Decree No. 218/2013/ND-CP provides detailed regulations and guidance on the implementation of the Law on Corporate Income Tax.

DECREE

Regulations detailing and guiding the implementation of the Law on Corporate Income Tax.session number

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Pursuant to the Law on Organization of the Government dated December 25, 2001;

Based on the Law on Corporate Income Tax dated June 3, 2008 and the Law Amending and Supplementing Certain Provisions of the Law on Corporate Income Tax dated June 19, 2013;

At the proposal of the Minister of Finance;

The Government promulgates this Decree to detail and guide the implementation of the Law on Corporate Income Tax and the Law Amending and Supplementing Certain Provisions of the Law on Corporate Income Tax.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decree details and guides the implementation of certain provisions of the Law on Corporate Income Tax and the Law Amending and Supplementing Certain Provisions of the Law on Corporate Income Tax regarding: Taxpayers; taxable income, tax-exempt income; determination of taxable income, determination of losses and carryover of losses; revenue; deductible and non-deductible expenses when determining taxable income; tax rates; methods of calculating tax; tax incentives and conditions for applying tax incentives.

Article 2. Taxpayer

Taxpayers shall comply with the provisions of Article 2 of the Law on Corporate Income Tax and Clause 1 of Article 1 of the Law Amending and Supplementing Certain Provisions of the Law on Corporate Income Tax.

1. Taxpayers as prescribed in Clause 1 of Article 2 of the Law on Corporate Income Tax include:

a) Enterprises established and operating in accordance with the Enterprise Law, Investment Law, Law on Credit Institutions, Insurance Business Law, Securities Law, Petroleum Law, Commercial Law, and other legal documents under various forms: Joint-stock companies; limited liability companies; partnerships; private enterprises; parties in joint venture contracts; parties in oil product sharing contracts, oil joint ventures, and joint management companies;

b) Enterprises established in accordance with foreign laws (hereinafter referred to as foreign enterprises) having a permanent establishment or not having a permanent establishment in Vietnam;

c) Public and non-public service units engaged in production and business of goods and services with taxable income as prescribed in Article 3 of this Decree;

d) Organizations established and operating (or registered to operate) in accordance with Vietnamese law;

đ) Other organizations outside those specified in Points a, b, c, and d of this Clause that engage in production and business activities with taxable income as prescribed in Article 3 of this Decree.

2. Organizations established and operating (or registering to operate) in accordance with Vietnamese law, and individual businesses are taxpayers subject to withholding tax at source when purchasing services (including services attached to goods, purchasing goods supplied or distributed through import-export transactions at place or according to international trade terms) based on contracts signed with foreign enterprises as prescribed in Points c and d of Clause 2 of Article 2 of the Law on Corporate Income Tax.

The Ministry of Finance shall provide detailed guidance on the withholding tax as prescribed in this Clause.

Article 3. Taxable Income

1. Taxable income includes income from production and business activities of goods and services and other income as prescribed in Clause 2 of this Article. For enterprises registered for business and having income as prescribed in Clause 2 of this Article, such income shall be determined as income from production and business activities of the enterprise.

2. Other income includes:

a) Income from capital transfer including income from transferring part or all of the invested capital in an enterprise, including selling an enterprise, transferring securities, transferring capital contribution rights, and other forms of capital transfer as prescribed by law;

b) Income from project transfer, income from participating in project transfers, income from transferring exploration, exploitation, and processing rights of minerals as prescribed by law; income from real estate transfers as prescribed in Articles 13 and 14 of this Decree;

c) Income from property usage and ownership rights, including income from intellectual property ownership rights, income from technology transfer as prescribed by law;

d) Income from asset transfer, leasing, and liquidation (excluding real estate), including various types of negotiable instruments;

đ) Income from interest on deposits, interest on loans, and foreign currency sales including: Interest on deposits at credit institutions, interest on loans in all forms as prescribed by law including late payment interest, installment interest, loan guarantee fees, and other fees in loan contracts; income from foreign currency sales; exchange rate differences arising from revaluation of foreign currency denominated debts at year-end; exchange rate differences arising during the period (except exchange rate differences arising during the basic construction investment period to form fixed assets of newly established enterprises which have not yet been put into production and business operations, to be implemented according to the guidance of the Ministry of Finance). For foreign currency denominated debts and loans arising during the period, the exchange rate difference of these debts and loans is the difference between the exchange rate at the time of debt recovery and the exchange rate at the initial recording of the debt or loan;

e) Prepaid expense deductions that are not used or fully utilized within the prescribed period without adjusting the reduction of expenses;

g) Previously written-off bad debts now recovered;

h) Unidentifiable creditors' debts;

i) Previously omitted income from business operations in previous years discovered later;

k) Differences between penalties received, compensation received due to breach of economic contracts or bonuses received for fulfilling contractual commitments (excluding penalty amounts recorded as reductions in the value of projects during the investment phase) minus (-) penalties paid and compensation paid due to breach of contract as prescribed by law;

l) Grants received in cash or in kind;

m) Differences arising from revaluation of assets as prescribed by law for capital contributions, transfers when dividing, splitting, merging, consolidating, or changing the type of enterprise;

Enterprises receiving assets shall record them at the revalued price when determining deductible expenses as prescribed in Article 9 of this Decree;

n) Income received from production and business activities outside Vietnam;

o) Other income includes income exempted from tax as stipulated in Clause 6 and Clause 7, Article 4 of this Decree.

3. The taxable income generated in Vietnam by foreign enterprises as specified in Points c and d, Clause 2, Article 2 of the Law on Corporate Income Tax is income received from sources in Vietnam from activities such as providing services, supplying and distributing goods, lending capital, royalty payments to Vietnamese organizations and individuals or to foreign organizations and individuals operating in Vietnam, regardless of the location where the business is conducted.

The taxable income as provided for in this Clause does not include income from services performed outside the territory of Vietnam, such as: repairing transportation means, machinery, and equipment abroad; advertising, marketing, investment promotion, and trade promotion abroad; brokering the sale of goods and services abroad; training abroad; sharing postal and telecommunications service fees with foreign parties.

The Ministry of Finance shall provide detailed guidance on the taxable income as provided for in this Clause.

Article 4. Exempted Income

Exempted income shall be implemented according to the provisions of Article 4 of the Law on Corporate Income Tax and Clause 3, Article 1 of the Law amending and supplementing certain articles of the Law on Corporate Income Tax.

1. Income from crop cultivation, animal husbandry, aquaculture, salt production of cooperatives; income of cooperatives operating in agriculture, forestry, fisheries, salt industry in areas with difficult socio-economic conditions or particularly difficult socio-economic conditions; income of enterprises from crop cultivation, animal husbandry, aquaculture in particularly difficult socio-economic areas; income from marine fishing activities.

Income from crop cultivation, animal husbandry, aquaculture of cooperatives and enterprises as provided for in this Clause shall not include income from processing and manufacturing products derived from crop cultivation, animal husbandry, and aquaculture. Cooperatives and enterprises must separately account for income from crop cultivation, animal husbandry, and aquaculture from other processing and manufacturing stages to determine the amount of corporate income tax exempted under this Clause. In cases where separate accounting is not possible, the exempted income shall be determined based on the ratio between the costs of the exempted activities and the total production and business costs of the entity during the tax period.

