Corporate income tax of foreign language centers ?

If a foreign language center fully carries out procedures for establishment and operation licenses and is granted an investment certificate according to relevant legal regulations, can it be eligible for tax exemption for up to 4 years, followed by a 50% reduction in tax payable in the subsequent 5 years for the corporate income from implementing new investment projects ?

DMS Law office in Danang, Vietnam advise about corporate income tax of foreign language centers ?

Tax incentives:

Apply a tax rate of 10% to the corporate income from carrying out socialization activities in the fields of education - training, vocational training, health, culture, sports and environment.

The list of types, scale criteria and standards of enterprises implementing socialization specified in this Clause are prescribed by the Prime Minister;

Tax exemption for 4 years, followed by a 50% reduction in tax payable in the subsequent 5 years for corporate income from implementing new investment projects in the field of socialization in localities not on the list of localities with difficult or extremely difficult socio-economic conditions specified in the Appendix issued with this Decree (Point a Clause 2 Article 15, Clause 2 Article 16 Decree No. 218/2013/ND-CP dated December 26, 2013).

New investment projects:

New investment projects eligible for corporate income tax incentives specified in Article 15 and Article 16 of Decree No. 218/2013/ND-CP are:

A project which is granted the first-time Investment Certificate from January 1, 2014 onwards and generates revenues from the date the Investment Certificate is granted (Point a, Clause 5, Article 18 of Circular No. 78/2014 /TT-BTC dated June 18, 2014).

Preferential tax rate of 10%:

Preferential tax rate of 10% throughout the operating period applies to: Corporate income from socialization activities in the fields of education - training, vocational training, health, culture, sports, environment, and judicial appraisal (hereinafter collectively referred to as the field of socialization) (Clause 3, Article 10 of Circular 96/2015/TT-BTC dated June 22, 2015).

​Pursuant to Point c Clause 1 Article 1 Circular 71/2021/TT-BTC dated August 17, 2021 guiding on corporate income tax for establishments implementing socialization that have not yet been collected arrears according to Resolution 63/NQ- CP; and Section II of the List issued together with Decision 1470/QD-TTG dated July 22, 2016 amending the detailed list of types, criteria, scale and standards of establishments implementing socialization in the fields of education - training, vocational training, health, culture, sports, and environment, issued together with Decision 1466/QD-TTG, a Foreign Language Center must be organized and operate according to the provisions of Circular No. 21 /2018/TT-BGDDT dated August 24, 2018 replacing Circular No. 03/2011/TT-BGDDT dated January 28, 2011.

Therefore, in order to be entitled to a 4-year tax exemption, followed by a 50% reduction in the tax payable in the subsequent 5 years for the corporate income from implementing new investment projects and apply a preferential tax rate of 10% throughout the operating period, a foreign language center must fully carry out procedures in accordance with the law on establishment and operation licenses and be granted an investment registration certificate./.

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(Signed)

Lawyer Do Minh Son