Circular No. 230/2009/TT-BTC guides tax incentives for environmental protection activities as stipulated in Decree No. 04/2009/NĐ-CP dated January 14, 2009 of the Government on incentives and support for environmental protection activities.

CIRCULAR

Guidelines on tax incentives for environmental protection activities as stipulated in

Decree No. 04/2009/NĐ-CPdated January 14, 2009 of the Government on incentives and support for environmental protection activities

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Pursuant to the Enterprise Income Tax Law and related guiding documents;

Pursuant to the Law on Value Added Tax and related guiding documents;

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 04/2009/NĐ-CP dated January 14, 2009 of the Government on incentives and support for environmental protection activities;

After receiving the opinion of the Ministry of Natural Resources and Environment (Environmental General Department) in Circular No. 1803/TCMT-KHTC dated October 21, 2009,

The Ministry of Finance hereby provides guidelines on tax incentives for environmental protection activities as follows:

Article 1. Incentives for Corporate Income Tax

1. Enterprises and cooperatives implementing investment projects in environmental protection activities as specified in Section II Part A and Section II Part B of the List issued together with Decree No. 04/2009/NĐ-CP that meet the criteria for socialized facilities in the environmental sector shall enjoy corporate income tax incentives as follows:

a) Applying a tax rate of 10% throughout the period of operation for the portion of income derived from investment projects in the environmental protection sector.

b) New enterprises and cooperatives established from investment projects in the environmental protection sector implemented in areas with difficult socio-economic conditions or extremely difficult socio-economic conditions as defined in the Appendix issued together with Decree No. 124/2008/NĐ-CP dated December 11, 2008 of the Government detailing and guiding the implementation of certain provisions of the Law on Corporate Income Tax shall be exempted from tax for four years starting from when they have taxable income, and shall have their tax reduced by 50% for the next nine years.

c) New enterprises and cooperatives established from investment projects in the environmental protection sector implemented in areas not included in the List of areas with difficult socio-economic conditions or extremely difficult socio-economic conditions as defined in the Appendix issued together with Decree No. 124/2008/NĐ-CP of the Government shall be exempted from tax for four years starting from when they have taxable income, and shall have their tax reduced by 50% for the next five years.

2. The corporate income tax incentives stipulated in Clause 1 of this Article shall only apply to the portion of income from environmental protection activities; in cases where enterprises and cooperatives engaged in environmental protection also conduct other production and business activities, they must separately account for income from environmental protection activities to accurately declare the amount of corporate income tax eligible for incentives.

If during the tax period, enterprises and cooperatives cannot separately account for income from environmental protection activities and other production and business activities, the income from environmental protection activities shall be determined by multiplying the total taxable income from production and business activities (excluding other income) by the percentage ratio of revenue from environmental protection activities to the total revenue of the enterprise or cooperative during the tax period.

Income from environmental protection activities enjoying tax incentives under this Article includes income generated from environmental protection projects meeting the criteria for socialized facilities in the environmental sector, including income from selling products recovered during the implementation of such projects and income from scientific research topics on waste and wastewater treatment.

4. The scale and standard criteria for socialized facilities in the environmental sector shall be implemented according to the List of types, scale criteria, and standards of socialized facilities prescribed by the Prime Minister.

Article 2. Regarding Value Added Tax

Machinery, equipment, materials that belong to types not yet produced domestically, as specified in Clause 2, Article 2 of Decree No. 04/2009/NĐ-CP for organizations and individuals with investment projects for environmental protection activities, when imported for direct use in scientific research and technological development, shall be exempt from Value Added Tax.

The list of machinery, equipment, materials that have been produced domestically to serve as a basis for distinguishing from those not yet produced domestically, which need to be directly imported for use in scientific research and technological development, to determine goods exempt from tax under this Article, shall be issued by the Ministry of Planning and Investment.

To determine goods exempt from Value Added Tax at the import stage as stipulated in this Article, the importer must present to the customs authority documents according to the guidance of the Ministry of Finance on customs procedures; customs inspection and supervision; export duties, import duties, and tax management for exported and imported goods.

Article 3. Regarding Costs for Promoting Product Activities and Sorting Waste at Source

1. Promotion costs for products from environmental protection activities, costs for building scientific films and reports about environmental protection, and costs for providing free tools to the public to sort household waste at source as specified in points a, b, and c of Clause 1, Article 21 of Decree No. 04/2009/NĐ-CP for enterprises and cooperatives with investment projects for environmental protection activities, if they meet the conditions regarding invoices and documents as prescribed by law, shall be deductible expenses when determining taxable income for corporate income tax based on actual expenditures.

2. Promotion costs for products from environmental protection activities as stipulated in Clause 1 of this Article include the following costs:

a) Costs for organizing scientific seminars discussing production methods, features, and functions of products from environmental protection activities;

b) Market research costs; surveying, interviewing, collecting, analyzing, and evaluating information about products from environmental protection activities;

c) Costs for developing and supporting market research;

d) Costs for hiring consultants to perform research, development, and supporting market research tasks;

đ) Exhibition and product introduction costs, and organizing trade fairs and exhibitions: costs for opening rooms or booths to display and introduce products; costs for renting space to display and introduce products; costs for materials and tools to support displays and introductions; costs for transporting displayed and introduced products.

e) Promotion costs for products from environmental protection activities through educational, health, disaster relief, and poverty alleviation activities for poor people as prescribed by the Corporate Income Tax Law and guiding documents.

3. Scientific films and reports about environmental protection as stipulated in Clause 1 of this Article include:

a) Films promoting and raising awareness about environmental protection and sustainable consumption for communities regarding environmentally friendly products certified with an eco-label by recognized organizations.

b) Scientific films and reports popularizing knowledge about sorting household waste at source: reduce, reuse, recycle (3R).

4. Free tools provided to the public as stipulated in Clause 1 of this Article include: different-sized trash bins or bags, colored to distinguish organic and inorganic waste.

In cases where enterprises and cooperatives with investment projects for environmental protection provide free tools to the public to sort household waste at source as stipulated in this clause, if they also provide brochures guiding the sorting of organic and inorganic solid waste along with these tools, the costs for making the brochures shall be deductible expenses when determining taxable income for corporate income tax.

Enterprises and cooperatives providing free tools to the public as stipulated in this Article, in addition to meeting the conditions regarding invoices and documents as prescribed by law, must prepare detailed lists, specifying the name and address of each recipient; quantity and value of each type of tool; signatures of recipients; signatures of legal representatives or authorized persons of the enterprise.

The list of free tool provision signed by the legal representative or authorized person of the enterprise and responsible before the law for the accuracy and truthfulness of the list preparation.

Article 4. Organization of Implementation

1. This Circular takes effect 45 days from the date of signature.

2. In case of any difficulties during implementation, organizations and individuals are requested to promptly report to the Ministry of Finance for further study and supplementary guidance.