Crop cultivation, animal husbandry, and aquaculture activities of cooperatives and enterprises in particularly difficult socio-economic areas as exempted under this Clause and Point e, Clause 2, Article 15 of this Decree shall be determined based on the first-level economic sector code of the agriculture, forestry, and fishery sectors as prescribed in the Vietnamese Economic Classification System.

Cooperatives operating in agriculture, forestry, fisheries, and salt industry as provided for in this Clause and Clause 2, Article 15 of this Decree are cooperatives that meet the ratio of supplying products and services to members who are individuals, households, and legal entities engaged in agricultural, forestry, fisheries, and salt industry production as prescribed by the Law on Cooperatives and guiding documents.

2. Income from directly serving agricultural technical services is exempted, including: income from irrigation and drainage services; plowing, harrowing land, dredging canals and ditches within fields; pest and disease control services for crops and livestock; harvesting agricultural product services.

3. For income from implementing scientific research and technological development contracts, income from selling experimental products, and income from producing products using new technology applied for the first time in Vietnam, the maximum exemption period shall not exceed one year, starting from the date when revenue from selling products according to the scientific research and technology application contract, experimental production, or new technology production begins.

The Ministry of Finance shall provide detailed guidance on the provisions of this Clause.

4. Income from production and business activities of enterprises employing at least 30% of the average number of workers throughout the year as persons with disabilities, former drug addicts, and HIV/AIDS patients.

Enterprises exempted from tax as provided for in this Clause are enterprises with an average workforce of at least 20 people throughout the year, excluding financial and real estate businesses.

The exempted income as provided for in this Clause does not include other income as stipulated in Clause 2, Article 19 of this Decree.

5. Income from vocational training activities specifically for ethnic minorities, persons with disabilities, children in particularly difficult circumstances, social delinquents, those undergoing rehabilitation, former drug addicts, and HIV/AIDS patients. In cases where the training institution has other types of trainees, the exempted income shall be determined based on the ratio of ethnic minority persons, persons with disabilities, children in particularly difficult circumstances, social delinquents, those undergoing rehabilitation, former drug addicts, and HIV/AIDS patients to the total number of trainees at the institution.

6. Income distributed from economic joint ventures, equity investments, joint ventures, and associations with domestic enterprises, after the receiving party has paid taxes according to the Law on Corporate Income Tax, including cases where the receiving party is enjoying tax incentives as stipulated in Chapter IV of this Decree.

7. Grants received for use in educational, scientific research, cultural, artistic, charitable, humanitarian, and other social activities in Vietnam.

If the organization receiving the grant uses the grant for purposes other than intended, it must pay corporate income tax on the portion used for unintended purposes during the tax period in which the misuse occurs.

The organization receiving grants as provided for in this Clause is an organization established and operating in accordance with the law, complying with legal regulations on accounting and statistics.

8. Income from the initial transfer of Certified Emission Reduction certificates (CERs) to enterprises that have been issued such certificates; subsequent transfers shall be subject to corporate income tax according to regulations.

9. Income from performing state tasks assigned to the Vietnam Development Bank regarding investment credit and export credit; income from microfinance activities of the Social Policy Bank; income of the Limited Liability Company for Asset Management of Credit Organizations in Vietnam; income from activities generating revenue while performing state tasks assigned to state financial funds: the Vietnam Social Security Fund, deposit insurance organizations, the Health Insurance Fund, the Vocational Training Support Fund, the Overseas Employment Support Fund under the Ministry of Labor, Invalids and Social Affairs, the Farmer Support Fund, the Legal Aid Fund of Vietnam, the Public Telecommunications Service Fund, the Local Investment and Development Fund, the Vietnam Environmental Protection Fund, the Guarantee Fund for Small and Medium Enterprises' Credit, the Cooperative Development Support Fund, the Poor Women Support Fund, the Citizen and Legal Entity Protection Fund Abroad, the Housing Development Fund, the Small and Medium Enterprises Development Fund, the National Science and Technology Development Fund, the National Technological Innovation Fund; income from performing state tasks assigned to land development funds and other state funds operating without profit-making objectives established and operated according to government and Prime Minister decisions and legal provisions.

10. The portion of income not distributed by socialized entities in the education-training, healthcare sectors, and other socialized sectors (including Judicial Appraisal Office) retained for investment and development of such entities according to specialized laws on education-training, healthcare, and other socialized sectors; distribution of income forming undistributed assets of cooperatives established and operated according to the Law on Cooperatives.

11. Income from technology transfer in priority areas for transfer to organizations and individuals in economically disadvantaged areas.

Chapter II

BASIS AND METHOD OF CALCULATING TAX

Article 5. Tax Base

The tax base consists of taxable income for the period and tax rate.

The tax period is implemented according to Article 5 of the Corporate Income Tax Law and relevant tax management laws.

Enterprises may choose the tax period as either the calendar year or fiscal year but must notify the tax authority in advance.

Article 6. Determination of Taxable Income

1. Taxable income for the tax period is determined as follows:

2. Taxable income is determined as follows:

For enterprises engaged in multiple business activities, taxable income from production and business operations is the total income from all business activities. If there are loss-making business activities, the losses can be offset against the taxable income of profitable business activities chosen by the enterprise. The remaining income after offsetting losses is subject to the corporate income tax rate applicable to the remaining business activity with income.

Income from real estate transfer, investment project transfer, participation rights in investment projects, exploration, exploitation, and processing of mineral resources must be separately declared for tax purposes. In cases where participation rights in investment projects, investment projects (excluding mineral exploration and exploitation projects), and real estate transfers result in losses, these losses can be offset against profits from production and business operations during the tax period. If an enterprise undergoing liquidation sells fixed assets as real estate, the income from real estate transfer (if any) can be offset against the income from the enterprise's production and business operations.

3. The determination of taxable income for certain production and business activities is specified as follows:

a) For income from capital transfer (excluding income from securities transfer as provided in Point b of this Clause) is determined by the total amount received under the transfer agreement minus the purchase price of the transferred capital, minus direct costs related to the transfer.

If an enterprise transfers capital without receiving money but receives other assets or material benefits (such as shares, fund certificates) resulting in income, it must pay corporate income tax.

b) For income from securities transfer is determined by the selling price minus the purchase price of the transferred securities, minus direct costs related to the securities transfer.

If an enterprise issues shares, the difference between the issue price and the par value is not subject to corporate income tax.

If an enterprise undergoes division, merger, or consolidation and exchanges shares at the time of division, merger, or consolidation resulting in income, this income must be subject to corporate income tax.

If an enterprise transfers securities without receiving money but receives other assets or material benefits (such as shares, fund certificates) resulting in income, it must pay corporate income tax.

c) For income from intellectual property rights and technology transfer is determined by the total amount received minus the cost of creating the intellectual property rights or transferred technology, minus maintenance, upgrade, and development costs of the intellectual property rights or transferred technology, and other deductible expenses.

d) For income from leasing assets is determined by lease revenue minus basic depreciation allowances, maintenance, repair, and preservation costs of the asset, rental costs for leased assets (if any), and other deductible expenses related to asset leasing.

d) Income from the transfer or liquidation of assets (excluding real estate) shall be calculated as the amount received from the transfer or liquidation of assets minus (-) the remaining value of the asset recorded in the accounting books at the time of transfer or liquidation, and related expenses incurred for the transfer or liquidation of the asset.

e) Income from foreign currency sales shall be the total amount received from selling foreign currency minus (-) the cost price of the quantity of foreign currency sold.

g) The difference arising from revaluation of assets when transferred, divided, merged, consolidated, dissolved, converted to another business form, or changed ownership, or contributed as capital is the difference between the revalued value of the asset and its remaining value recorded in the accounting books before revaluation.

