including: 

A. APPLICABLE OBJECTS

1. Companies and enterprises (referred to collectively as enterprises), regardless of ownership form and scale, including: Limited Liability Companies; Joint Stock Companies; Joint Ventures; Private Enterprises; Cooperatives, Cooperative Federations; State-owned Enterprises.

2. Private and public-private partnership educational and training institutions, private and public-private partnership healthcare facilities, and ethnic cultural centers established and operating legally in accordance with the law.

3. Enterprises of political organizations, socio-political organizations, and trade associations that have registered their business operations in accordance with the law.

4. Individuals and business groups established and operating under Decree No. 66/HĐBT dated March 2, 1992 of the Council of Ministers (now the Government).

5. Vietnamese citizens, overseas Vietnamese, foreigners residing permanently in Vietnam, who purchase shares or contribute capital to Vietnamese enterprises.

The subjects mentioned in Points 1, 2, 3, 4, and 5 of Part A of this Circular shall only enjoy tax benefits as prescribed in Decree No. 51/1999/NĐ-CP and guided in Part B of this Circular when:

- Engaging in activities within the scope of their registered business operations.

- Having registered for tax payment with the tax authority.

- Implementing accounting and bookkeeping systems in accordance with regulations.

B. GUIDELINES FOR IMPLEMENTING TAX EXEMPTIONS AND REDUCTIONS

I. TAX EXEMPTIONS, REDUCTIONS, AND TAX RATE BENEFITS ON ENTERPRISE INCOME TAX

1. Subjects and documents serving as the basis for determining tax benefits.

a. For new business establishment investment projects.

Decree No. 51/1999/NĐ-CP dated July 8, 1999 of the Government stipulates that new production and business establishments must have a decision on establishment from the competent authority and a business registration certificate. Those establishments that were previously established and subsequently divided, split, renamed, or changed their ownership form do not qualify for tax benefits under this provision. New establishments meeting the requirements set out in Articles 15 and 16 of the Decree shall enjoy tax rate benefits, tax exemptions, and reductions on enterprise income tax as provided in Articles 20 and 21 of the Decree. Within ten days of receiving the investment incentive certificate, the production and business establishment must submit an application for tax benefits recorded in the investment incentive certificate to the directly managing tax authority. The documents include:

- A letter requesting tax benefits recorded in the investment incentive certificate, signed by the authorized representative and stamped by the entity.

- The establishment decision and business registration certificate (a certified copy or a true copy with the signature and stamp of the enterprise).

- Final accounts of construction works or handover records for putting construction works into operation (if there is no final account of construction works).

- Investment incentive certificate issued by the Ministry of Planning and Investment or provincial People's Committee (a certified copy or a true copy with the signature and stamp of the enterprise).

- Tax registration form.

b. For expansion and technological upgrade investment projects.

Production and business establishments with expansion and technological upgrade investment projects in industries and fields of investment incentives listed in Appendix A of Decree No. 51/1999/NĐ-CP dated July 8, 1999 of the Government, such as establishing new workshops, installing new production lines, adding new equipment to existing production lines, replacing entire or complete parts of existing production line machinery and equipment with new ones, and applying new technology to production, shall enjoy tax exemptions and reductions on enterprise income tax as stipulated in Article 23 of Decree No. 51/1999/NĐ-CP.

Business establishments eligible for these benefits must submit documents to the directly managing tax authority, including:

- Investment incentive certificate issued by the Ministry of Planning and Investment or provincial People's Committee (a certified copy or a true copy with the signature and stamp of the enterprise).

- A letter from the business establishment clearly stating the reasons for tax exemption and reduction, accompanied by:

+ For state-owned enterprises, the investment feasibility study approved by the competent authority; final accounts of construction works or handover records for putting construction works into operation (if there is no final account).

+ For limited liability companies and joint stock companies, the investment feasibility study approved by the board of directors or shareholders; final accounts of construction works or handover records for putting construction works into operation.

+ For private enterprises, the construction and installation contract and final accounts of the contract; if self-built, invoices and receipts for materials and equipment purchases and actual installation of equipment must be presented.

- Financial final accounts and enterprise income tax final accounts of the business establishment before and after the investment year for which tax exemption and reduction are requested.

Business establishments must calculate and record separately the additional income generated by new investments, the amount of tax exempted and reduced, and the tax payable each period and annually, and settle taxes with the tax authority in accordance with regulations.The business entity shall independently calculate and account separately for the additional income generated from new investments, the amount of tax exemptions and reductions, and the tax payable for each period as well as for the year, and settle the tax with the tax authority in accordance with the regulations.

