Nghi Dinh 218 2013 ND CP Chinh Phu

THE GOVERNMENT
Decree No. 218/2013/ND-CP of December 26, 2013

detailing and guiding the implementation of the Law on
Enterprise Income Tax1
Pursuant to the December 25, 2001 Law on Organization of the Government;
Pursuant to the June 3, 2008 Law on Enterprise Income Tax and the June 19,
2013 Law Amending and Supplementing a Number of Articles of the Law on
Enterprise Income Tax;
At the proposal of the Minister of Finance,
The Government promulgates the Decree to detail and guide the
implementation of the Law on Enterprise Income Tax.
Chapter I
GENERAL PROVISIONS
Article 1. Scope of regulation
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This Decree details and guides the implementation of a number of articles of
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the Law on Enterprise Income Tax and the Law Amending and Supplementing
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a Number of Articles of the Law on Enterprise Income Tax on taxpayers;
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taxable incomes, tax-exempt incomes; determination of taxed incomes,
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determination and carrying forward of losses; turnover; deductible and non-
deductible expenses upon determination of taxable incomes; tax rates; tax
calculation method; tax incentives and conditions for application of tax
incentives.
Article 2. Taxpayers
Taxpayers are defined in Article 2 of the Law on Enterprise Income Tax and
Clause 1, Article 1 of the Law Amending and Supplementing a Number of
Articles of the Law on Enterprise Income Tax.
1. Taxpayers defined in Clause 1, Article 2 of the Law on Enterprise Income
Tax include:
a/ Enterprises established and operating under the Law on Enterprises, the Law
on Investment, the Law on Credit Institutions, the Law on Insurance Business,
the Law on Securities, the Law on Petroleum, the Commercial Law, and other
legal documents, in the form of joint-stock company; limited liability company;
partnership; private enterprise; party to business cooperation contract; party to
1
Công Báo Nos 71-72 (10/01/2014)
Vietnam Law & Legal Forum 1

oil and gas production sharing contract, oil and gas joint-venture enterprise or
jointly operating company;
b/ Enterprises established under foreign laws (below referred to as foreign
enterprises) with or without Vietnam-based permanent establishments;
c/ Public or non-public non-business units producing and trading in goods or
providing services and having taxable incomes under Article 3 of this Decree;
d/ Organizations established and operating under the Law on Cooperatives;
dd/ Organizations other than those defined at Points a, b, c and d of this Clause
that carry out production and business activities and have taxable incomes
under Article 3 of this Decree.
2. Organizations established and operating (or registering operation) under
Vietnamese law, business individuals paying tax by the withholding method in
case of purchase of services (including services associated with goods,
purchase of goods supplied or distributed in the form of on-the-spot import and
export or according to international commercial terms) on the basis of contracts
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signed with foreign enterprises defined at Points c and d, Clause 2, Article 2 of
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the Law on Enterprise Income Tax.
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The Ministry of Finance shall specifically guide the tax withholding referred to
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in this Clause.
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Article 3. Taxable incomes
1. Taxable incomes include income from goods production and trading and
service provision and other incomes specified in Clause 2 of this Article. For
enterprises having registered their business and earning incomes specified in
Clause 2 of this Article, such incomes will be determined as incomes from their
production and business activities.
2. Other incomes include:
a/ Income from capital transfer, including income from the transfer of part or
the whole of the capital amount invested in an enterprise, even in case of sale
of enterprises, transfer of securities, transfer of the capital contribution right
and transfer of capital in other forms in accordance with law;
b/ Income from transfer of investment projects, income from transfer of the
right to join investment projects, income from transfer of the mineral
exploration, exploitation or processing right in accordance with law; income
from transfer of real estate under Articles 13 and 14 of this Decree;
c/ Income from the right to use or own assets, including income from
intellectual property rights and income from technology transfer in accordance
with law;

d/ Income from transfer, lease or liquidation of assets (except real estate),
including other valuable papers;
dd/ Income from deposit interests, loan interests or foreign currency sales,
including interests on deposits at credit institutions, interests on loans in any
forms in accordance with law, including interests on deferred or installment
payments, credit guarantee charges and other charges in loan provision
contracts; income from foreign currency sales; exchange rate differences
resulting from the revaluation of payable debts of foreign-currency origin at the
end of a fiscal year; foreign exchange rate differences arising in a period
(particularly, foreign exchange differences arising in the process of capital
construction investment to form fixed assets of newly established enterprises
which are not yet put into production or business activities shall comply with
the guidance of the Ministry of Finance). Foreign exchange rate differences of
receivable debts or loans of foreign-currency origin arising in a period are
differences between foreign exchange rates at the time of debt collection and
those at the time of recording receivable debts or initial loans;
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e/ Amounts deducted in advance as expenses which are left unused or have not
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been used up in the period of their deduction and not accounted by enterprises
to reduce expenses;
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g/ Recovered bad debts which have been written off;
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h/ Payable debts of unidentifiable creditors;
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i/ Omitted incomes from previous years’ business activities now discovered;
k/ Difference between collected fines or compensations for breaches of
economic contracts or rewards for proper realization of contract commitments
(excluding fines and compensations recorded as reductions of the work value
in the stage of investment) and paid fines or compensations for contract
breaches in accordance with law;
l/ Received aid in cash or in kind;
m/ Differences resulting from the revaluation of assets in accordance law for
capital contribution or transfer upon separation, split, merger, consolidation or
transformation of enterprises.
Asset-receiving enterprises may conduct accounting based on revaluation
prices when determining deductible expenses specified in Article 9 of this
Decree;
n/ Incomes from production and business activities carried out outside
Vietnam;
o/ Other incomes, including tax-exempt incomes, specified in Clauses 6 and 7,
Article 4 of this Decree.

3. Taxable incomes generated in Vietnam by foreign enterprises defined at
Points c and d, Clause 2, Article 2 of the Law on Enterprise Income Tax are
incomes originating in Vietnam received from the provision of services, supply
and distribution of goods, provision of loans and copyright royalties collected
from Vietnamese organizations and individuals or foreign organizations and
individuals doing business in Vietnam, regardless of their places of business.
Taxable incomes specified in this Clause exclude income from services
provided outside the Vietnamese territory, such as overseas repair of means of
transport, machinery or equipment; overseas advertising, marketing and
investment and trade promotion; overseas goods or service sale brokerage;
overseas training; and international post and telecommunications service
charges divided to foreign parties.
The Ministry of Finance shall specifically guide taxable incomes referred to in
this Clause.
Article 4. Tax-exempt incomes
Tax-exempt incomes are specified in Article 4 of the Law on Enterprise
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Income Tax and Clause 3, Article 1 of the Law Amending and Supplementing
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a Number of Articles of the Law on Enterprise Income Tax.
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1. Incomes from cultivation, husbandry, aquaculture or salt production of
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cooperatives; incomes of cooperatives operating in the sector of agriculture,
forestry, fisheries or salt production in localities with difficult socio-economic
conditions or localities with particularly difficult socio-economic conditions;
incomes of enterprises from cultivation, husbandry or aquaculture in localities
with particularly difficult socio-economic conditions; incomes from marine
fishing.
Tax-exempt incomes from cultivation, husbandry or aquaculture of
cooperatives and enterprises specified in this Clause exclude incomes from the
processing or production of products from cultivation, husbandry or
aquaculture. Cooperatives and enterprises shall separately account incomes
from cultivation, husbandry or aquaculture from other processing or production
stages in order to determine enterprise income tax-exempt amounts mentioned
in this Clause. In case it is impossible to separately account such incomes, tax-
exempt incomes may be determined according to the ratio of expenses for tax-
exempt activities to the total production and business expenses in a tax period.
Tax-exempt cultivation, husbandry or aquaculture activities of cooperatives
and enterprises in localities with particularly difficult socio-economic
conditions specified in this Clause and at Point e, Clause 2, Article 15 of this
Decree shall be determined based on the level-1 economic sector codes of