Any increase or decrease arising from the revaluation of fixed assets when contributing capital, or assets transferred when dividing, merging, consolidating, or converting to another business form, including land use rights contributed to investment projects for construction and sale, shall be included in other income or deducted from other income during the tax period; specifically, the difference arising from the revaluation of land use rights contributed as capital, where the recipient does not depreciate such rights, shall be gradually included in other income over a maximum period of no more than 10 years starting from the year the asset was contributed.

h) For joint venture contracts (BCC) that allocate profits after tax, income shall be determined as the total revenue under the BCC contract minus (-) the total costs related to generating revenue under the BCC contract.

The Ministry of Finance shall provide specific guidelines on determining revenue and costs for joint venture contracts allocating profits after tax.

i) Income received from production and business activities abroad shall be the total income received before tax.

4. Income from oil and gas exploration and exploitation activities shall be determined according to each oil and gas contract.

Article 7. Determining Losses and Carrying Forward Losses

1. A loss occurring in the tax period is the negative (-) difference in taxable income before including losses carried forward from previous years, as defined by Clause 1 of Article 6 of this Decree.

2. A business with a loss may carry it forward to the next year, and this loss shall be deducted from taxable income. The carry-forward period shall be continuous and not exceed five years, starting from the year following the year in which the loss occurred.

3. Losses from transferring real estate, transferring investment projects, or transferring participation rights in investment projects (excluding exploration and exploitation mineral projects), after offsetting against taxable income from these activities or carrying forward losses as provided for in Clause 2 of Article 6 of this Decree if there is still a loss, and losses from transferring participation rights in exploration and exploitation mineral projects shall be carried forward to the next year and deducted from taxable income from those activities. The carry-forward period shall be continuous and not exceed five years, starting from the year following the year in which the loss occurred.

Article 8. Revenue

Revenue for calculating taxable income shall be implemented in accordance with Article 8 of the Law on Corporate Income Tax.

1. Revenue for calculating taxable income includes all money from sales, processing fees, service fees, including subsidies, surcharges, and premiums that the enterprise enjoys, regardless of whether the money has been collected or not.

For enterprises that declare and pay VAT using the deduction method, revenue for corporate income tax calculation shall be revenue excluding VAT. For enterprises that declare and pay VAT using the direct method based on added value, revenue for corporate income tax calculation shall include VAT.

2. The time of determining revenue for calculating taxable income for goods sold is the time of transferring ownership or usage rights of the goods to the buyer.

The time of determining revenue for calculating taxable income for services is the time of completing the provision of services to the buyer or the time of issuing an invoice for the provision of services.

3. Revenue for calculating taxable income for certain cases is specified as follows:

a) For goods sold on installment basis, revenue shall be determined based on the price of goods paid in full, excluding installment interest or deferred payment interest.

b) For goods and services used for exchange or internal consumption (excluding goods and services used to continue the production and business process of the enterprise), revenue shall be determined based on the selling price of similar products, goods, or services at the time of exchange or internal consumption.

c) For processing activities, revenue shall be the income from processing activities including labor charges, fuel, power, auxiliary materials, and other costs serving the processing of goods.

d) For leasing activities, golf course operations, and other service businesses where customers pay in advance for multiple years, revenue for calculating taxable income shall be the amount paid by the lessee or service purchaser according to the contract for each period. In cases where the lessee or service purchaser pays in advance for multiple years, revenue for calculating taxable income can be allocated over the number of years of advance payment or determined as a lump sum payment. If the enterprise is enjoying tax incentives during this period, the determination of the tax benefit must be based on the total corporate income tax payable for the number of years of advance payment divided (:) by the number of years of advance payment.

đ) For credit activities and financial leasing, revenue shall be the interest income from loans and income from financial leasing due within the tax period.

e) For transportation activities, revenue shall be the total transportation revenue from passengers, cargo, and luggage generated within the tax period.

g) For electricity and clean water, revenue shall be the amount recorded on the VAT invoice.

h) For insurance and reinsurance activities, revenue shall be the amount receivable for original insurance premiums; service fees (including loss assessment, claim settlement, third-party reimbursement, and handling 100% compensation items); reinsurance acceptance fees; commission income from reinsurance, and other income from insurance activities, minus (-) refunds or reductions in insurance premiums, reinsurance acceptance fees, and refunds or reductions in reinsurance commission.

In the case of insurance contracts, the revenue for calculating taxable income is the original insurance premium income allocated according to the proportion of the insurance policy not including value-added tax.

For insurance contracts that agree to pay money in installments, the revenue for calculating taxable income is the amount due to be collected in each period.

i) For construction and installation activities, it is the value of the project, component of the project, or volume of construction and installation work that has been inspected and accepted.

In cases where construction and installation activities do not include the cost of raw materials, machinery, and equipment, the revenue for taxation does not include the value of raw materials, machinery, and equipment.

k) For business activities conducted under joint venture contracts without establishing a legal entity:

- In cases where the parties to the joint venture contract divide business results based on sales revenue from goods and services, the revenue for taxation is the revenue of each party divided according to the contract.

- In cases where the parties to the joint venture contract divide business results based on post-tax profit, the revenue for determining taxable income is the amount of sales revenue from goods and services under the contract.

l) For casino operations, electronic games with prizes, and betting operations, it is the total amount received from these activities including special consumption tax minus the amount paid out as prizes to customers.

m) For securities trading, it includes revenues from brokerage services, proprietary trading, underwriting securities issuance, investment advisory services, fund management, issuance of fund certificates, market organization services, and other securities services as prescribed by law.

n) For oil and gas exploration, development, and production activities, it is the total revenue from selling oil and gas according to fair trade contracts during the tax period.

o) For derivative financial service activities, it is the amount received from providing such services during the tax period.

The Ministry of Finance shall provide detailed guidance on the provisions of this Article and for certain special cases.

Article 9. Deductible and Non-deductible Expenses when Determining Taxable Income

1. Except for expenses specified in Clause 2 of this Article, enterprises are allowed to deduct all expenses if they meet the following conditions:

a) Actual expenses incurred in connection with the enterprise's production and business activities, including:

- Expenses for implementing national defense and security education tasks, training, activities of civilian self-defense forces, and serving other national defense and security tasks as prescribed by law; expenses supporting the activities of party organizations and political-social organizations within the enterprise;

- Actual expenses for HIV/AIDS prevention and control activities at the workplace, including: costs for training enterprise staff on HIV/AIDS prevention, costs for organizing HIV/AIDS prevention communication for enterprise employees, fees for HIV counseling, testing, and examination, and costs for supporting HIV-infected employees.

b) Expenses supported by invoices and receipts in accordance with the law.