In cases where a business entity cannot separately account for the additional taxable income generated from investing in production lines, expanding scale, or updating technology, the additional taxable income shall be determined based on the ratio between the value of additional investment and the total value of existing fixed assets of the business entity. Annually, when settling corporate income tax, the tax authority officially determines the amount of corporate income tax that is exempted or reduced.

c. For BOT and BTO projects.

Business entities implementing BOT and BTO projects are exempted or reduced from corporate income tax according to the provisions of Article 22 of Decree No. 51/1999/NĐ-CP dated July 8, 1999, issued by the Government.

The business entity must submit the dossier to the tax authority directly managing the tax collection, which includes:

- A request letter from the business entity.

- An investment incentive certificate issued by the Ministry of Planning andInvestment - Office of the President of the Stateinvestment send a text message Provincial People's Committee, organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.City under direct jurisdiction TW level (certified copy or stamped and signed copy by the enterprise).

- The investment project approved by the competent authority in the form of BOT or BTO.

2. Procedures and authority for deciding exemptions and reductions of corporate income tax.

The tax authority managing the tax collection of the business entity, upon receiving the tax exemption and reduction dossier of the business entity eligible for corporate income tax incentives as specified in points 1a, 1b, and 1c above, shall be responsible for reviewing the dossier of the unit.

Within a maximum period of 30 days from the date of receipt of the dossier, the tax authority directly managing the unit must issue a decision (according to the attached model) regarding the tax exemption, reduction, and the tax exemption and reduction period recorded in the investment incentive certificate.

If the review of the unit's dossier finds it invalid or not in accordance with the objects defined in this Circular, within 15 days from the date of receipt of the dossier, the tax authority must notify the unit in writing.

Based on the tax exemption and reduction rate, the business entity shall determine the amount of tax exemption and reduction, the amount payable, and declare and pay taxes for each period as well as settle the annual tax with the tax authority according to regulations. Annually, when settling corporate income tax, the tax authority must officially inform the entity about the tax payable, the tax exempted, and the tax reduced according to the investment incentive certificate. If the tax temporarily paid by the entity during the year is insufficient compared to the tax payable recorded in the tax notification, the entity must pay the remaining tax according to the deadline stated in the tax notification; if the entity pays more than the tax recorded in the tax payment notification during the year, the excess will be deducted from the tax payable in the next period. During the tax settlement process, if the tax authority discovers that the business entity has misrepresented or evaded taxes, in addition to recovering the tax, penalties will be imposed according to the law, and the tax recovered due to recovery will not be exempted or reduced according to the investment incentive certificate. If business entities do not comply with the provisions stipulated in point 6 of Part A of this Circular, the tax authority will notify the units about their lack of eligibility for investment incentives.

II. ADDITIONAL CORPORATE INCOME TAX EXEMPTIONS

According to Article 24 of Decree No. 51/1999/NĐ-CP, investors with projects as specified in Articles 15 or 16 are not required to pay additional corporate income tax as stipulated in Clause 1 of Article 10 of the Corporate Income Tax Law, and this shall be implemented by the tax authority directly managing the unit when settling corporate income tax.

Production and business bases granted land by the State to carry out production and business activities shall be entitled to exemption and reduction of land use fee payable as stipulated in Article 17 of Decree No. 51/1999/NĐ-CP according to the following preferential levels.

Investors granted land use rights by the State for business operations are entitled to exemptions and reductions in land use fees according to Article 17 of Decree No. 51/NĐ-CP and must submit an application for exemption and reduction of land use fees to the tax authority directly managing the land use fee collection. To implement the exemption and reduction of land use fees, the business entity must submit the dossier to the tax authority directly managing the tax collection, including:

- A letter requesting exemption and reduction from the business entity.

- A certified copy or a stamped and signed copy of the investment incentive certificate by the enterprise.

- A decision on land allocation by the competent state authority.

The tax authority directly collecting land use fees, upon receiving the dossier for exemption and reduction of land use fees, must issue a decision on exemption or reduction of land use fees within 30 days.

IV. EXEMPTION AND REDUCTION OF LAND RENT:

Investors with projects meeting one of the conditions specified in Article 15 of Decree No. 51/1999/NĐ-CP dated July 8, 1999, are entitled to exemptions and reductions in land rent according to Article 18 of Decree No. 51/1999/NĐ-CP. Investors must submit the dossier to the tax authority directly managing the land rent collection.