agriculture, forestry and aquaculture prescribed in the System of Economic
Sectors of Vietnam.
Cooperatives operating in the sector of agriculture, forestry, fisheries or salt
production specified in this Clause and Clause 2, Article 15 of this Decree are
those satisfying the condition of ratio of products or services provided to their
members being individuals, households or legal persons engaged in agriculture,
forestry, fisheries or aquaculture in accordance with the Law on Cooperatives
and guiding documents.
2. Tax-exempt incomes from the provision of technical services directly for
agriculture include income from services of irrigation and water drainage, soil
plowing and harrowing, dredging of in-field canals and ditches, prevention and
control of crop and animal pests and diseases, and harvest of agricultural
products.
3. For incomes from the performance of scientific research and technology
development contracts, sale of products turned out from trial production and
with technologies applied for the first time in Vietnam, the maximum tax
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exemption duration is one year from the date of generating turnover from the
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sale of products under scientific research and technology application contracts,
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trial production or production with new technologies.
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The Ministry of Finance shall specifically guide this Clause.
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4. Incomes from goods production and trading and service provision activities
of enterprises employing disabled, detoxified and HIV/AIDS-affected persons
who account for at least 30% of the average number of employees in a year.
Tax-exempt enterprises specified in this Clause are those having an average
number of employees of at least 20 in a year, excluding those operating in the
fields of finance and real estate business.
Tax-exempt incomes specified in this Clause exclude other incomes specified
in Clause 2, Article 19 of this Decree.
5. Incomes from vocational training activities exclusively reserved for ethnic
minority people, the disabled, children in extremely disadvantaged
circumstances, persons involved in social evils, persons undergoing
detoxification, detoxified persons and HIV/AIDS-affected persons. If an
establishment also provides vocational training for other categories of people,
tax-exempt income will be determined based on the ratio between the number
of ethnic minority people, the disabled, children in extremely disadvantaged
circumstances, persons involved in social evils, persons undergoing
detoxification, detoxified persons and HIV/AIDS-affected persons and the total
number of job trainees of the establishment.

6. Incomes divided from capital contribution, share purchase, joint venture or
association with domestic enterprises, after contributed capital recipients, bond
issuers or joint-venture or association parties, including those enjoying tax
incentives under Chapter IV of this Decree, have paid tax in accordance with
the Law on Enterprise Income Tax.
7. Received aid for use for educational, scientific research, cultural, artistic,
charitable, humanitarian and other social activities in Vietnam.
Aid beneficiaries that improperly use the aid shall pay enterprise income tax
calculated on the improperly used aid amount in the tax period during which
the aid is improperly used.
Aid beneficiaries defined in this Clause are organizations established and
operating in accordance with law and strictly observing the laws on accounting
and statistics.
8. Incomes from the first-time transfer of Carbon Emission Reduction
Certificates (CERs) of enterprises which have been granted such certificates.
For subsequent transfers, enterprises shall pay enterprise income tax.
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9. Incomes from the performance of state-assigned tasks of the Development
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Bank of Vietnam regarding development investment credit and export credit;
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incomes from the Social Policy Bank’s activities of providing credit to the poor
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and other policy beneficiaries; incomes of the single-member limited liability
company managing assets of Vietnamese credit institutions (VAMC); incomes
from revenue-earning activities in the performance of state-assigned tasks of
the state financial funds: the Vietnam Social Security Fund, the Deposit
Insurance, the Health Insurance Fund, the Vocational Training Support Fund,
the Overseas Employment Support Fund under the Ministry of Labor, War
Invalids and Social Affairs, the Supporting Fund for Farmers, the Vietnam
Legal Aid Fund, the Vietnam Public-Utility Telecommunications Service Fund,
local development investment funds, the Vietnam Environmental Protection
Fund, the Credit Guarantee Fund for Small- and Medium-Sized Enterprises, the
Cooperative Development Support Fund, the Assistance Fund for Poor
Women, the Fund for Assisting Overseas Vietnamese Citizens and Legal
Entities, the Housing Development Fund, the Fund for Development of Small-
and Medium-Sized Enterprises, the National Foundation for Science and
Technology Development, and the National Technology Innovation Fund;
incomes from the performance of state-assigned tasks of the Land
Development Fund and other not-for-profit funds of the State which are
established under decisions of the Government or the Prime Minister and
operate in accordance with law.
10. Undivided incomes of establishments engaged in socialized education and
training, health and other socialized fields (including judicial assessment

offices) which are retained for investment in such establishments in accordance
with specialized laws on education and training, health and other socialized
fields; undivided incomes for forming assets of cooperatives which are
established and operate in accordance with the Law on Cooperatives.
11. Incomes from technology transfer in the fields in which technology transfer
to organizations and individuals in localities with particularly difficult socio-
economic conditions is prioritized.
Chapter II
TAX BASES AND TAX CALCULATION METHODS
Article 5. Tax bases
Tax bases include taxed income in a tax period and tax rate.
Tax period is specified in Article 5 of the Law on Enterprise Income Tax and
the law on tax administration.
Enterprises may choose to apply a tax period according to the calendar year or
fiscal year but shall register it with tax agencies before application.
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Article 6. Determination of taxed incomes
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1. Taxed income in a tax period shall be determined as follows:
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Taxed income = Taxable income - (Tax-exempt income + Losses carried
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forward under regulations)
2. Taxable income shall be determined as follows:
Taxable income = (Turnover - Deductible expenses) + other incomes
For an enterprise conducting different business activities, taxable income from
production and business activities is the total of incomes from all business
activities. If a business activity makes losses, the enterprise may offset such
losses with the taxable income of an income-generating business activity
selected by the enterprise. The remaining income after loss offsetting is subject
to the rate of enterprise income tax on income-generating business activities.
Incomes from the transfer of real estate, transfer of investment projects,
transfer of the right to join investment projects, transfer of mineral exploration,
exploitation or processing right must be separately accounted for tax
declaration and payment. In case the transfer of the right to join investment
projects or transfer of investment projects (except projects on mineral
exploration or exploitation) or transfer of real estate makes losses, such losses
may be offset with profits of production and business activities in a tax period.
In case an enterprise carrying out dissolution procedures sells real estate being
fixed assets, income (if any) from transfer of real estate may be offset with
income from production and business activities of the enterprise.

3. Taxable incomes from some production and business activities shall be
determined as follows:
a/ For income from capital transfer (excluding income from securities transfer
specified at Point b of this Clause), taxable income is the total money amount
collected under the transfer contract minus (-) the purchase price of the
transferred capital amount, minus (-) expenses for the transfer.
An enterprise that transfers capital not in cash but in asset or other material
benefits (stocks or fund certificates) and earns incomes shall pay enterprise
income tax;
b/ For income from securities transfer, taxable income is the selling price minus
(-) the purchase price of the transferred securities, minus (-) expenses for the
transfer.
For an enterprise that issues stocks, the difference between the issuance price
and the par value of stocks is not liable to enterprise income tax.
For an enterprise undergoing separation, split, consolidation or merger that
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swaps stocks at the time of separation, split, consolidation or merger and earns
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income, such income is liable to enterprise income tax.
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An enterprise that transfers securities not in cash but in asset or other material
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benefits (stocks or fund certificates) and earns incomes shall pay enterprise
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income tax;
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c/ For income from intellectual property rights or technology transfer, taxable
income is the total collected money amount minus (-) the cost or expense for
creating the transferred intellectual property right or technology, minus (-) the
expense for maintaining, upgrading or developing the transferred intellectual
property right or technology, and other deductible expenses;
d/ For income from asset lease, taxable income is the lease turnover minus (-)
basic depreciation, expense for asset renovation, repair and maintenance,
expense for lease of assets for sublease (if any) and other deductible expenses
related to the lease;
dd/ For income from the transfer or liquidation of assets (except real estate),
taxable income is the money amount collected from asset transfer or liquidation
minus (-) the residual book value of assets at the time of transfer or liquidation
and deductible expenses related to the transfer or liquidation;
e/ For income from foreign currency sales, taxable income is the total money
amount collected from foreign currency sales minus (-) the cost price of the
quantity of sold foreign currencies;
g/ For difference resulting from the revaluation of assets transferred upon the
separation, split, consolidation, merger, transformation of enterprises, change

of owners or capital contribution, taxable income is the difference between the
revaluated value and the residual book value of such assets before the
revaluation.
The positive or negative difference resulting from the revaluation of fixed
assets for capital contribution, assets transferred upon the separation, split,
consolidation, merger or transformation of enterprises, or assets being the
value of the land use rights contributed as capital to investment projects on
construction of houses and infrastructure facilities for sale, may be accounted
as other incomes or reductions of other incomes in a tax period; particularly,
the difference resulting from the revaluation of land use rights contributed as
capital which capital contribution recipients may not depreciate may be
incrementally accounted as other incomes for not more than 10 years;
h/ For business cooperation contracts (BCC) which divide after-tax profits,
income is the total turnover generated under such contracts minus (-) total
expenses related to the generation of turnover under such contracts.
The Ministry of Finance shall specifically guide the determination of turnover
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and expenses of BCC which divide after-tax profits;
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i/ For incomes received from overseas production and business activities,
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taxable income is the total of pre-tax incomes.
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4. Incomes from oil and gas exploration and extraction are determined based
on each oil and gas contract.
Article 7. Determination and carrying forward of losses
1. Loss arising in a tax period is the negative (-) taxable income amount
exclusive of losses carried forward from previous years and determined
according to the formula specified in Clause 1, Article 6 of this Decree.
2. Loss-suffering enterprises may carry forward their losses to the subsequent
year; these losses may be offset with taxable incomes. The maximum duration
for carrying forward losses is 5 consecutive years, counting from the year
following the year the losses arise.
3. Losses from transfer of real estate, investment projects or the right to join
investment projects (except mineral exploration and exploitation projects)
remaining after being offset with taxable incomes of this activity or offset
under Clause 2, Article 6 of this Decree and losses from transfer of mineral
exploration and exploitation rights may be carried forward to the subsequent
year as taxable incomes of such activity. The maximum duration for carrying
forward losses is 5 consecutive years, counting from the year following the
year the losses arise.
Article 8. Turnover