In cases where goods are purchased directly from producers or harvesters of agricultural, forestry, and aquatic products; handicraft products made from rattan, straw, bamboo, palm leaves, reed, coconut shells, coir, or recycled agricultural products sold directly by producers; earth, stone, sand, gravel purchased directly from households or individuals who extract them for sale; scrap materials purchased from individuals who collect them directly; household items and assets sold directly by households or individuals, and services purchased from households or individuals not engaged in business, there must be payment vouchers and a purchase list signed and responsible by the legal representative or authorized person of the enterprise.

c) For invoices for purchasing goods and services individually valued at twenty million dong or more, non-cash payment vouchers must be provided, except for expenses related to: Implementing national defense and security tasks, HIV/AIDS prevention and control activities at the workplace, and supporting the activities of party organizations and political-social organizations within the enterprise as stipulated in Point a, Clause 1 of this Article; and for purchasing goods and services listed in Point b, Clause 1 of this Article.

The Ministry of Finance shall provide specific guidance on situations involving payments made according to contracts where the payment time differs from the expense recognition time as prescribed, and other expenses that do not require non-cash payment vouchers.

2. Non-deductible expenses when determining taxable income are implemented in accordance with the provisions of Clause 2, Article 9 of the Law on Corporate Income Tax and Clause 5, Article 1 of the Law Amending and Supplementing Certain Provisions of the Law on Corporate Income Tax, and certain cases regarding non-deductible expenses are defined as follows:

a) Expenses that do not meet the conditions set forth in Clause 1 of this Article, except for the portion of losses due to natural disasters, epidemics, fires, and other force majeure events that cannot be compensated.

Part ||| The value of losses due to natural disasters, epidemics, fires, and other force majeure cases that are not compensated shall be determined by subtracting (-) the value that the insurance company or other organizations or individuals must compensate according to the provisions of the law from the total loss value.

b) The portion of business management costs allocated by foreign enterprises to their permanent establishments in Vietnam exceeding the amount calculated according to the following formula:

c) The portion exceeding the limit prescribed by the law on setting up reserve funds;

d) The depreciation of fixed assets not in accordance with the regulations of the Ministry of Finance, including: Depreciation of passenger cars with up to 9 seats (excluding cars used for passenger transport services, tourism, and hotels) corresponding to the original cost exceeding 1.6 billion VND per vehicle; depreciation of civil aircrafts, yachts not used for cargo and passenger transportation services, tourism, and hotels;

đ) Pre-deductions into expenses not in accordance with the provisions of the law.

Pre-deductions included in deductible expenses include: Pre-deductions for major repairs of fixed assets according to cycles, pre-deductions for activities that have recorded revenue but still need to fulfill obligations according to contracts, including cases where the lessor records all rental income over multiple years into the revenue of the year of receipt, other pre-deductions according to the regulations of the Ministry of Finance;

e) Interest payments on borrowed capital corresponding to the remaining subscribed capital, according to the contribution schedule recorded in the charter of the enterprise; interest on borrowed capital already recorded in the asset value; interest on borrowed capital for implementing exploration and exploitation oil and gas contracts;

g) Advertising, marketing, promotional, and brokerage commission expenses (excluding insurance commissions according to the law on insurance business, agency commissions at the correct price, commissions paid to distributors of multi-level marketing enterprises); hospitality, ceremonial, conference expenses; marketing support expenses, and direct production and business operation-related expenses exceeding 15% of the total deductible expenses.

The total deductible expenses do not include the above-mentioned expense items; for commercial activities, it does not include the purchase price of goods sold.

The expenses subject to controlled expense limits under this Point include gift, donation, and hospitality expenses to customers.

h) Excess costs allowed to be recovered beyond the ratio specified in the approved oil and gas contract; if the oil and gas contract does not specify the recovery ratio, excess costs over 35% cannot be included in deductible expenses; costs not included in recoverable expenses include:

- Expenses stipulated in Clause 2, Article 9 of the Law on Corporate Income Tax and Point 2, Clause 5, Article 1 of the Law amending and supplementing certain articles of the Law on Corporate Income Tax;

- Costs incurred before the oil and gas contract becomes effective, except those agreed upon in the contract or decided by the Prime Minister;

- Oil and gas commissions and other expenses not included in recoverable costs according to the contract;

- Interest expenses on investments for exploration, development, and exploitation of oil and gas fields;

- Penalties and compensation payments;

i) Input VAT that has been deducted, input VAT of the value of passenger cars with fewer than 9 seats exceeding 1.6 billion VND that cannot be deducted, corporate income tax, and other taxes, fees, and charges that cannot be included in expenses according to the regulations of the Ministry of Finance;

k) Expenses not corresponding to taxable revenue, except for some special cases guided by the Ministry of Finance;

Foreign exchange rate differences arising from revaluation of foreign currency monetary items at the end of the tax period, excluding foreign exchange rate differences arising from revaluation of foreign currency payable items at the end of the tax period, and foreign exchange rate differences occurring during the basic construction investment process to form fixed assets of newly established enterprises that have not yet been put into production and business operations, implemented according to the guidance of the Ministry of Finance.

For foreign currency receivables and loans generated during the period, the foreign exchange rate difference included in deductible expenses is the difference between the exchange rate at the time of recovering the receivable or loan repayment and the exchange rate at the initial recording of the receivable or loan.

m) Wages and salaries of the owner of a private business enterprise; the owner of a limited liability company with a single member (operated by an individual); remuneration paid to founding members of the enterprise who do not directly participate in production and business management; wages and salaries, other accounting expenses for employees that are not actually paid or lack invoices and receipts as required by law; expenditures on bonuses and purchasing life insurance for employees that are not specifically detailed regarding eligibility conditions and amounts in any of the following documents: Labor contracts; Collective labor agreements; Financial regulations of companies, holding companies, groups; Bonus regulations stipulated by the Chairman of the Board of Directors, General Director, or Director according to the financial regulations of the company or holding company. Expenditures on wages, salaries, and allowances that must be paid to employees but have not been made by the deadline for submitting annual tax settlement documents, except when the enterprise has established a reserve fund to supplement the next year's wage fund to ensure uninterrupted payment of wages and not used for other purposes. The annual reserve level is determined by the enterprise but shall not exceed 17% of the actual wage fund (the total amount of wages actually paid up to the final submission deadline for the tax settlement year, excluding the amount of the previous year's wage reserve fund used in the current tax settlement year). In cases where the enterprise has established a wage reserve fund in the previous year and has not used it or has not fully utilized it within six months from the end of the fiscal year, the enterprise must reduce costs in the following year.

n) Sponsorship payments, except for those for education, healthcare, scientific research, disaster relief, construction of solidarity houses, benevolent houses, houses for the poor, and policy beneficiaries as prescribed by law, and sponsorship payments under state programs for localities in areas with particularly difficult socio-economic conditions.

The organization receiving sponsorship for scientific research as specified herein is a science and technology organization established and operating under the Law on Science and Technology, implementing scientific and technological tasks as prescribed by laws on science and technology.

o) Expenditures exceeding VND 1 million per month per person for: Contributions to voluntary pension funds, purchase of voluntary pension insurance, and life insurance for employees; portions exceeding the limits prescribed by laws on social insurance and health insurance for contributions to social welfare funds (compulsory supplementary pension insurance, social insurance, health insurance fund, and unemployment insurance fund) for employees.