1. A registration form for issuing a journalist card filled out by the applicant according to the model; approved and stamped by the head of the applying agency (Model No. 1);

- A letter requesting exemption and reduction from the business entity specifying the reasons.

- A certified copy or a stamped and signed copy of the investment incentive certificate by the enterprise.

- The land lease contract.

The tax authority directly managing the land rent collection, upon receiving the dossier for exemption and reduction of land rent, must issue a decision on the exemption and reduction rate and period within 30 days.

V. EXEMPTION AND REDUCTION OF AGRICULTURAL LAND USE TAX

Investors eligible for exemptions and reductions in agricultural land use tax according to Article 19 of Decree No. 51/1999/NĐ-CP dated July 8, 1999, issued by the Government, must submit the dossier to the Tax Office directly managing the agricultural land use tax collection. The dossier includes:

- A letter requesting exemption and reduction from the business entity.

- A certified copy or a stamped and signed copy of the investment incentive certificate by the enterprise.

- A decision on land allocation by the competent authority.

The Tax Office directly managing the agricultural land use tax collection, upon receiving the dossier for exemption and reduction of agricultural land use tax, must forward the dossier along with a request letter to the Provincial Tax Department within 10 days if the conditions are met. The Provincial Tax Department must then submit the dossier to the People's Committee of the province or centrally-administered city for a decision on exemption and reduction of agricultural land use tax within 20 days.

VI. EXEMPTION FROM IMPORT DUTIES FOR EQUIPMENT AND MACHINERY FORMING FIXED ASSETS

According to Article 26 of Decree No. 51/1999/NĐ-CP, investors with projects listed in Category A (industries eligible for investment incentives), or projects located in areas specified in Category B (areas with difficult economic conditions) or Category C (areas with extremely difficult economic conditions) are exempted from import duties on goods that are not produced domestically or are produced but do not meet quality requirements.

1. Equipment, machinery, specialized transportation means (part of production technology chains) imported to form fixed assets of enterprises or to expand investment scale, modernize technology.

2. Specialized transportation means for picking up and dropping off workers.

The investment incentive beneficiary must submit a request and provide an economic and technical justification stating clearly the list of machinery, equipment, specialized transportation means (part of production technology chains), and specialized transportation means for picking up and dropping off workers that they propose to have confirmed by the agency issuing the investment incentive certificate.

Based on the investment incentive certificate and the list of machinery, equipment, specialized transportation means (part of production technology chains), and specialized transportation means for picking up and dropping off workers already confirmed by the agency issuing the investment incentive certificate, the investor must register with the customs authority at the port of entry where these types of machinery, equipment, and specialized transportation means are imported so that the customs authority can implement tax exemption for imports when the actual import takes place (in case of agency import, the agency importer must present the above documents along with the agency import contract to the customs authority).

VII. ADDITIONAL INVESTMENT INCENTIVES REGARDING TAXES FOR PRODUCERS AND TRADERS OF EXPORT GOODS:

In addition to the corporate income tax incentives stipulated in Articles 21, 22, and 23, producers and traders of export goods also enjoy additional corporate income tax incentives as provided in Article 27 of Decree No. 51/1999/NĐ-CP. To implement the reduction of corporate income tax as stipulated in Article 27, the business entity must submit the following documents to the direct tax collection management agency:

- A request from the business entity explaining clearly the reasons for tax exemption or reduction and the level of such exemption or reduction.

- An investment incentive certificate issued by the Ministry of Planning andInvestment - Office of the President of the Stateầu tư hoặc UBND province, centrally governed city d.1. Amount of taxable income in Vietnam:Party(certified copy or stamped copy by the enterprise).

The additional corporate income tax incentives under Article 27 are implemented during the annual settlement of corporate income tax. The direct tax collection management agency is responsible for determining the officially exempted corporate income tax amount after the annual settlement. If the business entity separately accounts for the exempted or reduced income according to the cases stipulated in Article 27, the tax authority allows the provisional calculation of the exempted or reduced amount when determining the amount payable in each period within the year. exempted or reduced when determining the amount payable in each period within the year.

VIII. TAX ON PROFIT TRANSFER OUTSIDE THE COUNTRY

Overseas Vietnamese residents, foreign residents in Vietnam, and foreigners who invest capital to purchase shares in accordance with Clause 4, Article 1 of Decree No. 51/1999/NĐ-CP, when transferring profits earned abroad only need to pay a tax of 5% of the transferred amount.