Turnover used for calculating taxable income is specified in Article 8 of the
Law on Enterprise Income Tax.
1. Turnover used for calculating taxable income is the total of sales, processing
remunerations and service charges, including also subsidies and surcharges
enjoyed by enterprises, regardless of whether money has been collected or not.
For enterprises declaring and paying value-added tax by the tax credit method,
turnover used for calculating enterprise income tax is exclusive of value-added
tax. For enterprises declaring and paying value-added tax by the method of
calculation of tax based directly on added value, turnover used for calculating
enterprise income tax is inclusive of value-added tax.
2. The time of determining turnover used for calculating taxable income for
goods sold is the time of transfer of the right to own or use goods to
purchasers.
The time of determining turnover used for calculating taxable income for
services is the time of completing the provision of services to purchasers or the
time of making service provision invoices.
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3. Turnover used for calculating taxable income in some cases is specified as
follows:
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a/ For goods sold on installment payment, it is determined based on the lump-
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sum selling price, excluding installment or deferred payment interests;
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b/ For goods and services used for barter or internal consumption (excluding
goods and services used for sustaining the production and business of
enterprises), it is determined based on the selling price of products, goods or
services of the same or similar categories at the time of barter or internal
consumption;
c/ For goods processing activities, it is the proceeds from processing activities,
including remuneration, expenses for fuel, power and auxiliary materials, and
other expenses for the processing;
d/ For asset lease, golf course business or other services for which customers
pay rent or charge in advance for many years, it is the rent amount paid
periodically by lessees or service purchasers under contracts. In case lessees or
service purchasers advances the rent for many years, it is allocated to the
number of years for which the rent has been advanced, or be determined
according to the turnover paid in lump sum. For enterprises currently enjoying
tax incentives, tax amounts eligible for incentives must be determined based on
the total payable enterprise income tax amount of the years for which the rent
is advanced divided by the number of years;

dd/ For credit or financial leasing activities, it is the receivable loan interest or
financial lease turnover arising in a tax period;
e/ For transportation activities, it is the whole turnover from passenger fares
and cargo and luggage freights arising in a tax period;
g/ For electricity and clean water supply activities, it is the money amount
indicated on the value-added invoice;
h/ For insurance or reinsurance business activities, it is the receivable amount
of principal insurance premiums; agency service charges (including those for
loss survey, indemnity consideration, claim for a third party to pay indemnities,
disposal of goods subject to 100% indemnity); reinsurance undertaking
charges; reinsurance commissions, and other insurance business revenues
minus (-) refunded or reduced insurance premiums, reinsurance undertaking
charges and refunded or reduced reinsurance receding commissions.
In case of co-insurance, turnover used for calculating taxable income is
principal insurance premiums allocated according to the co-insurance ratio,
exclusive of value-added tax.
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For insurance policies containing an agreement on periodical payment of
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premiums, it is the receivable money amount arising in each period;
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i/ For construction and installation activities, it is the value of the work, work
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item or work volume subject to takeover test.
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If construction or installation activities do not involve the supply of materials,
machinery and equipment, it is exclusive of the value of materials, machinery
or equipment;
k/ For business activities conducted under business cooperation contracts
without the establishment of legal persons:
- If parties to a business cooperation contract divide business results based on
the sales turnover of goods or services, it is the turnover divided to each party
under the contract;
- If parties to a business cooperation contract divide business results based on
pre-tax profits, it is the goods or service sales under the contract;
l/ For casino, prize-winning video game or betting entertainment business
services, it is the excise tax-inclusive proceeds from these services minus (-)
prizes already paid to customers;
m/ For securities trading, it is the proceeds from securities brokerage, dealing,
issuance underwriting and investment consultancy, investment fund
management, fund certificate issuance, market organization and other securities
services in accordance with law;

n/ For oil and gas prospecting, exploration and extraction activities, it is the
whole oil and gas sales turnover under arm’s length contracts in a tax period;
o/ For derivative financial services, it is the proceeds from the provision of
derivative financial services in a tax period;
The Ministry of Finance shall specifically guide this Article and some other
specific cases.
Article 9. Deductible and non-deductible expenses upon determination of
taxable incomes
1. Except for the expenses specified in Clause 2 of this Article, enterprises may
deduct any expenses which fully satisfy the following conditions:
a/ They are actually paid for production and business activities of enterprises,
including the following expenses:
- Expense for the performance of the task of national defense and security
education, drills and operation of militia and self-defense forces and other
national defense and security tasks in accordance with law; expense for
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operations of Party organizations and socio-political organizations in
enterprises;
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- Expenses actually paid for HIV/AIDS prevention and control at workplaces
of enterprises, including expense for training of HIV/AIDS prevention and
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control personnel of enterprises, expense for HIV/AIDS communication among
employees of enterprises, charges for medical consultation, examination and
HIV test, expense for HIV-infected employees of enterprises.
b/ They have adequate invoices and documents as prescribed by law.
In case of purchase of agricultural, forestry or fishery products from producers
or fishermen; purchase of handicraft products made of jute, sedge, bamboo,
leaf, rattan, straw, coconut husk or shell or materials taken from agricultural
products, from craftsmen; purchase of soil, rock, sand or gravel from local
mining households or individuals; purchase of scraps from individual collectors
or second-hand domestic appliances and assets from households or individuals,
and purchase of services from non-business households or individuals, there
must be documents of payment to sellers and a list of goods or services signed
by at-law representatives or authorized persons of enterprises;
c/ For one-off purchase invoices of goods or services which are valued at VND
20 million or more, there must be documents of non-cash payment, excluding
expenses paid by enterprises for the performance of the national defense and
security task, HIV/AIDS prevention and control at workplaces, expense for
operations of Party organizations and socio-political organizations in
enterprises as specified at Point a, Clause 1 of this Article; expense for the

purchase of goods and services specified at Point b, Clause 1 of this Article for
which a list may be made.
The Ministry of Finance shall specifically guide the case in which payments
under contracts are made and recorded at different points of time and other
expenses not required to have non-cash payment documents.
2. Non-deductible expenses upon the determination of taxable incomes under
Clause 2, Article 9 of the Law on Enterprise Income Tax and Clause 5, Article
1 of the Law Amending and Supplementing a Number of Articles, are specified
as follows:
a/ Expenses which do not fully satisfy the conditions specified in Clause 1 of
this Article, except the uncompensated value of losses caused by natural
disasters, epidemics, fires or other force majeure circumstances;
Uncompensated value of losses caused by natural disasters, epidemics, fires or
other force majeure circumstances is the total value of losses minus (-) the
value which must be compensated by insurance enterprises or other
organizations or individuals in accordance with law;
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b/ The business administration expense allocated by an overseas enterprise to
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its Vietnam-based permanent establishment in excess of the prescribed level is
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calculated according to the following formula:
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Business
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administration
= Taxed turnover of
Vietnam-based permanent
x Total business
administration
expense allocated establishment in a tax expenses of
by period the overseas
an overseas company in a tax
company to its Total turnover of the period
Vietnam-based overseas company,
permanent including turnovers of
establishment in permanent establishments
a tax period based in other countries in
a tax period
c/ Expense in excess of the prescribed level of deduction for the setting up of

provisions;
d/ Fixed asset depreciation made in contravention of the Finance Ministry’s
regulations, including depreciation for passenger cars of 9 seats or less (except
cars used for commercial transportation of passengers or for tourist or hotel
business) corresponding to the historical cost in excess of VND 1.6 billion/car;

