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CIT INCENTIVES

Released at: 23:43, 05/03/2015 TAX CONSULT

CIT INCENTIVES

Pursuant to guidance in Decree No. 101/2006/ND-CP, in case of re-registration the company is eligible to inherit all of its rights and legal benefits prior to the re-registration.

Our company enjoyed a Corporate Income Tax (CIT) incentive rate of 15 per cent for the entire life of its project, which lasted for 20 years, as per the initial Investment Certificate (IC) granted in 1993. The project has since been expanded a further 15 years under the amended IC issued in 2013. Will our company continue to enjoy the CIT incentives per the initial IC for the expanded period?  

Pursuant to guidance in Decree No. 101/2006/ND-CP, in case of re-registration the company is eligible to inherit all of its rights and legal benefits prior to the re-registration. Hence, the company shall be subject to CIT incentives of 15 per cent for the first 20 years following the CIT incentive in the initial project. However, for the next 15 years under the amended IC the company will not continue to enjoy the CIT incentives granted under the original license. The project in the new period will be entitled to incentives (if any) according to regulations at the time the amended IC was issued. 

Our company was established with an IC granted in November 2013. The project is still in the construction stage with no revenue generation. What CIT regulations should we rely on to assess CIT incentives for the project? 

Where a project is still under construction with no revenue generation, it is considered a new investment project and is subject to CIT incentives in accordance with the regulations for Circular No. 78/2014/TT-BTC dated June 18, 2014.

Our company has an expanded investment project in 2010 and satisfies the condition of location for CIT incentives. Will our company be subject to CIT incentives for the expanded investment project?

Pursuant to guidance for Decree No. 12/2015/ND-CP on CIT, if a company has an expanded investment project in the period from 2009 to 2013 and satisfies the conditions for CIT incentives in accordance with Law No. 32/2013/QH13, the expanded investment project shall be entitled to CIT incentives for the remaining period of the project, from fiscal year 2015. 

Our company’s charter capital has been fully contributed and we are now incurring some interest expenses on a loan taken out for the purpose of investing in another company. Will the relevant interest expenses be deductible for CIT calculation?

In accordance to guidance for Decree 12, where a company’s charter capital has been fully contributed the relevant interest expenses on loans for investment in another company shall be deductible for CIT calculation purposes. 

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