Expenditures for contributions to voluntary pension funds, social welfare funds, purchase of voluntary pension insurance, and life insurance for employees can be deducted from taxable income, provided they are specifically detailed regarding eligibility conditions and amounts in any of the following documents: Labor contracts; Collective labor agreements; Financial regulations of companies, holding companies, groups; Bonus regulations stipulated by the Chairman of the Board of Directors, General Director, or Director according to the financial regulations of the company or holding company.

Expenditures related to the operations of banking, insurance, lotteries, securities, and other special business activities as prescribed by the Ministry of Finance.

Late payment penalties for taxes as prescribed by the Tax Administration Law.

Expenditures directly related to the issuance of shares (excluding debt-related shares) and dividends on shares (excluding dividends on debt-related shares), purchases and sales of treasury shares, and other expenditures directly related to increases or decreases in the enterprise's equity capital.

The Ministry of Finance shall provide specific guidance on deductible and non-deductible expenses as prescribed in this Article.

Article 10. Tax Rate

The corporate income tax rate shall be implemented in accordance with Clause 6, Article 1 of the Law amending and supplementing certain articles of the Corporate Income Tax Law:

1. The corporate income tax rate is 22%, except for enterprises subject to a tax rate of 20% and a tax rate from 32% to 50% as stipulated in Clause 2, Clause 3 of this Article and those eligible for preferential tax rates as provided for in Article 15 and Article 16 of this Decree.

From January 1, 2016, enterprises subject to the 22% tax rate as stipulated in this Clause shall apply a tax rate of 20%.

2. Enterprises established and operating in accordance with Vietnamese law, including cooperatives and production and business units, which have total annual revenue not exceeding VND 20 billion, shall apply a tax rate of 20%.

The total annual revenue serving as the basis for determining that an enterprise falls within the scope of the 20% tax rate as stipulated in this Clause is the total revenue from selling goods and providing services of the enterprise in the immediately preceding year.

3. The corporate income tax rate for activities related to oil and gas exploration, development, and rare mineral extraction in Vietnam ranges from 32% to 50%. For oil and gas exploration and development activities, based on location, extraction conditions, and deposit size, the Prime Minister decides on specific tax rates suitable for each project and business entity upon the proposal of the Minister of Finance. For platinum, gold, silver, tin, tungsten, antimony, gemstone, and rare earth mines, the tax rate is 50%; however, for mines where at least 70% of the area is located in particularly difficult economic and social areas listed in the preferential corporate income tax zones accompanying this Decree, the corporate income tax rate is 40%.

Article 11. Method of Calculating Tax

1. The corporate income tax payable during the tax period equals taxable income multiplied (x) by the tax rate; if the enterprise has already paid corporate income tax on income generated abroad, it may deduct the amount of tax paid, but not exceeding the corporate income tax payable according to the Corporate Income Tax Law.

2. The corporate income tax payable for the transfer of real estate equals the income from transferring real estate multiplied (x) by the tax rate of 22%; from January 1, 2016, this tax rate is 20%.

3. For enterprises specified in Points c and d, Clause 2, Article 2 of the Corporate Income Tax Law, the corporate income tax payable is calculated as a percentage of sales revenue from goods and services in Vietnam, specifically as follows:

a) Services: 5%, except for hotel, resort, and casino management services: 10%; when service provision is tied to goods, the goods are taxed at 1%; if the value of goods cannot be separated from the value of services, the rate is 2%;

b) Supply and distribution of goods in Vietnam through domestic trade or international trade terms (Incoterms): 1%;

c) Royalty payments: 10%;

d) Aircraft leasing (including engine and aircraft part leasing): 2%;

đ) Leasing of drilling platforms, machinery, equipment, and transportation means (excluding the provisions in Point d of this Clause): 5%;

e) Interest on loans: 5%;

g) Transfer of securities and reinsurance abroad: 0.1%;

h) Derivative financial services: 2%;

i) Construction, transportation, and other activities: 2%.

4. For oil and gas extraction activities where revenue and costs are accounted for in foreign currency in contracts, taxable income and the tax payable are determined in foreign currency.

5. Public institutions and other organizations not being enterprises established and operating in accordance with Vietnamese law, which engage in commercial activities generating taxable corporate income, and which can account for revenue but cannot determine costs of such activities, shall declare and pay corporate income tax at a percentage of sales revenue from goods and services, specifically as follows:

a) For services (including interest on deposits and loans): 5%. Specifically, educational, healthcare, and artistic performance activities apply the rate specified in Point c of this Clause;

b) For goods trading: 1%;

c) For other activities: 2%.

Article 12. Place of Tax Payment

1. Enterprises shall pay taxes at the locality where their main office is located. In cases where enterprises have production units dependent on accounting located in provinces or centrally governed cities different from the locality where their main office is located, the amount of tax to be paid at the place of the main office and at the place of the production unit shall be determined.

The corporate income tax payable at the province or centrally governed city where the dependent production unit is located shall be calculated by multiplying the total corporate income tax payable by the enterprise for the period by (x), which represents the ratio between the costs incurred at the dependent production unit and the total costs of the enterprise.

The tax payment provisions stipulated in this Clause shall not apply to construction projects, project components, or dependent construction units.

The classification, management, and utilization of revenue from corporate income tax shall be carried out in accordance with the provisions of the State Budget Law.

2. Dependent accounting units of enterprises with industry-wide accounting that generate income outside their primary business operations shall pay taxes at the province or centrally governed city where such business activities take place.

3. The Ministry of Finance shall provide guidance on the places of tax payment as prescribed in this Article.

Chapter III

INCOME FROM THE TRANSFER OF REAL ESTATE

Article 13. Income from the transfer of real estate includes income from transferring land use rights, transferring land lease rights; income from subleasing land by real estate businesses in accordance with the laws on land, regardless of whether there are infrastructure works or architectural structures attached to the land; income from transferring houses and buildings constructed on land, including assets attached to those houses and buildings, regardless of whether there is a transfer of land use rights or land lease rights; income from transferring other assets attached to land.

Article 14. Taxable income from the transfer of real estate is determined by subtracting the cost of the real estate and related expenses from the revenue generated from the transfer of real estate.

1. Revenue for calculating taxable income is determined based on the actual transfer price of real estate according to the purchase and sale contracts in compliance with the law.

If the price of transferring land use rights according to the purchase and sale contract is lower than the land price set by the provincial or centrally governed city People's Committee at the time of signing the contract, it shall be calculated based on the land price set by the provincial or centrally governed city People's Committee.

2. The time point for determining revenue for calculating taxable income is the time point when the real estate is handed over.

In cases where advance payments are received according to the progress schedule, the time point for determining revenue for temporarily paying corporate income tax is the time point when the money is received. The Ministry of Finance shall provide guidance on temporarily paying tax as stipulated in this Clause.