depreciation for civil aircraft or yachts not used for commercial cargo or
passenger transportation or for tourist or hotel business;
dd/ Advanced expenses in contravention of law.
Advanced deductible expenses include those for regular overhaul of fixed
assets; those for activities of which turnover has been accounted but
contractual obligations have not yet been fulfilled, including the case of asset
lease with advance payment of rent for many years in which the lessor
accounts the whole paid rent into the turnover of the year of rent collection;
and other advanced expenses under the Finance Ministry’s regulations;
e/ Loan interests paid corresponding to insufficient charter capital amount to be
contributed according to the schedule indicated in the enterprise’s charter; loan
interests recorded as asset value; interests on loans for the performance of oil
and gas prospecting, exploration and exploitation contracts;
g/ Expense for advertising, marketing, sales promotion and brokerage
commissions (excluding insurance brokerage commissions under the law on
insurance business or commissions for agents selling goods at set prices,
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commissions for distributors of multi-level marketing businesses); expense for
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guest reception, protocol and conferences; expense in support of marketing and
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activities directly related to production and business activities, in excess of
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15% of total deductible expenses.
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Total deductible expenses exclude the expenses specified above; for
commercial activities, total deductible expenses exclude purchase prices of
goods sold.
Expenses subject to expenditure limitations specified at this Point include also
gifts, presents and donations given to customers.
h/ Expenses allowed to be recovered in excess of the ratio set in approved oil
and gas contracts; if an oil and gas contract does not set the ratio of
recoverable expenses, the expense in excess of 35% must not be included in
deductible expenses; expenses which may not be included in recoverable
expenses include:
- Expenses specified in Clause 2, Article 9 of the Law on Enterprise Income
Tax and at Point 2, Clause 5, Article 1 of the Law Amending and
Supplementing a Number of Articles of the Law on Enterprise Income Tax;
- Expenses arising before oil and gas contracts come into force, except those
agreed under oil and gas contracts or decided by the Prime Minister;
- Various oil and gas commissions and other expenses not included in
recoverable expenses under contracts;

- Interests on investments in prospecting, exploration and development of oil
and gas fields and oil and gas exploitation;
- Fines and damages.
i/ Credited input value-added tax, uncredited input value-added tax on the
value of under-9-seat cars in excess of VND 1.6 billion, enterprise income tax
and other taxes, charges, fees and revenues not allowed to be accounted as
expenses under the Finance Ministry’s regulations;
k/ Expenses not corresponding to taxed turnover, except a number of special
cases as guided by the Ministry of Finance;
l/ Foreign exchange rate difference resulting from the revaluation of monetary
items of foreign currency origin at the end of a tax period, except foreign
exchange rate difference resulting from the revaluation of payable debts of
foreign currency origin at the end of the tax period, and exchange rate
difference arising in the course of capital construction investment to form fixed
assets of newly established enterprises which are not yet put into production or
business comply with the guidance of the Ministry of Finance.
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For receivable debts and loans of foreign currency origin provided in the
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period, foreign exchange rate difference allowed to be accounted as a
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deductible expense is the difference between the exchange rate at the time of
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debt or loan recovery and the exchange rate at the time of recording receivable
debts or initial loans;
m/ Salaries or wages of owners of private enterprises, owners of single-
member limited liability companies (owned by individuals); remunerations paid
to enterprise founders who do not personally participate in administering
production and business activities; salaries, wages and other amounts
accounted as expenses payable to employees which have actually not been
paid or have been paid without invoices or documents as prescribed by law;
bonuses and expenses for purchase of life insurance for employees for which
the payment conditions and levels are not specified in any of the following
papers: labor contracts; collective labor agreements; financial regulations of
companies, corporations or groups; or reward regulations issued by
chairpersons of Boards of Directors, directors general or directors under
financial regulations of companies or corporations. Salaries or wages and
allowances payable to employees which are not actually paid upon the
expiration of the time limit for submission of annual tax finalization dossiers,
except where the enterprise sets aside provisions to be added to the salary fund
of the subsequent year in order to ensure that the salary payment is
uninterrupted and the fund is not used for other purposes. The annual provision
level may be decided by the enterprise but must not exceed 17% of the actual
salary fund (the total salary amount actually paid in the year of tax finalization

by the deadline for submission of the finalization dossier and exclusive of the
salary provision set aside in the previous year and used in the year of tax
finalization). In case the salary provision set aside by the enterprise in the
previous year remains unused or is not used up within 6 months after the end of
the fiscal year, the enterprise shall record it as a reduction of expenses in the
subsequent year;
n/ Financial aid, except aid for education, health, scientific research,
remediation of consequences of natural disasters, building of great solidarity or
gratitude houses or houses for the poor and policy beneficiaries in accordance
with law, aid under the State’s programs for localities with particularly difficult
socio-economic conditions.
Institutions receiving aid for scientific research specified at this Point are
scientific and technological institutions established and operating in accordance
with the Law on Science and Technology and performing science and
technology tasks in accordance with the law on science and technology.
o/ Expense in excess of the level of VND 1 million/month/person for setting up
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the voluntary pension fund or purchasing voluntary retirement insurance and
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life insurance for employees; expense in excess of the level prescribed by the
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laws on social insurance and health insurance for setting up funds of social
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security nature (compulsory social insurance and retirement insurance), health
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insurance fund and unemployment insurance fund for employees.
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Deductions for payment of contributions to the voluntary pension fund and
funds of social security nature or for purchase of voluntary retirement
insurance and life insurance for employees may be accounted as deductible
expenses and must not exceed the level specified in this Clause while
conditions for receipt of and level of insurance sums must be specified in any
of the following dossiers: labor contracts, collective labor agreements, financial
regulations of companies, corporations or groups; reward regulations set out by
chairpersons of Boards of Directors, directors general or directors in
accordance with financial regulations of companies or corporations;
p/ Expenses for banking, insurance, lottery and securities business and some
other special business activities as prescribed by the Ministry of Finance;
q/ Late-tax payment interests as prescribed by the Law on Tax Administration;
r/ Expense directly related to the issuance of stocks (except stocks in the form
of payable debt) and stock dividends (except dividends of stocks in the form of
payable debts), purchase and sale of fund stocks and other expenses directly
related to the increase or reduction of equity capital of enterprises.
The Ministry of Finance shall specifically guide deductible and non-deductible
expenses specified in this Article.

Article 10. Tax rates
Enterprise income tax rates are specified in Clause 6, Article 1 of the Law
Amending and Supplementing a Number of Articles of the Law on Enterprise
Income Tax:
1. The enterprise income tax rate is 22%, except the cases in which enterprises
are subject to the tax rate of 20% and the tax rate of between 32% and 50%
specified in Clauses 2 and 3 of this Article and those eligible for tax rate
incentives specified in Articles 15 and 16 of this Decree.
From January 1, 2016, enterprises subject to the tax rate of 22% specified in
this Clause will be subject to the tax rate of 20%.
2. Enterprises established and operating in accordance with Vietnamese law,
including cooperatives and non-business units engaged in goods production
and trading or service provision and having an annual total turnover of VND
20 billion or less is subject to the tax rate of 20%.
The annual total turnover serving as a ground for identifying an enterprise
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subject to the tax rate of 20% specified in this Clause is the total turnover from
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goods sale or service provision of such enterprise in the previous year.
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3. The enterprise income tax rate applicable to activities of prospecting,
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exploring and exploiting oil and gas and other precious and rare natural
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resources in Vietnam is between 32% and 50%. Based on the location,
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exploitation conditions and reserves of mines, the Prime Minister shall, at the
proposal of the Minister of Finance, decide on a specific tax rate applicable to
each project or business establishment. Mines of mineral resources of
platinum, gold, silver, tin, tungsten, antimony, gems and rare earths are subject
to the tax rate of 50%. Mines with 70% or more of their assigned areas in
localities with particularly difficult socio-economic conditions on the list of
localities eligible for enterprise income tax incentives promulgated together
with this Decree are subject to the tax rate of 40%.
Article 11. Tax calculation method
1. An enterprise income tax amount payable in a tax period is equal to taxed
income multiplied by (x) the tax rate; in case an enterprise has paid income tax
on incomes arising overseas, the paid tax amount may be subtracted but must
not exceed the enterprise income tax amount payable under the Law on
Enterprise Income Tax.
2. The payable enterprise income tax amount applicable to real estate transfer
is income from real estate transfer multiplied by (x) the tax rate of 22%, or
20% from January 1, 2016.

