On 17 June 2016, the Ministry of Finance issued Circular No. 83/2016/TT-BTC guiding the implementation of investment incentives prescribed in the Law on Investment No.67/2014/QH13 and Decree No. 118/2015/ND-CP (“Circular 83”).

Circular 83 clarifies the incentives in terms of corporate income taxes (“CIT”), import duty (“ID”), and non-agricultural land use tax (“NALUT”), with detailed guidance on applications, especially for investment projects in the fields of science and technology and agriculture. Bellows are several key points of Circular 83.

Corporate income tax incentives:

The science and technology enterprises, which satisfy statutory science and technology revenues level as required by the laws on science and technology, are entitled to CIT incentives as enterprises conducting investment in high-tech zones (Article 4.6.b).

Expanded projects as defined in the Article 14.4 of the Law on Corporate income taxes are entitled to CIT incentives during the remaining operational period, if any, or CIT exemptions or reductions on the increased revenue created by the expansion. The period of taxes exemption or reduction on revenues from expanded projects is equal to the taxes exemption or reduction period for new projects in the same area or sector qualifying for CIT incentives (Article 4.8).

If an investment project is entitled to different types of CIT incentives, its investor can choose the most favorable incentives to apply (Article 4.5).

Import duty incentives based on investment sectors or investment areas:

Projects in special incentive investment sectors or implemented in special disadvantaged socioeconomic areas, are entitled to both ID exemptions on imported goods that constitute fixed assets and ID exemptions regarding importation of materials, supplies and components which cannot be produced domestically in five years commencing from the starting date of production (Article 5.1).

Projects in hotel, office or apartment buildings for lease, residential houses, commercial centers, engineering services, supermarkets, golf courses, tourist sites, sports facilities, entertainment places, healthcare service facilities, training and cultural centers, finance, banking, insurance, auditing and consultancy services are only exempted from paying ID for imported goods constituting fixed assets for the first time (Article 5.3).

The ID incentives are not applicable to projects in mining; production, trading of commodities and provision of services that subject to special consumption tax, except for automobile production (Article 5.7).

Non-agricultural land use tax incentives based on investment sectors or investment area:

Projects in special incentive investment sectors or implemented in special disadvantaged socioeconomic areas are entitled to exemption from NALUT (Article 6.1).

The NALUT are not applicable to projects in mining; production, trading of commodities and provision of services subject to special consumption tax, except for automobile production (Article 6.7).

Import duty and non-agricultural land use tax incentives based on capital scale or human resources:

Projects with total capital of at least VND6 trillion (roundly equivalent to USD273 million) that is disbursed within three years from the issuance date of investment registration certificate or investment policy decision are entitled to ID and NALUT as projects implemented in special incentive investment sectors or implemented in special disadvantaged socioeconomic areas, on the basis of the investor’s declaration. Projects which fail to disburse at least VND6 trillion in the above period are not entitled to such incentives (Article 5.4 and 6.3).

Projects in rural areas and having at least 500 employees who are neither part-time employees nor employees with under-12-month labor contract nor employees working at non-rural areas, are entitled to incentives as projects in the incentive investment sectors or implemented in special disadvantaged socioeconomic areas (Article 5.5 and 6.4).

Circular 83 will take effect on 1 August 2016. Regarding projects having Investment Licenses, Investment Certificates, or other equivalent documents before 1 July 2015 and domestic projects with capital scale of less than VND15 billion implemented before 1 July 2015, tax policy incentives shall be regulated by the provisions which came into effect prior to 1 July 2015 (Article 7).