Joint Circular No. 66-LB/TT guiding the implementation of provisions on income tax rates and exemptions/reductions for foreign investment projects under the Law on Foreign Investment in Vietnam.

CIRCULAR

JOINT DECISION OF THE MINISTRY OF FINANCE AND NATIONAL COMMITTEE FOR COOPERATION AND INVESTMENT

No. 66/TT-LB dated October 30

1992 GUIDING IMPLEMENTATION OF PROVISIONS ON TAX RATES AND TAX EXEMPTIONS AND REDUCTIONS

ON FOREIGN INVESTMENT PROJECTS UNDER THE FOREIGN INVESTMENT LAW IN VIETNAM

Pursuant to the Law on Foreign Investment in Vietnam adopted by the National Assembly of the Socialist Republic of Vietnam on December 29, 1987 and the Law Amending and Supplementing Certain Provisions of the Law on Foreign Investment in Vietnam adopted by the National Assembly of the Socialist Republic of Vietnam on June 30, 1990;

Pursuant to Decision No. 28/HĐBT dated February 6, 1991 of the Council of Ministers detailing the implementation of the Law on Foreign Investment in Vietnam and related provisions under the Law:

In order to promote the attraction of foreign investment capital according to the Law on Foreign Investment in Vietnam, gradually forming a reasonable economic structure by region and territory, while creating favorable conditions for investors to be proactive in the investment preparation process, the Ministry of Finance and the National Committee for Cooperation and Investment now guide the implementation of provisions on tax rates and tax exemptions and reductions on foreign investment projects under the Law on Foreign Investment in Vietnam as follows:

I. REGARDING THE TAX RATES ON PROFIT TAX

According to Article 69 and Article 71 of Decision No. 28/HĐBT dated February 6, 1991 of the Council of Ministers detailing the implementation of the Law on Foreign Investment in Vietnam, the profit tax rates are determined as follows:

1. Preferential tax rate:

The preferential tax rate range (15%-20%) includes two tax rates of 15% and 20%. Among them:

a) The 15% tax rate applies to projects falling within the scope of priority as stipulated in Article 69 of Decision No. 28/HĐBT, investing in localities listed in Appendix 1 (attached hereto).

b) The 20% tax rate applies to projects falling within the scope of priority as stipulated in Article 69 of Decision No. 28/HĐBT, investing in localities not listed in Appendix 1 (attached hereto).

c) The preferential tax rates mentioned in points a and b above do not apply to projects investing in the banking, insurance, accounting service, auditing service, consulting service, and financial company sectors.

2. General tax rate:

The general tax rate range (21%-25%) includes two tax rates of 23% and 25%.

Where:

a) The 25% tax rate applies to projects investing in the banking, insurance, accounting service, auditing service, consulting service, and financial company sectors.

b) The 23% tax rate applies to projects not falling within the categories mentioned in point 1 and point 2a above.

3. Special preferential tax rate:

The special preferential tax rate of 10% only applies to joint ventures falling within the scope of priority as stipulated in Article 69 of Decision No. 28/HĐBT operating in infrastructure construction such as transportation construction, power supply, water supply and drainage, afforestation, and infrastructure construction of export processing zones and industrial parks according to the national planning and encouraged investment project list announced by the National Committee for Cooperation and Investment.

4. For exploration, exploitation, and processing projects of oil and gas and rare mineral resources, the profit tax rate is higher than 25% and is determined specifically for each project by the National Committee for Cooperation and Investment based on international practices and taking into account the extraction conditions, quality, and reserves of the resources, upon the investor's proposal.

II. TAX EXEMPTIONS AND REDUCTIONS FOR JOINT VENTURES FALLING WITHIN THE SCOPE OF PRIORITY AS STIPULATED IN ARTICLE 69 OF DECISION NO. 28/HĐBT

According to Article 70 and Article 71 of Decision No. 28/HĐBT detailing the implementation of the Law on Foreign Investment in Vietnam, the conditions for enjoying tax exemptions and reductions are implemented as follows:

1. Projects investing in localities listed in Appendix 1 (attached hereto) enjoy four years of tax exemption and a 50% reduction in the following four years from the time they start making profits.

2. Projects investing in provinces listed in Appendix 2 (attached hereto) enjoy two years of tax exemption and a 50% reduction in the following two years from the time they start making profits.

3. Projects investing in Ho Chi Minh City, Dong Nai, Ba Ria-Vung Tau may be considered for one year of tax exemption and a 50% reduction in the following year from the time they start making profits, depending on the specific encouragement for investment.

4. Infrastructure construction projects eligible for a 10% profit tax rate, regardless of where they are located, enjoy four years of tax exemption and a 50% reduction in the following four years from the time they start making profits.

5. The above guidelines on tax exemptions and reductions do not apply to projects exploiting oil and gas resources and rare mineral resources, banking, insurance, accounting services, auditing services, consulting services, and financial companies.

III. OTHER PROVISIONS

- For a joint venture falling within the scope of priority as stipulated in Article 69 of Decision No. 28/HĐBT that simultaneously invests capital in several different localities listed in both Appendix 1 and Appendix 2 (attached hereto), the preferential provisions mentioned in Sections I and II above will be applied based on considering where the joint venture mainly invests capital and where its main production and business activities take place.

This Circular takes effect from the date of issuance. Investment projects that have been granted investment permits before the issuance date of this Circular shall implement according to the regulations stated in their permits, without applying this Circular.

ANNEX

(Attached to Joint Circular of the Ministry of Finance - National Committee for Cooperation and Investment
No. 66-TT/LB dated October 30, 1992)

APPENDIX 1

Quang Ninh, Bac Thai, Cao Bang, Lang Son, Lao Cai, Yen Bai, Ha Giang, Tuyen Quang, Son La, Lai Chau, Thanh Hoa, Nghe An, Ha Tinh, Quang Tri, Quang Binh, Quang Ngai, Binh Dinh, Phu Yen, Binh Thuan, Ninh Thuan, Gia Lai, Kon Tum, Dak Lak, Lam Dong, Hoa Binh.

ANNEX NO. 2

Hanoi, Haiphong, Thai Binh, Hai Hung, Nam Ha, Ninh Binh, Ha Tay, Ha Bac, Vinh Phu, Thua Thien - Hue, Quang Nam - Da Nang, Khanh Hoa, Long An, Tien Giang, Dong Thap, Ben Tre, Vinh Long, Tra Vinh, Can Tho, Soc Trang, Kien Giang, An Giang, Minhy Hai, Tay Ninh, Song Be.