3. For enterprises defined at Points c and d, Clause 2, Article 2 of the Law on
Enterprise Income Tax, the payable enterprise income tax amount is the
percentage (%) of the sales turnover of goods and services in Vietnam,
specifically:
a/ Services: 5%, particularly restaurant, hotel and casino management services:
10%; services provided together with goods: 1%; services provided in case it is
impossible to separate the goods value from the service value: 2%;
b/ Provision and distribution of goods in Vietnam in the form of on-the-spot
import and export or under the international commercial terms: 1%;
c/ Copyright royalties: 10%;
d/ Charter of aircraft (including aircraft engines or spare parts) or seagoing
ships: 2%;
dd/ Hire of drilling platforms, machinery, equipment or means of transport
(except those specified at Point d of this Clause): 5%;
e/ Loan interests: 5%;
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g/ Securities transfer and overseas ceding of reinsurance: 0.1%;
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h/ Derivative financial services: 2%;
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i/ Construction, transportation and other activities: 2%.
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4. For oil and gas exploitation under contracts indicating the accounting of
turnover and expenditures in a foreign currency, taxed income and payable tax
amount must be calculated in such foreign currency.
5. Non-business units and organizations other than enterprises established and
operating in accordance with Vietnamese law which are engaged in goods
trading or service provision, earn incomes liable to enterprise income tax and
can account their turnover but cannot account expenditures and incomes of
their business activities shall declare and pay enterprise income tax at a
percentage (%) of turnover from goods or service sale, specifically as follows:
a/ For services (including deposit and loan interests): 5%. Particularly,
educational, health care and art performance activities are subject to the tax
rate specified at Point c of this Clause;
b/ For goods trading: 1%;
c/ For other activities: 2%.
Article 12. Places for tax payment
1. Enterprises shall pay tax in localities where they are headquartered. For an
enterprise that has a dependent cost-accounting production establishment
operating in a province or centrally run city other than the locality where it is

headquartered, the tax amount must be calculated and paid in the locality
where the enterprise is headquartered and the locality where its production
establishment is based.
The enterprise income tax amount calculated and paid in a province or
centrally run city where the dependent cost-accounting production
establishment is based is the enterprise income tax amount payable by the
enterprise in a period multiplied by (x) the ratio of expenses arising in the
production establishment to the total expenses of the enterprise.
Tax payment specified in this Clause is not applicable to works, work items or
dependent cost-accounting construction establishments.
The decentralization, management and use of enterprise income tax revenues
comply with the Law on the State Budget.
2. Dependent cost-accounting units of enterprises practicing cost-accounting in
the whole system that have incomes from activities other than their core
business lines shall pay tax in provinces or centrally run cities where other
activities are carried out.
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3. The Ministry of Finance shall guide places for tax payment mentioned in this
Article.
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Chapter III
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INCOMES FROM REAL ESTATE TRANSFER
Article 13. Incomes from real estate transfer include income from the transfer
of land use or lease rights; income from sublease of land of real estate-trading
enterprises in accordance with the land law, regardless of whether
infrastructure or architectural works attached to land are available or not;
income from the transfer of houses or construction works attached to land,
including assets attached to such houses or construction works, regardless of
whether land use or lease rights are transferred or not; and income from the
transfer of other assets attached to land.
Article 14. Taxable income from real estate transfer is turnover from real
estate transfer activities minus the cost price of real estate and deductible
expenses related to the real estate transfer.
1. Turnover used for calculating taxable income shall be determined based on
the real price of real estate transfer under real estate purchase and sale
contracts in accordance with law.
If the price of transfer of land use rights under a real estate purchase and sale
contract is lower than the land price set by the provincial-level People’s
Committee at the time of contract signing, the price set by the provincial-level
People’s Committee shall be applied.

2. The time of determining turnover used for calculating taxable income is the
time of handover of real estate.
If money is advanced according to schedule, the time of determining turnover
used for calculating the enterprise income tax amount to be temporarily paid is
the time of money collection. The Ministry of Finance shall guide the
temporary tax payment referred to this Clause.
3. Deductible expenses for real estate transfer:
a/ The cost price of transferred land, to be determined according to the origin
of land use rights, specifically:
- For land allocated by the State with land use levy or land rent, its cost price is
the land use levy or lease rent actually remitted into the state budget;
- For land transferred from other organizations or individuals, its cost price is
based on contracts and lawful payment documents upon the receipt of land use
or lease rights; if contracts and lawful payment documents are unavailable,
such cost price must be calculated based on the price set by the provincial-
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level People’s Committee at the time the enterprise receives real estate
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transferred;
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- For land contributed as capital, its cost price is the price agreed upon capital
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contribution;
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- For inherited or donated land with unidentifiable cost price, such cost price
must be determined based on the land price set by the provincial-level People’s
Committee at the time of inheritance or donation.
For land inherited or donated before 1994, its cost price must be determined
based on the land prices set in 1994 by the provincial-level People’s
Committee on the basis of the Table of land price brackets in the
Government’s Decree No. 87/CP of August 17, 1994;
b/ Expense for compensations and support upon land recovery by the State;
c/ Charges and fees related to the grant of land use rights in accordance with
law;
d/ Expense for soil improvement or ground fill-up and leveling;
dd/ Value of infrastructure or architectural works on land;
e/ Other expenses related to transferred real estate.
Chapter IV
ENTERPRISE INCOME TAX INCENTIVES
Article 15. Tax rate incentives
1. The preferential tax rate of 10% for 15 years is applicable to:

a/ Incomes earned by enterprises from the implementation of new investment
projects in localities with particularly difficult socio-economic conditions
specified in the Appendix to this Decree, economic zones and hi-tech parks,
including information technology parks established under the Prime Minister’s
decisions;
b/ Incomes earned by enterprises from the implementation of new investment
projects in the fields of scientific research and technology development;
application of high technologies on the list of high technologies prioritized for
development investment in accordance with the Law on High Technology;
incubation of high technologies and hi-tech enterprises; venture investment for
development of high technologies on the list of high technologies prioritized for
development investment in accordance with the Law on High Technology;
investment in construction and commercial operation of high technology and
high technology enterprise incubation; investment in development of water
plants, power plants, water supply and drainage systems; bridges, roads,
railways; airports, seaports, river ports; airfields, stations and other
infrastructure works of special importance as decided by the Prime Minister;
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manufacture of software products; manufacture of composite materials, light
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building materials and precious and rare materials; generation of renewable
bio-technology.
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energy, clean energy and energy from the disposal of waste; development of
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Investment projects on manufacture of software products specified at this Point
are those on manufacture of software products on the list of software products
and applying the law-prescribed process of manufacture of software products;
c/ Incomes earned by enterprises from the implementation of new investment
projects in the field of environmental protection, covering manufacture of
equipment for treatment of environmental pollution and equipment for
environmental observation and analysis; environmental pollution treatment and
environmental protection; collection and treatment of wastewater, exhaust gas
and solid waste; recycling and reuse of waste;
d/ Incomes earned by hi-tech enterprises and agricultural enterprises applying
high technologies
In case enterprises currently enjoying enterprise income tax incentives or have
enjoyed all enterprise income tax incentives under legal documents on
enterprise income tax are granted certificates of hi-tech enterprises or
agricultural enterprises applying high technologies, the incentive levels for such
enterprises are equal to that applicable to hi-tech enterprises and agricultural
enterprises applying high technologies specified in Clause 1, Article 15 and
Clause 1, Article 16 of this Decree minus the enjoyed incentives (including tax
rate incentives and exemption or reduction, if any);