3. Transfer expenses of real estate that can be deducted include:

a) The cost of land transferred is determined in accordance with the source of land use rights, specifically as follows:

- For state-granted land with land use fees or land lease fees, the cost is the actual amount of land use fees or land lease fees paid to the state budget;

- For land acquired from other organizations or individuals, it is based on the contract and legitimate payment receipts when acquiring land use rights or land lease rights; if there is no contract or legitimate payment receipt, the cost is calculated based on the land price set by the provincial or centrally governed city People's Committee at the time the enterprise acquires the real estate transfer;

- For land acquired through capital contribution, the cost is the agreed value at the time of contribution;

- For inherited, gifted, or donated land where the cost cannot be determined, it is calculated based on the land prices set by the provincial or centrally governed city People's Committee at the time of inheritance, gift, or donation;

For land inherited, gifted, or donated before 1994, the cost is determined based on the land prices decided by the provincial or centrally governed city People's Committee in 1994 according to the Land Price Framework Table specified in Decree No. 87/CP dated August 17, 1994 of the Government;

b) Compensation and support costs when the state recovers land;

c) Fees and charges related to granting land use rights as prescribed by law;

d) Costs of land improvement and site leveling;

đ) Value of infrastructure and architectural structures on the land;

e) Other costs related to the real estate being transferred.

Chapter IV

TAX INCENTIVES FOR CORPORATE INCOME TAX

Article 15. Preferential tax rate

1. A preferential tax rate of 10% for a period of 15 years shall apply to:

a) Income of enterprises from implementing new investment projects in areas with particularly difficult socio-economic conditions as specified in the Appendix attached hereto, economic zones, high-tech zones including concentrated information technology zones established pursuant to the Prime Minister's Decision;

b) Income of enterprises from implementing new investment projects in the following fields: Scientific research and technological development; application of high-tech technologies listed in the priority investment and development catalog under the Law on High Technology; incubation of high-tech technologies, incubation of high-tech enterprises; venture capital investment for the development of high-tech technologies listed in the priority development catalog under the laws on high technology; investment in construction and operation of high-tech incubation facilities, incubation of high-tech enterprises; investment in developing water treatment plants, power plants, water supply and drainage systems; bridges, roads, railways; airports, seaports, river ports; special infrastructure projects of great importance decided by the Prime Minister; production of software products; production of composite materials, lightweight building materials, rare materials; production of renewable energy, clean energy, energy from waste disposal; development of biotechnology;

The software product production investment project specified herein refers to a project producing software products listed in the software product catalog and meeting the production process requirements for software products as stipulated by law;

c) Income of enterprises from implementing new investment projects in environmental protection fields, including: Production of pollution control equipment, environmental monitoring and analysis equipment; pollution control and environmental protection; collection, treatment of wastewater, exhaust gas, solid waste; recycling and reuse of waste;

d) High-tech enterprises, agricultural enterprises applying high-tech;

In cases where enterprises are currently enjoying corporate income tax preferences or have fully enjoyed corporate income tax preferences according to legal regulations on corporate income tax and are granted certificates as high-tech enterprises or agricultural enterprises applying high-tech, the level of preference for high-tech enterprises and agricultural enterprises applying high-tech shall be determined by subtracting the time already enjoyed (both tax rates and exemption/reduction periods if applicable) from the preferential rate applied to high-tech enterprises and agricultural enterprises applying high-tech as stipulated in Clause 1, Article 15 and Clause 1, Article 16 of this Decree;

đ) Income of enterprises from implementing new investment projects in manufacturing fields (excluding projects producing goods subject to special consumption taxes and mineral extraction projects) that meet one of the following criteria:

- Projects with a minimum investment capital of VND 6 trillion, disbursed within no more than three years from the date of investment approval and achieving a minimum annual turnover of VND 10 trillion within no more than three years from the year of revenue;

- Projects with a minimum investment capital of VND 6 trillion, disbursed within no more than three years from the date of investment approval and employing at least 3,000 workers within no more than three years from the year of revenue;

The number of workers specified herein refers to those who have signed full-time labor contracts, excluding part-time workers and short-term contracts under one year;

2. A 10% tax rate shall apply to the following income:

a) Income of enterprises from implementing socialized activities in education and training, vocational training, healthcare, culture, sports, and environment sectors;

The list of types, scale criteria, and standards of enterprises implementing socialization as stipulated herein shall be prescribed by the Prime Minister;

b) Income from publishing activities of publishers as prescribed by the Law on Publishing;

c) Income from print media activities (including advertising in print media) of press agencies as prescribed by the Law on Press;

d) Income of enterprises from implementing housing social investment projects for sale, lease, or lease-purchase to eligible groups as stipulated in Article 53 of the Law on Housing;

Social housing as stipulated herein refers to housing built by the State or entities and individuals from various economic sectors and meeting the criteria for housing, selling price, rental price, lease-purchase price, eligible groups, and conditions for purchasing, renting, or lease-purchasing social housing as prescribed by the law on housing, and the determination of income subject to the 10% tax rate prescribed herein does not depend on the signing date of the contract for selling, leasing, or lease-purchasing social housing;

đ) Income of enterprises from: Planting, caring for, and protecting forests; farming, forestry, aquaculture in economically disadvantaged areas; production, breeding, and hybridization of crop and livestock seeds; production, mining, and refining of salt except for salt production as stipulated in Clause 1, Article 4 of this Decree; investment in post-harvest agricultural product preservation, aquatic and food preservation;

e) Income of cooperatives operating in agriculture, forestry, fisheries, and salt industries outside economically disadvantaged and particularly disadvantaged areas, except for cooperatives as stipulated in Clause 1, Article 4 of this Decree;

3. A 20% tax rate for a period of ten years shall apply to:

a) Income of enterprises from implementing new investment projects in areas with difficult socio-economic conditions as specified in the Appendix attached hereto;

b) Income of enterprises from implementing new investment projects: Production of high-quality steel; production of energy-saving products; production of machinery and equipment for agriculture, forestry, fisheries, and salt industries; production of irrigation equipment; production, refining of animal, poultry, and seafood feed; development of traditional crafts.

Enterprises implementing new investment projects in sectors and areas with preferential tax rates as stipulated in Points a and b of this Clause shall apply a tax rate of 17% from January 1, 2016.

4. A tax rate of 20% applies to people's credit funds and microfinance organizations, and from January 1, 2016, a tax rate of 17% shall be applied.

For people's credit funds and microfinance organizations, after the period during which the tax rate of 10% as prescribed in Clause 1 of this Article expires, they shall switch to applying a tax rate of 20% (and from January 1, 2016, it will be 17%). Microfinance organizations referred to in this Clause are organizations established and operating in accordance with the Law on Credit Institutions.

5. For projects eligible for preferential tax rates as stipulated in Points b and c of Clause 1 of this Article, if they have large scale and high technology or are newly established and require special attraction of investment, the duration of application of preferential tax rates may be extended, but the total duration of application of the 10% tax rate shall not exceed 30 years. The Prime Minister decides on extending the duration of application of the preferential 10% tax rate as prescribed in this Clause upon the proposal of the Minister of Finance.

6. The duration of application of preferential tax rates as prescribed in this Article shall be continuously calculated from the first year enterprises generate revenue from new investment projects; for high-tech enterprises and high-tech agricultural enterprises, it shall be calculated from the date they are recognized as high-tech enterprises or high-tech agricultural enterprises; for high-tech projects, it shall be calculated from the date the certificate of high-tech project is issued.

