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Incentives for Enterprise Income Tax- EIT in Vietnam (Also known: Corporate Income Tax - CIT): 

EIT preferential tax rate in Vietnam:

The preferential tax rate of 10% for fifteen (15) years is applicable to: Incomes of enterprises from the implementation of new investment projects in the fields of scientific research and  technological development; application of high technologies on the list of high technologies  prioritized or development investment in accordance with the Law on HighTechnologies; nursery  of high technologies and hi-tech enterprises; venture investment in development of high  technologies on the list of high technologies prioritized for development in accordance with the Law on HighTechnologies; construction investment and commercial operation of establishments nursing high technologies and hi-tech enterprises; investment in development water plants,  power  plants,  water  supply  and  drainage systems;  bridges, roads,  railways;  airports, seaports, river  ports;  air fields, stations  and  other  particularly  important  infrastructure  facilities  decided  by The  Prime  Minister;  production  of  software  products;  manufacture  of composite  materials,  light  building  materials,  rare  and  precious  materials;

generation of renewable energies, clean energy and energy from the waste disposal; development of biotechnology (Point b Clause 1 Article 19 Circular No 78/2014/TT-BTC dated June18, 2014 guiding the implementation of the Law on Enterprise Income Tax in Vietnam).

EIT tax exemption and reduction duration: 

Tax exemption for 4 years and 50% reduction of  tax payable amount for 9 subsequent years are applicable to: Incomes  of  enterprises  from  the  implementation  of  new  investment projects specified in Clause 1, Article 19 of this Circular.

Therefore, a software producing company, from the date of establishment, will be entitled to enterprise income tax (EIT) incentives as follows:

From the first year to the fourth year: EIT Tax exemption;

From the fifth year to the thirteen year: 50% Reduction of the tax payable, i.e. the company only pays EIT tax at 5%;

The fourteenth year and fifteenth year: Pays EIT at 10%;

From the sixteenth year afterwards: the company will pay the normal tax rate applicable 20% (Point a Clause 1 Article 20 Circular No 78/2014/TT-BTC dated 18June2014 guiding the implementation of the Law on Enterprise Income Tax in Vietnam)

Incentives for Value Added Tax in Vietnam (VAT): 

Goods and services not subjected to VAT: Computer software including software products and software services as prescribed by law (Clause 21, Article 4 Circular No 219/2013/TT-BTC dated 31 Dec2013 guiding the implementation of the Law on Value-Added Tax and the Decree No 209/2013/ND-CP dated December 18, 2013 of the Government on detailing and guiding implementation of several articles of Law on Value-Added Tax).

Incentives for Personal Income Tax in Vietnam (PIT): 

Resolution No 41/NQ-CP dated May26, 2016 regarding tax incentives to promote the development and application of information technology in Vietnam, stipulates:

50% reduction on personal income tax for income from employment of individuals who are high-tech human resources wokring in information technology, who are qualified and skilled people meeting requirements of research activities, development, application of hi-tech in information technology, managing hi-tech in information technology; operating equipment, production line for manufacturing of hi-tech products; managing security of information system.

Identification of Software products in Vietnam: 

Software (or software product) means a combination of commands or directives written with one or some programming languages in a specific order, relevant data and documents in order to perform certain tasks or functions, or to solve some particular issues.

The types of software products are specified in the List of software products promulgated together with Circular No 09/2013/TT-BTTTT dated April 08, 2013 of the Minister of Information and Communications (Clause 1 Article 3 Circular No 16/2014/TT-BTTTT dated November 18, 2014 prescribing the identification of software producing activities)./.

Tax incentives for software producing companies in Vietnam

DMS Law firm in Vietnam Director (Signed) Lawyer Do Minh Son