dd/ Incomes earned by enterprises from the implementation of new investment
projects in the field of production (except projects on production of goods
liable to excise tax and mineral mining projects) which satisfy either of the
following criteria:
- Being capitalized at least VND 6 trillion, having their capital disbursed within
3 years from the date of grant of investment licenses, and earning a total
turnover of at least VND 10 trillion/year within 3 years from the date of
earning turnover.
- Being capitalized at least VND 6 trillion, having their capital disbursed within
3 years from the date of grant of investment licenses, and employing more than
3,000 laborers within 3 years from the date of earning turnover.
Laborers specified at this Point are those signing labor contracts to work on a
full-time basis, excluding those working on a part-time basis or under labor
contracts of a term of under 1 year.
2. The tax rate of 10% is applicable to the following incomes:
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a/ Incomes earned by enterprises from their socialized education-training,
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vocational training, health care, cultural, sports and environmental protection
activities.
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The list of types, size and standards of enterprises engaged in socialized fields
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mentioned in this Clause is promulgated by the Prime Minister.
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b/ Incomes from publication activities of publishing houses in accordance with
the Law on Publication;
c/ Incomes from print newspapers (including advertising on print newspapers)
of press agencies in accordance with the Law on Press;
d/ Incomes from earned by enterprises from the implementation of investment
projects on social houses for sale, lease or hire-purchase to the subjects
specified in Article 53 of the Housing Law.
Social houses specified in this Clause are houses built by the State or
organizations or individuals of all economic sectors and satisfying the criteria
for houses, house prices, rent rates, hire-purchase prices, eligible subjects,
conditions on purchase, rent or hire-purchase of social houses in accordance
with the housing law, and the determination of incomes subject to the tax rate
of 10% specified in this Clause does not depend on the time of signing of
social house sale, lease or hire-purchase contracts;
dd/ Incomes earned by enterprises from cultivation, tending and protection of
forests; planting or rearing agricultural, forest or aquatic products in localities
with difficult socio-economic conditions; production, propagation and cross-
breeding of plant varieties and animal breeds; production, exploitation and

purification of salt, except salt production specified in Clause 1, Article 4 of
this Decree; post-harvest preservation of agricultural products or preservation
of agricultural and aquatic products and foods;
e/ Incomes of cooperatives operating in agriculture, forestry, fisheries or salt
production and not located in localities with difficult socio-economic
conditions or those with particularly difficult socio-economic conditions,
except incomes of cooperatives specified in Clause 1, Article 4 of this Decree.
3. The tax rate of 20% for 10 years is applicable to:
projects in localities with difficult socio-economic conditions specified in the
Appendix to this Decree.
projects on manufacture of hi-grade steel, energy-saving products, machinery
and equipment for agricultural production, forestry, fisheries or salt production,
irrigation and drainage equipment; production or processing of cattle, poultry
or aquatic animal feed; or development of traditional crafts or trades.
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From January 1, 2016, enterprises implementing new investment projects in the
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fields or localities eligible for tax incentives specified at Points a and b of this
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Clause will be subject to the tax rate of 17%.
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4. The tax rate of 20% is applicable to people’s credit funds and microfinance
institutions, which will be subject to the tax rate of 17% from January 1, 2016.
Upon the expiration of the duration of application of the tax rate of 10%
specified in Clause 1 of this Article, people’s credit funds and microfinance
institutions shall switch to be subject to the tax rate of 20% (or 17% from
January 1, 2016). Microfinance institutions specified in this Clause are those
established and operating in accordance with the Law on Credit Institutions.
5. For large-sized and hi-tech or new projects eligible for tax incentives
specified at Points b and c, Clause 1 of this Article in which investment needs
to be specially attracted, the duration of application of the preferential tax rate
of 10% may be prolonged but must not exceed 30 years. The Prime Minister
shall decide to prolong the duration of application of the preferential tax rate of
10% specified in this Clause at the request of the Minister of Finance.
6. The duration of application of the preferential tax rate specified in this
Article shall be counted consecutively from the first year of earning turnover
from new investment projects; for hi-tech enterprises and agricultural
enterprises applying high technologies, the duration shall be counted from the
date these enterprises are recognized as hi-tech enterprises or agricultural
enterprises applying high technologies; for projects applying high technologies,

the duration shall be counted from the date of grant of certificates of projects
applying high technologies.
Article 16. Tax exemption and reduction
1. Tax exemption for 4 years and 50% reduction of payable tax amounts for 9
subsequent years are applicable to:
projects specified in Clause 1, Article 15 of this Decree;
projects in the socialized fields in localities with difficult socio-economic
conditions or particularly difficult socio-economic conditions specified in the
Appendix to this Decree.
subsequent years are applicable to incomes earned by enterprises from the
implementation of new investment projects in the socialized fields in localities
not on the list of localities with difficult socio-economic conditions or
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particularly difficult socio-economic conditions specified in the Appendix to
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this Decree.
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subsequent years are applicable to incomes earned by enterprises from the
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implementation of new investment projects specified in Clause 3, Article 15 of
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this Decree and new investment projects in industrial parks (except those in
localities with favorable socio-economic conditions).
Localities with favorable socio-economic conditions specified in this Clause
are inner districts of centrally run special-grade or grade-I urban centers and
provincially run grade-I urban centers; the determination of tax incentives for
industrial parks located in both localities with favorable and unfavorable
conditions must be based on localities with larger areas of these industrial
parks. The determination of special-grade or grade-I urban centers specified in
this Clause must comply with regulations of the Government on classification
of urban centers.
4. The tax exemption or reduction duration specified in this Article is counted
consecutively from the first year an enterprise has taxable income from a new
investment project eligible for tax incentives; in case an enterprise has no
taxable income during the first 3 years, counting from the first year it has
turnover from a new investment project, the tax exemption or reduction
duration shall be counted from the fourth year. The tax exemption or reduction
duration for hi-tech enterprises and agricultural enterprises applying high
technologies specified in Clause 1 of this Article shall be counted from the time

these enterprises are recognized as hi-tech enterprises or agricultural
enterprises applying high technologies.
In the first tax period, if the new investment project of an enterprise with a
production and business duration eligible for tax exemption or reduction of
under 12 (twelve) months, the enterprise may choose to enjoy the tax
exemption or reduction for the new investment project right in such tax period
or register with the tax agency the time of starting to enjoy the tax exemption
or reduction from the subsequent tax period.
5. Enterprises that have development investment projects or operating
investment projects in the fields or localities eligible for enterprise income tax
incentives under this Decree which expand their production, increase their
productivity or renew their production technologies and satisfy one of the three
criteria specified in this Clause may choose to enjoy the tax incentives under
operating projects for the remaining duration (if any) or enjoy the tax
exemption or reduction for additional incomes brought about by expanded
investment. The tax exemption or reduction duration for additional incomes
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brought about by expanded investment specified in this Clause equals that
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applicable to new investment projects in the same localities or fields eligible
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for enterprise income tax incentives.
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An expanded investment project specified in this Clause must satisfy one of the
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following criteria:
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- The historical cost of additional fixed assets upon its completion and
commissioning is at least VND 20 billion, for projects in the fields eligible for
the enterprise income tax incentives specified in this Decree, or at least VND
10 billion, for projects implemented in localities with difficult socio-economic
conditions or particularly difficult socio-economic conditions in accordance
with the law on enterprise income tax;
- The ratio of the historical cost of additional fixed assets equals at least 20%
of the total cost of fixed assets before investment;
- The design capacity increases at least 20% after investment.
In case an operating enterprise invests in upgrading, replacement or renewal of
technology of an operating project in a field or locality eligible for the tax
incentives under this Decree but fails to satisfy one of the three criteria
specified at this Point, the tax incentives will be granted to the operating
project for the remaining duration (if any).
In case an enterprise chooses to enjoy the tax incentives for expanded
investment, the additional income brought about by expanded investment must
be separately accounted; in case it is impossible to separately account such
income, it shall be determined according to the ratio of the historical cost of

fixed assets used for production or business activities to the total costs of fixed
assets of the enterprise.
The tax exemption or reduction duration specified in this Clause shall be
counted from the year when the expanded investment project is completed and
put into production or business and earns income; in case no taxable income is
earned in the first 3 years from the year of generation of turnover from the
expanded investment project, the tax exemption or reduction duration shall be
counted from the fourth year.
The tax incentives specified in this Clause are not applicable to cases of
expanded investment from merger and acquisition of operating enterprises or
investment projects.
Article 17. Tax reduction in other cases
1. Production, construction or transport enterprises which employ between 10
and 100 female laborers who account for more than 50% of their total regular
employees or regularly employ over 100 female laborers who account for more
than 30% of their total regular employees are entitled to reduction of enterprise
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income tax amounts equal to additional expenses paid for female laborers,
including:
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a/ Expense for job retraining;
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b/ Salaries and allowances (if any) for teachers in crèches and kindergartens
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organized and managed by the enterprises;
c/ Expense for additional health check-ups in a year;
d/ Post-natal allowances for female laborers. The Ministry of Finance shall,
pursuant to the labor law, coordinate with the Ministry of Labor, War Invalids
and Social Affairs in specifying post-natal allowance levels mentioned in this
Clause;
dd/ Salaries and allowances for female laborers who return to work while still
on prescribed maternity leave.
2. Enterprises that employ ethnic minority laborers are entitled to reduction of
enterprise income tax amounts equal to additional expenses for job training,
housing subsidies, social insurance premiums and health insurance premiums
for these laborers, if they have not yet received the State’s supports under
regulations.
3. Enterprises that transfer technologies in the fields prioritized for technology
transfer to organizations or individuals in localities with difficult socio-
economic conditions are entitled to 50% reduction of enterprise income tax on
the income from technology transfer.