Article 16. Exemption and Reduction of Tax

1. Exemption of tax for four years and reduction of 50% of the tax payable in the next nine years for:

a) Income of enterprises from implementing new investment projects as stipulated in Clause 1 of Article 15 of this Decree;

b) Income of enterprises from implementing new investment projects in socialized fields carried out in areas with difficult economic and social conditions or extremely difficult conditions as specified in the Appendix attached to this Decree.

2. Exemption of tax for four years and reduction of 50% of the tax payable in the next five years for income of enterprises from implementing new investment projects in socialized fields in areas not included in the list of areas with difficult economic and social conditions or extremely difficult conditions as specified in the Appendix attached to this Decree.

3. Exemption of tax for two years and reduction of 50% of the tax payable in the next four years for income from implementing new investment projects as stipulated in Clause 3 of Article 15 of this Decree and income of enterprises from implementing new investment projects in industrial parks (excluding industrial parks located in areas with favorable economic and social conditions).

Areas with favorable economic and social conditions as stipulated in this Clause include inner-city districts of special-class cities, central cities of class I, and provincial cities of class I; in cases where an industrial park is located in both favorable and unfavorable areas, the determination of tax incentives for the industrial park shall be based on the area with the larger portion of the industrial park's land area. The classification of special-class cities and class I cities as stipulated in this Clause shall be implemented according to the Government's regulations on city classification.

4. The duration of tax exemption and reduction as prescribed in this Article shall be continuously calculated from the first year of generating taxable income from new investment projects eligible for tax incentives; in cases where there is no taxable income in the first three years, the duration of tax exemption and reduction shall be calculated from the fourth year starting from the first year of generating revenue from new investment projects. The duration of tax exemption and reduction for high-tech enterprises and high-tech agricultural enterprises as stipulated in Clause 1 of this Article shall be calculated from the date they are recognized as high-tech enterprises or high-tech agricultural enterprises.

In the first tax period, if the new investment project of an enterprise has less than twelve months of production and business activities exempted from or reduced in tax, the enterprise may choose to enjoy tax exemption or reduction for the new investment project in that tax period or register with the tax authority to start enjoying tax exemption or reduction from the following tax period.

An enterprise with an ongoing investment project in a sector or area with corporate income tax incentives under this Decree that expands its production scale, increases capacity, or updates production technology, if meeting one of the criteria stipulated in this Clause, may choose to enjoy tax incentives for the remaining time of the ongoing project (if any) or be exempted or reduced in tax on additional income generated from expanded investment. The duration of tax exemption and reduction for additional income generated from expanded investment as stipulated in this Clause shall be equal to the duration of tax exemption and reduction applicable to new investment projects in the same tax incentive sector or area.

Investment expansion projects as stipulated in this Clause must meet one of the following criteria:

- Additional fixed asset value when the investment project is completed and put into operation reaches at least VND 20 billion for investment expansion projects in sectors eligible for corporate income tax incentives under this Decree or VND 10 billion for investment expansion projects carried out in areas with difficult economic and social conditions or extremely difficult conditions as prescribed by the Corporate Income Tax Law;

- The proportion of additional fixed asset value reaches at least 20% compared to the total fixed asset value before investment;

- Increased design capacity reaches at least 20% compared to the design capacity before investment.

If an enterprise currently in operation invests in upgrading, replacing, or modernizing the technology of an ongoing project in sectors or areas with tax incentives as prescribed in this Decree without meeting one of the three criteria stipulated in this Point, tax incentives shall be implemented for the ongoing project for the remaining time (if any).

In the case where a business chooses to enjoy tax benefits under the expanded investment category, the additional income generated from expanded investment shall be accounted for separately; if separate accounting is not possible, the income from expanded investment activities shall be determined based on the ratio between the original value of new fixed assets invested and put into use for production and business operations over the total original value of fixed assets of the business.

The period of tax exemption and reduction stipulated in this Clause shall be calculated from the year the expanded investment project completes and is put into production and business operations with income; in cases where there is no taxable income in the first three years, starting from the first year of revenue from the expanded investment project, the period of tax exemption and reduction shall be calculated from the fourth year.

The tax benefits stipulated in this Clause shall not apply to cases of expanded investment through mergers, acquisitions of businesses, or ongoing investment projects.

Article 17. Tax Reduction for Other Cases

1. Businesses engaged in production, construction, transportation that employ from 10 to 100 female workers, wherein female workers account for more than 50% of the total number of regularly present or frequently employed workers, or those employing more than 100 female workers, with female workers accounting for more than 30% of the total number of regularly present workers of the business, shall be entitled to a reduction in corporate income tax equivalent to the additional costs incurred for female workers, including:

a) Costs for retraining;

b) Wages and allowances (if any) for teachers working at kindergartens organized and managed by the business;

c) Additional health check-ups annually;

d) Allowances for female workers after childbirth. Based on labor law regulations, the Ministry of Finance shall coordinate with the Ministry of Labor, Invalids, and Social Affairs to specify the specific levels of allowances stipulated in this Clause;

đ) Wages and allowances paid during the time female workers are entitled to rest after childbirth and breastfeeding according to the regime but continue to work.

2. Businesses employing workers who are ethnic minorities shall be entitled to a reduction in corporate income tax equivalent to the additional costs incurred for training ethnic minority workers, housing support, social insurance, and health insurance for ethnic minorities in cases where such support has not been provided by the State according to the prescribed regime.

3. Businesses implementing technology transfer in priority areas for transfer to organizations and individuals in economically disadvantaged areas shall be entitled to a 50% reduction in corporate income tax on the portion of income derived from technology transfer.

Article 18. Establishment of the Enterprise Science and Technology Development Fund

The establishment of the Enterprise Science and Technology Development Fund shall be carried out in accordance with Article 17 of the Law on Corporate Income Tax and Clause 11 of Article 1 of the Law Amending and Supplementing Certain Provisions of the Law on Corporate Income Tax.

1. Enterprises established and operating in accordance with Vietnamese law may allocate up to 10% of their taxable income annually to establish the Enterprise Science and Technology Development Fund. For state-owned enterprises holding more than 50% of the charter capital, in addition to establishing the science and technology development fund as prescribed by this Law, they must also ensure the minimum allocation rate as stipulated by the Law on Science and Technology.

Annually, enterprises shall decide on the level of allocation to the Enterprise Science and Technology Development Fund as prescribed above and prepare a report on the allocation and use of the Enterprise Science and Technology Development Fund together with the final tax return for corporate income tax.

The format of the Report on the Allocation and Use of the Enterprise Science and Technology Development Fund shall be prescribed by the Ministry of Finance.

2. Existing enterprises undergoing changes in ownership form, mergers, or consolidations, the newly established enterprise resulting from such changes, mergers, or consolidations shall inherit and be responsible for managing and using the Enterprise Science and Technology Development Fund of the enterprise prior to the change, merger, or consolidation.

Enterprises with an Enterprise Science and Technology Development Fund that has not been fully utilized when splitting or dividing shall have the newly established enterprise resulting from such splitting or division inherit and be responsible for managing and using the Enterprise Science and Technology Development Fund of the enterprise prior to splitting or dividing. The division of the Enterprise Science and Technology Development Fund shall be decided by the enterprise and registered with the Tax Authority.

