Corporate income tax will be completely exempted in the first four years and cut by half for the next nine years for emerging tech and science firms in Vietnam, as per a Ministry of Finance circular effective in March.
The Ministry of Finance has published Circular 03, which provides details on the deduction of corporate income tax for tech and science firms.
In order to be eligible for the tax cut, firms must present their Certificate of Science and Technology Enterprise issued by relevant authorities.
Furthermore, their revenue from manufacturing and selling tech-based products must constitute 30 percent or more of their total revenue in a year, otherwise the tax deduction for that year will not be applicable.
On top of that, revenue yielded from tech-based applications must come from new services, not pre-existent ones on the market.
Science and tech firms are also required to keep separate business accounts for the manufacturing and selling of tech-based products to benefit from the tax cut.
The Ministry of Finance also noted a firm’s responsibility to adhere to accounting and bookkeeping regulations, as well as fulfilling tax liability as per the law.
The new policy is meant to stimulate the establishment of new science and tech firms in Vietnam, the Ministry of Finance stated.
The ministry pointed out that there are only 500 businesses registered as science and technology enterprises in the country, while up to 5,000 firms are estimated to be eligible for the status.