Article 18. Deduction for setting up science and technology development
funds of enterprises
The deduction for setting up science and technology development funds of
enterprises complies with Article 17 of the Law on Enterprise Income Tax and
1. Enterprises established and operating under Vietnamese law may deduct up
to 10% of annual taxed income for setting up their science and technology
development funds. Particularly, enterprises of which the State holds more than
50% of charter capital, in addition to making deduction for setting up the
science and technology development funds under this Law, they shall ensure
the minimum deduction level for setting up the funds as prescribed in the
Science and Technology Law.
Annually, enterprises may decide by themselves on the level of deduction for
setting up their science and technology development funds under the above
provision and make reports on the setting up and use of such funds, enclosed
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with enterprise income tax finalization declarations.
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The Ministry of Finance shall issue the form of report on the setting up and use
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of the science and technology development fund of enterprises.
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2. For operating enterprises which undergo ownership transformation, are
consolidated or merged, the new enterprises set up as a result of such
ownership transformation, consolidation or merger may take over the science
and technology development funds of the former enterprises and shall take
responsibility for the management and use of such funds.
If the science and technology development fund of an enterprise is not used up
upon its separation or split, the new enterprise set up as a result of such
separation or split may take over the science and technology development fund
of the former enterprise and shall take responsibility for the management and
use of such fund. Enterprises shall decide on and register with tax agencies the
division of their science and technology development funds.
Article 19. Conditions for application of enterprise income tax incentives
Conditions for application of enterprise income tax incentives are specified in
1. Enterprises shall separately account income from production and business
activities eligible for enterprise income tax incentives (including preferential
tax rates or tax exemption or reduction); any turnover or deductible expenses
which cannot be separately accounted must be determined based on the ratio of
deductible expenses or turnover from production and business activities

eligible for tax incentives to the total deductible expenses or turnover of
enterprises.
2. The enterprise income tax incentives specified in Clauses 1 and 4, Article 4
and Articles 15 and 16 of this Decree and the tax rate of 20% specified in
Clause 2, Article 10 of this Decree are not applicable to:
a/ Income from the transfer of capital or the capital contribution right; income
from the transfer of real estate, except income from investment and commercial
operation of social houses specified at Point d, Clause 2, Article 15 of this
Decree; income from the transfer of investment projects, the right to join
investment projects or the mineral exploration or exploitation right; and income
earned from production or business activities outside Vietnam;
b/ Income from the prospecting, exploration or exploitation of oil, gas and
other precious and rare natural resources and income from mineral mining;
c/ Income from the provision of services liable to excise tax in accordance with
the Law on Excise Tax;
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d/ Other incomes specified in Clause 2, Article 3 of this Decree not earned
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from production or business activities eligible for tax incentives (for fields or
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sectors eligible for the incentives specified in Articles 15 and 16 of this
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Decree).
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3. In the same duration, an enterprise which is entitled to different tax
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incentives for the same income may choose to apply the highest incentive.
4. In a tax year within the duration of enjoyment of the enterprise income tax
incentives, if an enterprise fails to satisfy one of the conditions for enjoyment
of the tax incentives specified in Clauses 7, 8 and 12, Article 1 of the Law
Amending and Supplementing a Number of Articles of the Law on Enterprise
Income Tax and this Article, it is not entitled to the tax incentives in such tax
year and shall pay tax at the rate of 22%, or of 20% for enterprises with a total
annual turnover of VND 20 billion or less specified in Clause 2, Article 10 of
this Decree. From January 1, 2016, the common tax rate will be 20%.
For investment projects of enterprises specified at Point dd, Clause 1, Article
15 of this Decree which fail to satisfy the conditions specified at such Point
within 3 years after being granted investment licenses (excluding the case of
behind-schedule implementation due to delayed ground clearance or
completion of administrative procedures by state enterprises or natural
disasters or fires as approved by investment-licensing agencies and the Prime
Minister) or after three years of turnover generation, these enterprises will not
be entitled to the enterprise income tax incentives and shall declare and pay
enterprise income tax amounts already declared for incentives in the previous
years (if any) in accordance with law, but their previous tax declaration will

not be regarded as false declaration under the law on tax administration. In a
tax year within the duration of enjoyment of the enterprise income tax
incentives, if an enterprise fails to fully satisfy one of the conditions for
enjoyment of the tax incentives specified at Point dd, Clause 1, Article 15 of
this Decree, it is not entitled to the enterprise income tax incentives in such
year.
5. New investment projects eligible for the tax incentives specified in Clauses
1 and 3, Article 15 and Clauses 1, 2 and 3, Article 16 of this Decree are
investment projects implemented for the first time or investment projects
independent from ongoing projects, excluding:
a/ Investment projects formulated as a result of the separation, split, merger,
consolidation or transformation of enterprises in accordance with law;
b/ Investment projects formulated as a result of the owner change (including
cases of implementation of new investment projects with assets, business
locations and business lines of former enterprises for continued production or
business activities).
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nam
New investment projects eligible for the tax incentives specified in Articles 15
t V i t
and 16 of this Decree must have investment licenses or investment certificates
e
granted by competent state agencies. For a domestic investment project
.L u a
capitalized at under VND 15 billion and not on the list of conditional
w w
investment fields but associated with the establishment of a new enterprise, the
w
document for identification of such investment project is the enterprise
registration certificate.
Chapter V
IMPLEMENTATION PROVISIONS
Article 20. Effect
1. This Decree takes effect on February 15, 2014, and applies to the tax period
from 2014 on.
To annul the Government’s Decrees No. 124/2008/ND-CP of December 11,
2008, and No. 122/2011/ND-CP of December 27, 2011, detailing and guiding
a number of articles of the Law on Enterprise Income Tax, and Articles 2 and
3, the Government’s Decree No. 92/2013/ND-CP of August 13, 2013,
detailing a number of articles of the Law Amending and Supplementing a
Number of Articles of the Law on Enterprise Income Tax and the Law
Amending and Supplementing a Number of Articles of the Law on Value-
Added Tax which took effect on July 1, 2013.
2. Enterprises having investment projects which, by the end of the tax period of
2013, remain eligible for the enterprise income tax incentives, including also

investment projects for which investment licenses, investment certificates or
enterprise registration certificates have been granted (for domestic investment
projects associated with the establishment of new enterprises, capitalized at
under VND 15 billion and not on the list of conditional investment fields), and
have not yet enjoyed the incentives under the legal documents on enterprise
income tax before the effective date of this Decree may continue to enjoy the
incentives for the remaining duration under such documents; in case they
satisfy the conditions for enjoyment of the tax incentives specified in this
Decree, they may choose to enjoy the incentives which they are currently
entitled to or the incentives specified in this Decree (including tax rate
incentives and tax exemption or reduction) for new investment for the
remaining duration as enterprises newly established under investment projects
or as expanded investment projects for the remaining duration.
Enterprises having investment projects eligible for the preferential tax rate of
20% specified in Clause 3, Article 15 of this Decree by the end of the tax
period of 2015 may shift to apply the tax rate of 17% for the remaining
duration from January 1, 2016.
. vn
nam
The remaining duration for enjoyment of the tax incentives shall be counted
i e t
consecutively from the date of implementation of the provisions on tax
t V
.L u a
incentives of the legal documents on foreign investment in Vietnam, promotion
w w w
of domestic investment and enterprise income tax promulgated before the
effective date of this Decree.
3. Enterprises established or having investment projects as a result of the
enterprise transformation, owner change, separation, split, merger or
consolidation shall pay enterprise income tax (including fines, if any) and, at
the same time, may continue to enjoy the enterprise income tax incentives
(including losses not yet carried forward) of former enterprises or investment
projects if they still satisfy the conditions for enjoyment of the enterprise
income tax incentives or for carrying forward of losses prescribed by law.
4. The settlement of tax-related problems and tax finalization, exemption and
reduction before the effective date of this Decree must comply with the laws
on enterprise income tax, foreign investment in Vietnam and promotion of
domestic investment and other legal documents promulgated before the
effective date of this Decree.
Article 21. Implementation responsibility
1. The Ministry of Finance shall guide the implementation of this Decree.
2. Ministers, heads of ministerial-level agencies, heads of government-attached
agencies, chairpersons of provincial-level People’s Committees, and related
organizations and individuals shall implement this Decree.

