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

CIRCULAR

JOINT CIRCULAR OF THE MINISTRY OF FINANCE AND THE STATE COMMITTEE FOR FOREIGN ECONOMIC RELATIONS AND INVESTMENT NO. 66/TT-LB DATED OCTOBER 30, 1992 GUIDING THE IMPLEMENTATION OF PROVISIONS ON TAX RATES AND TAX EXEMPTIONS AND REDUCTIONS FOR 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 Decree 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 below the Law;

In order to promote the attraction of foreign investment capital under the Law on Foreign Investment in Vietnam, gradually form a reasonable economic structure by region and territory, and at the same time create favorable conditions for investors to be proactive in the investment preparation process, the Ministry of Finance and the State Committee for Foreign Economic Relations and Investment now guide the implementation of provisions on tax rates and tax exemptions and reductions for foreign investment projects under the Law on Foreign Investment in Vietnam as follows:

I. REGARDING THE TAX RATES ON CORPORATE INCOME TAX

According to Article 69 and Article 71 of Decree No. 28/HĐBT dated February 6, 1991 of the Council of Ministers detailing the implementation of the Law on Foreign Investment in Vietnam, the corporate income 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 prioritized according to Article 69 of Decree No. 28/HĐBT, investing in localities listed in Appendix 1 (attached hereto).

b) The 20% tax rate applies to projects prioritized according to Article 69 of Decree 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, accounting audit 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%. Among them:

a) The 25% tax rate applies to projects investing in the banking, insurance, accounting service, accounting audit 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 prioritized according to Article 69 of Decree No. 28/HĐBT operating in infrastructure construction such as transportation construction, power supply, water supply and drainage, afforestation, and infrastructure construction in export processing zones and industrial parks planned by the Vietnamese government and included in the list of encouraged investment projects announced by the State Committee for Foreign Economic Relations and Investment.

4. For exploration, exploitation, and processing of oil and gas and rare mineral resources, the corporate income tax rate is higher than 25% and is determined specifically for each project by the State Committee for Foreign Economic Relations 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 PRIORITY JOINT VENTURES AS PROVIDED FOR IN ARTICLE 69
OF DECREE 28/HĐBT

According to Article 70 and Article 71 of Decree 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 corporate income tax exemption and a 50% reduction for the next four years from the date of profit generation.

2. Projects investing in provinces listed in Appendix 2 (attached hereto) enjoy two years of corporate income tax exemption and a 50% reduction for the next two years from the date of profit generation.

3. Projects investing in Ho Chi Minh City, Dong Nai, and Ba Ria-Vung Tau may be considered for one year of corporate income tax exemption and a 50% reduction for the following year from the date of profit generation, depending on the specific encouragement for investment.

4. Infrastructure construction projects eligible for a 10% corporate income tax rate, regardless of the location of investment, enjoy four years of corporate income tax exemption and a 50% reduction for the next four years from the date of profit generation.

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

III. OTHER PROVISIONS

- For a joint venture prioritized according to Article 69 of Decree 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 licenses before the date of issuance of this Circular shall implement the provisions stated in their licenses and shall not apply this Circular.

ANNEX

(Attached to Joint Circular of the Ministry of Finance - State Committee for Foreign Economic Relations and Investment No. 66-TT/LB dated October 30, 1992)
Decision 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, Hai Phong, Thai Binh, Hai Hung, Nam Ha, Ninh Binh, Ha Tay, Ha Bac, Vinh Phuc, 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, Minh Hai, Tay Ninh, Song Be.