Hi DMS Law firm in Vietnam, I am a Japanese citizen. I am considering to set up a company in Vietnam that specializing in software producing, located in Danang Vietnam, by the form of 100% foreign-owned company in Vietnam. I would like lawyer to give advice on Vietnam’s tax incentives for 100% foreign-owned companies specializing in software producing.
Hi, given below is advice from DMS Law firm in Vietnam for your enquiry:
Incentives for Enterprise Income Tax- EIT (Also known: Corporate Income Tax - CIT):
Circular No 78/2014/TT-BTC dated June18, 2014 guiding the implementation of the Law on Enterprise Income Tax (Point b Clause 1 Article 19), stipulates:
EIT preferential tax rate:
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;
EIT tax exemption and reduction duration:
Circular No 78/2014/TT-BTC dated 18June2014 guiding the implementation of the Law on Enterprise Income Tax (Point a Clause 1 Article 20), stipulates:
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%).
Incentives for Value Added Tax (VAT):
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 (Clause 21, Article 4), stipulates:
Goods and services not subjected to VAT: Computer software including software products and software services as prescribed by law.
Incentives for Personal Income Tax (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:
Circular No 16/2014/TT-BTTTT dated November 18, 2014 prescribing the identification of software producing activities (Clause 1 Article 3), stipulates:
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./.
Tax incentives for company in Vietnam
|DMS Law firm in Vietnam|
Lawyer Do Minh Son
DMS Lawyers in Vietnam advise on value added tax (VAT) for foreign companies in Vietnam
Law office in Vietnam advises about value added tax (VAT) for foreign companies in Vietnam