On behalf of the Government
Prime Minister
NGUYEN TAN DUNG
Appendix
LIST OF LOCALITIES ELIGIBLE FOR ENTERPRISE
INCOME TAX INCENTIVES
(To the Government’s Decree No. 218/2013/ND-CP of December 26, 2013)
No. Province Localities with Localities with difficult

particularly difficult socio-economic conditions
socio-economic
conditions
. vn
1 Bac Kan All districts and towns
V i e t nam
2 Cao Bang
.L u a t
All districts and towns
3 w w
Ha Giang
w All districts and towns
4 Lai Chau All districts and towns
5 Son La All districts and towns
6 Dien Bien All districts and Dien

Bien city
7 Lao Cai All districts Lao Cai city
8 Tuyen Na Hang, Chiem Hoa and Ham Yen, Son Duong and
Quang Lam Binh districts Yen Son districts and Tuyen
Quang city
9 Bac Giang Son Dong district Luc Ngan, Luc Nam, Yen The
and Hiep Hoa districts

10 Hoa Binh Da Bac and Mai Chau Kim Boi, Ky Son, Luong Son,
districts Lac Thuy, Tan Lac, Cao
Phong, Lac Son and Yen Thuy
districts
11 Lang Son Binh Gia, Dinh Lap, Cao Bac Son, Chi Lang and Huu
Loc, Loc Binh, Trang Lung districts
Dinh, Van Lang and Van
Quan districts
12 Phu Tho Thanh Son and Yen Lap Doan Hung, Ha Hoa, Phu
districts Ninh, Song Thao, Thanh Ba,
Tam Nong and Thanh Thuy
districts
13 Thai Vo Nhai and Dinh Hoa Dai Tu, Pho Yen, Phu Luong,
Nguyen districts
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Phu Binh and Dong Hy
V i e t nam
districts
14 Yen Bai
.L u a t
Luc Yen, Mu Cang Chai Tran Yen, Van Chan, Van
w w w and Tram Tau districts Yen and Yen Binh districts

and Nghia Lo town
15 Quang Ninh Ba Che and Binh Lieu Van Don district

districts, Co To island
district and islands in the
province
16 Hai Phong Bach Long Vi and Cat

Hai island districts
17 Ha Nam Ly Nhan and Thanh Liem

districts
18 Nam Dinh Giao Thuy, Xuan Truong, Hai

Hau and Nghia Hung districts
19 Thai Binh Thai Thuy and Tien Hai

districts

20 Ninh Binh Nho Quan, Gia Vien, Kim
Son, Tam Diep and Yen Mo
districts
21 Thanh Hoa Muong Lat, Quan Hoa, Thach Thanh and Nong Cong
Quan Son, Ba Thuoc, districts
Lang Chanh, Thuong
Xuan, Cam Thuy, Ngoc
Lac, Nhu Thanh and Nhu
Xuan districts
22 Nghe An Ky Son, Tuong Duong, Tan Ky, Nghia Dan and Thanh
Con Cuong, Que Phong, Chuong districts
Quy Hop, Quy Chau and
Anh Son districts
23 Ha Tinh Huong Khe, Huong Son

. vn
Duc Tho, Ky Anh, Nghi Xuan,
and Vu Quang districts
V i e t nam
Thach Ha, Cam Xuyen and
Can Loc districts
.L u a t
24
w w
Quang Binh Tuyen Hoa, Minh Hoa
w and Bo Trach districts
Other districts
25 Quang Tri Huong Hoa and Dac Other districts

Krong districts
26 Thua Thien A Luoi and Nam Dong Phong Dien, Quang Dien,
Hue districts Huong Tra, Phu Loc and Phu
Vang districts
27 Da Nang Hoang Sa island district
28 Quang Nam Dong Giang, Tay Giang, Dai Loc and Duy Xuyen
Nam Giang, Phuoc Son, districts
Bac Tra My, Nam Tra
My, Hiep Duc, Tien
Phuoc and Nui Thanh
districts, and Cu Lao
Cham island

29 Quang Ngai Ba To, Tra Bong, Son Nghia Hanh and Son Tinh
Tay, Son Ha, Minh Long, districts
Binh Son and Tay Tra
districts, and Ly Son
island district
30 Binh Dinh An Lao, Vinh Thanh, Van Hoai An and Phu My districts
Canh, Phu Cat and Tay
Son districts
31 Phu Yen Song Hinh, Dong Xuan, Song Cau town, and Dong
Son Hoa and Phu Hoa Hoa, Tay Hoa and Tuy An
districts districts
32 Khanh Hoa Khanh Vinh and Khanh Van Ninh, Dien Khanh and
Son districts, Truong Sa Ninh Hoa districts, and Cam
. vn
island district and islands Ranh town
in the province
V i e t nam
33
u a t
Ninh Thuan All districts
.L
w w w
34 Binh Thuan Phu Quy island district Bac Binh, Tuy Phong, Duc
Linh, Tanh Linh, Ham Thuan
Bac and Ham Thuan Nam
districts
35 Dak Lak All districts
36 Gia Lai All districts and towns
37 Kon Tum All districts and towns
38 Dak Nong All districts
39 Lam Dong All districts Bao Loc city
40 Ba Ria- Con Dao island district Tan Thanh district

Vung Tau

41 Tay Ninh Tan Bien, Tan Chau, Other districts
Chau Thanh and Ben Cau
districts
42 Binh Phuoc Loc Ninh, Bu Dang and Dong Phu, Binh Long, Phuoc
Bu Dop districts Long and Chon Thanh districts
43 Long An Kien Tuong town, and Duc

Hue, Moc Hoa, Tan Thanh,
Duc Hoa, Vinh Hung and Tan
Hung districts
44 Tien Giang Tan Phuoc district Go Cong Dong and Go Cong

Tay districts
45 Ben Tre Thanh Phu, Ba Chi and Other districts

Binh Dai districts
. vn
V i e t nam
46 Tra Vinh
.L u a t
Chau Thanh and Tra Cu
districts
Cau Ngang, Cau Ke and Tieu
Can districts
47 w w w
Dong Thap Hong Ngu, Tan Hong, Other districts
Tam Nong and Thap
Muoi districts
48 Vinh Long Tra On district
49 Soc Trang All districts and Vinh Soc Trang city

Chau town
50 Hau Giang All districts and Nga Bay Vi Thanh city

town
51 An Giang An Phu, Tri Ton, Thoai Other districts

Son, Tan Chau and Tinh
Bien districts
52 Bac Lieu All districts Bac Lieu city

53 Ca Mau All districts Ca Mau city
54 Kien Giang All districts and islands in Ha Tien town and Rach Gia
the province city
THE END
. vn
V i e t nam
.L u a t
w w w

Nghi Dinh 218 2013 ND CP Chinh Phu

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THE GOVERNMENT

Decree No. 218/2013/ND-CP of December 26, 2013

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c/ Expense in excess of the prescribed level of deduction for the setting up of

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No. Province Localities with Localities with difficult

4 Lai Chau All districts and towns

5 Son La All districts and towns

6 Dien Bien All districts and Dien

7 Lao Cai All districts Lao Cai city

Vietnam Law & Legal Forum 31

w w w and Tram Tau districts Yen and Yen Binh districts

15 Quang Ninh Ba Che and Binh Lieu Van Don district

16 Hai Phong Bach Long Vi and Cat

17 Ha Nam Ly Nhan and Thanh Liem

18 Nam Dinh Giao Thuy, Xuan Truong, Hai

19 Thai Binh Thai Thuy and Tien Hai

Vietnam Law & Legal Forum 32

23 Ha Tinh Huong Khe, Huong Son

25 Quang Tri Huong Hoa and Dac Other districts

27 Da Nang Hoang Sa island district

Vietnam Law & Legal Forum 33

35 Dak Lak All districts

36 Gia Lai All districts and towns

37 Kon Tum All districts and towns

38 Dak Nong All districts

39 Lam Dong All districts Bao Loc city

40 Ba Ria- Con Dao island district Tan Thanh district

Vietnam Law & Legal Forum 34

43 Long An Kien Tuong town, and Duc

44 Tien Giang Tan Phuoc district Go Cong Dong and Go Cong

45 Ben Tre Thanh Phu, Ba Chi and Other districts

48 Vinh Long Tra On district

49 Soc Trang All districts and Vinh Soc Trang city

50 Hau Giang All districts and Nga Bay Vi Thanh city