Tax management

Decree 31/2021/ND-CP defines preferential invesment categories, conditions and investment incentive policies

On 26 March 2021, the Government issued Decree No. 31/2021/ND-CP guiding some articles of the Law on Investment. According to the Decree, new categories have been released, such as:

  • List of prohibited industries and conditional investments applied to foreign investors (Appendix I)
  • List of industries with investment incentives and special investment incentives (Appendix II)
  • List of geographical areas eligible for investment incentives and special investment incentives (Appendix III)

The Decree comes into force since the signing date and replaces Decree No. 118/2015/ND-CP dated 12 November 2015, Decree No. 37/2020/ND-CP dated 30 March 2020, Decree No. 83/2015/ND-CP dated 25 September 2015, Decree No. 104/2007/ND-CP dated 14 June 2007, Decree No. 69/2016/ND-CP dated 01 July 2016, Decree No. 79/2016/ND-CP dated 01 July 2016, and Article 2 of Decree No. 100/2018/ND-CP dated 16 July 2018.


Corporate income tax (“CIT”)

Donations, sponsorship payments to prevention and control efforts of the Covid-19 pandemic are deductible expenses

On 31 March 2021, the Government issued Decree No. 44/2021/ND-CP (Decree 44) regarding deductible donations and sponsorship payments by enterprises/organizations to prevent and control the Covid-19 pandemic. Details are as follows:

  • Subjects of application: organizations and enterprises (hereinafter, “enterprises, etc.”) who are CIT payers under the provisions of the Law on Corporate Income Tax, that make donations to or sponsor efforts to prevent and control the Covid-19 pandemic in Vietnam.
  • Cash donations, sponsorship payments and/or donations in-kind to a list of certified organizations (state-owned and private; for a full list of acceptable organizations, please refer to Decree 44) to support the efforts to prevent and control the Covid-19 pandemic in Vietnam by Enterprises, etc. are deductible expenses for CIT purposes.
  • Decree 44 also specifies necessary evidence documents for donations/sponsorship payments as follows: Proof of sponsorship (fixed form, issued by Decree 44), or documents (hard copy or electronic) certifying the donations signed and sealed by the representative of the donating enterprise, signed and sealed by the representative of the recipient organization; legal invoices and vouchers of the donations in accordance with applicable laws.

This Decree takes effect from signing date and applies to the CIT period of 2020 and 2021.


Value added tax (“VAT”)

Declaring VAT on new investment projects for VAT refund

On 1 April 2021, the General Department of Taxation issued Official Letter No. 944/TCT-CS (OL 944) on VAT refund for new investment projects. According to OL 944, at the end of the investment period, the enterprise implementing an investment project must declare its outstanding deductible VAT in item “Outstanding deductible input VAT requested for refund on Form 02/GTGT.

In case it has not declared the above item, the enterprise must revise its VAT returns in accordance with Point b, Clause 4, Article 7 of Decree No. 126/2020/ND-CP.

The enterprise may apply for VAT refund (for an investment project) if it meets the prescribed refund conditions.



Criteria for determining high-tech enterprises

On 16 March 2021, the Prime Minister issued Decision No. 10/QD-TTg on Criteria for determining high-tech enterprises as follows:

High-tech enterprises must satisfy the criteria set forth in Point a and b, Clause 1, Article 18 of the Law on High Technologies No. 21/2008/QH12 (amended and supplemented by Article 75 of the Law on Investment No. 67/2014/QH13 and Clause 3, Article 76 of the Law on Investment No. 61/2020/QH14). In addition, an enterprise must meet the following 3 criteria:

– Revenue from high-tech products must account for at least 70% of the total annual net revenue of the enterprise.

– Total R&D expense over the difference between total net revenue and net purchases (including imported and domestically sourced raw materials and components) must reach a certain level annually, depending on the enterprise’s size and revenue.

– The ratio of employees who directly conduct R&D activities with a college degree or higher qualification (the employees must have signed a labor contract with term of 01 year or more, or an indefinite-term contract; employees with college degrees do not exceed 30% of the R&D workforce) out of the total number of employees must reach a certain level.

This Decision takes effect on 30 April 2021 and supersedes Decision No. 19/2015/QD-TTg dated 15 June 2015.