Article 19. Conditions for Applying Corporate Income Tax Incentives

The conditions for applying corporate income tax incentives shall be implemented in accordance with Clause 12, Article 1 of the Law Amending and Supplementing Certain Provisions of the Corporate Income Tax Law.

1. Enterprises must separately account for income from production and business activities that enjoy corporate income tax incentives (including preferential tax rates or tax exemption, reduction); in cases where certain revenues or deductible expenses cannot be separately accounted for, such revenues or deductible expenses shall be determined based on the ratio between the deductible expenses or revenues of the production and business activities enjoying tax incentives over the total deductible expenses or revenues of the enterprise.

2. The corporate income tax incentives stipulated in Clause 1, Clause 4, Article 4 and Articles 15, 16 of this Decree, and the 20% tax rate stipulated in Clause 2, Article 10 of this Decree shall not apply to the following incomes:

a) Income from capital transfer, equity contribution transfer; income from real estate transfer, except income from social housing investment business as provided for in Point d, Clause 2, Article 15 of this Decree; income from investment project transfer, participation right in investment project transfer, exploration and exploitation rights for minerals transfer; income received from production and business activities outside Vietnam;

b) Income from oil and gas exploration, exploitation, rare resource exploitation activities, and income from mineral exploitation activities;

c) Income from business services subject to special consumption tax as prescribed by the Special Consumption Tax Law;

d) Other types of income specified in Clause 2, Article 3 of this Decree that are unrelated to production and business activities enjoying tax incentives (in cases where the conditions for tax incentives in terms of fields and industries as stipulated in Articles 15, 16 of this Decree are met).

3. During the same period, if an enterprise enjoys multiple levels of tax incentives for the same income, the enterprise may choose to apply the most favorable tax incentive level.

4. During the period of corporate income tax incentives, if during a taxable year the enterprise fails to meet one of the tax incentive conditions stipulated in Clauses 7, 8, and Clause 12, Article 1 of the Law Amending and Supplementing Certain Provisions of the Corporate Income Tax Law and the provisions of this Article, then that taxable year will not enjoy tax incentives and the enterprise must pay taxes at the 22% tax rate, and enterprises with annual revenue not exceeding 20 billion VND as stipulated in Clause 2, Article 10 of this Decree must pay taxes at the 20% tax rate. From January 1, 2016, the general tax rate is 20%.

For investment projects as provided for in Point d, Clause 1, Article 15 of this Decree, if within three years from the date of investment permit issuance (excluding delays due to objective reasons in land clearance, administrative procedures of state agencies, or natural disasters, fires approved by the investment certificate issuing authority and reported to the Prime Minister for approval) or the fourth year from the year of revenue generation, the investment project of the enterprise does not meet the conditions set out in Point d, Clause 1, Article 15 of this Decree, it will not enjoy corporate income tax incentives, and the enterprise must declare and pay the corporate income tax already declared for previous years (if any) according to the law without being considered as a violation under the tax management law. During the period of enjoying corporate income tax incentives, if in any taxable year the enterprise fails to meet one of the tax incentive conditions stipulated in Point d, Clause 1, Article 15 of this Decree, then that year the enterprise will not enjoy corporate income tax incentives.

5. New investment projects enjoying tax incentives as stipulated in Clause 1, Clause 3, Article 15 and Clauses 1, 2, 3, Article 16 of this Decree are new projects carried out for the first time or independent investment projects separate from ongoing projects, except for the following cases:

a) Investment projects formed from the division, separation, merger, conversion of enterprise forms as prescribed by law;

b) Investment projects formed from ownership change (including cases where a new investment project is implemented but continues to use the assets, business locations, and business fields of the old enterprise to continue production and business operations).

New investment projects enjoying tax incentives as stipulated in Articles 15, 16 of this Decree must be granted an Investment License or Investment Certificate by competent state authorities. In cases of domestic investment projects with investment capital below 15 billion VND and not included in the list of conditional investment sectors, the documentation to determine the investment project is the business registration certificate.

Chapter V

IMPLEMENTING PROVISIONS

Article 20. Effective Date

1. This Decree takes effect from February 15, 2014, and applies to tax periods starting from 2014 onwards.

Repeal Decree No. 124/2008/NĐ-CP dated December 11, 2008, No. 122/2011/NĐ-CP dated December 27, 2011 of the Government detailing and guiding the implementation of certain provisions of the Corporate Income Tax Law, and Articles 2, 3 of Decree No. 92/2013/NĐ-CP dated August 13, 2013 of the Government detailing the implementation of certain provisions of the Law Amending and Supplementing Certain Provisions of the Corporate Income Tax Law and the Law Amending and Supplementing Certain Provisions of the Value Added Tax Law, effective from July 1, 2013.

2. An enterprise with an investment project that, as of the end of the tax period in 2013, is still within the period for enjoying preferential corporate income tax benefits, including cases where the investment project has been granted an Investment License, Certificate of Investment, or Enterprise Registration Certificate (for domestic investment projects tied to the establishment of a new business with a capital investment under VND 15 billion and not included in the List of Conditional Investment Sectors) but has not yet enjoyed such benefits according to the provisions of legal documents on corporate income tax before this Decree takes effect shall continue to enjoy the remaining time of such benefits as stipulated in those documents; if it meets the conditions for preferential tax treatment as prescribed in this Decree, it may choose between the preferential treatment currently being enjoyed or the preferential treatment prescribed in this Decree (including the preferential tax rate and the period of tax exemption and reduction) according to the preferential treatment for new investments for the remaining time if it is currently enjoying preferential treatment as a newly established business from an investment project or according to the preferential treatment for expanded investments for the remaining time if it is currently enjoying preferential treatment as an expanded investment.

As of the end of the tax period in 2015, enterprises with investment projects applying the preferential tax rate of 20% as stipulated in Clause 3, Article 15 of this Decree shall be subject to the tax rate of 17% from January 1, 2016 for the remaining time.

The determination of the remaining time to enjoy preferential tax benefits shall be calculated continuously from the date of implementation of the preferential tax provisions in legal documents on foreign direct investment in Vietnam, domestic investment incentives, and corporate income tax issued before the effective date of this Decree.

3. Enterprises established or enterprises with investment projects resulting from changes in business form, ownership transfer, division, separation, merger, or consolidation shall be responsible for fulfilling their obligations to pay corporate income tax (including penalties, if any), while inheriting the corporate income tax preferences (including undeducted losses) of the enterprise or investment project prior to the change, division, separation, merger, or consolidation, provided they continue to meet the conditions for corporate income tax preferences and loss carryforward as prescribed by law.

4. The resolution of outstanding tax issues, finalization of tax returns, tax exemptions, and reductions before the effective date of this Decree shall be carried out in accordance with the provisions of legal documents on corporate income tax, laws on foreign direct investment in Vietnam, laws on domestic investment incentives, and other regulatory legal documents issued before the effective date of this Decree.

Article 21. Responsibility for Implementation

1. The Ministry of Finance shall provide guidance on the implementation of this Decree.

2. Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairpersons of People's Committees of provinces and centrally governed cities, and related organizations and individuals are responsible for implementing this Decree./.