The method of calculating the tax payable and procedures for tax payment shall be carried out in accordance with Section 5, Part C (procedures for declaration, payment, and refund of taxes on income transfer abroad) of Circular No. 99/1998/TT-BTC dated July 14, 1998, issued by the Ministry of Finance.

C. IMPLEMENTATION

1. Investment projects currently enjoying incentives under the Law on Domestic Investment Promotion before June 22, 1994, or under Decree No. 07/1998/NĐ-CP dated January 15, 1998, of the Government detailing the implementation of the Law on Domestic Investment Promotion will continue to enjoy investment incentives until the end of the remaining period specified in the issued investment incentive certificate. Tax benefits for profit recorded in the investment incentive certificate will be converted into corporate income tax benefits from January 1, 1999. Tax benefits for revenue recorded in the investment incentive certificate will be implemented until December 31, 1998.2. For investment projects with investment incentive certificates under the Law on Domestic Investment Promotion before June 22, 1994, or under Decree No. 07/1998/NĐ-CP dated August 15, 1998, of the Government detailing the implementation of the Law on Domestic Investment Promotion, which are entitled to additional corporate income tax incentives and tax exemptions on imports as stipulated in Decree No. 51/1999/NĐ-CP, the investment incentive certificate issuing agency will adjust and supplement incentives for the remaining incentive period, starting from the effective date of Decree No. 51/1999/NĐ-CP.

3. After enjoying tax incentives as stipulated in Decree No. 51/1999/NĐ-CP and guided by this Circular, if there is a change in the principal investor, the new principal investor will continue to enjoy the tax exemption and reduction levels recorded in the investment incentive certificate for the remaining period and will be responsible for fulfilling all obligations of the previous principal investor to enjoy tax exemptions and reductions.

In case the principal investor has enjoyed tax incentives based on the conditions registered for the invested project but during the implementation process, there is a change in the registered conditions leading to a change in the tax incentive level as stipulated in Decree No. 51/1999/NĐ-CP, the principal investor must declare to the competent authority within five days to adjust the investment incentive certificate accordingly.

If the principal investor engages in fraudulent behavior to obtain tax incentives or intentionally fails to declare changes in investment conditions to obtain higher tax incentives, in addition to returning the tax benefits received, the principal investor may be subject to administrative penalties or criminal prosecution depending on the severity of the violation as prescribed by law. about the registered conditions leading to a change in the tax incentive level as stipulated in Decree No. 51/1999/NĐ-CP, the principal investor must declare to the competent authority within five days to adjust the investment incentive certificate accordingly.

If the principal investor engages in fraudulent behavior to obtain tax incentives or intentionally fails to declare changes in investment conditions to obtain higher tax incentives, in addition to returning the tax benefits received, the principal investor may be subject to administrative penalties or criminal prosecution depending on the severity of the violation as prescribed by law.

Tax officials, customs officers, and other individuals who abuse their positions and powers to deliberately violate the provisions of Decree No. 51/1999/NĐ-CP and the guidance of this Circular causing damage to the State budget shall be subject to disciplinary action, administrative penalties, or criminal prosecution depending on the severity of the violation as prescribed by law.

Tax authorities at all levels shall be responsible for strictly managing investment projects under the Law on Encouraging Domestic Investment, the conditions registered by investors for each project within their jurisdiction that relate to tax incentives and exemptions; on one hand, they shall create favorable conditions for investors during the implementation of projects, while on the other hand, they shall promptly detect and prevent actions exploiting these incentives to evade taxes. The tax authority must maintain records to monitor and retain all relevant documents concerning tax exemptions and reductions for each investment project, and annually report to the Ministry of Finance (General Department of Taxation) the provisional exemptions and reductions, as well as the actual exemptions and reductions granted to entities benefiting from investment incentives under the Law on Encouraging Domestic Investment.

4. This Circular takes effect from July 23, 1999, the date when Decree No. 51/1999/NĐ-CP comes into force and replaces Circular No. 43/1998/TT-BTC dated April 4, 1998, issued by the Ministry of Finance guiding the implementation of tax exemptions and reductions as stipulated in Decree No. 07/1998/NĐ-CP dated January 15, 1998, of the Government detailing the implementation of the Law on Encouraging Domestic Investment (amended).

During the implementation process, if any issues arise, business establishments, sectors, and localities shall promptly reflect them to the Ministry of Finance for further guidance and supplementary instructions.