New regulations on corporate income tax and personal income tax exemptions

According to the information from the Ministry of Finance on February 6th, the Government has just issued Decree No. 11/2024/ND-CP which regulates interest rates, reasonable profits, payment methods, and project settlement under the Build-Transfer (BT) contract; exempting corporate income tax and personal income tax in Ho Chi Minh City.

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Processing seafood for export. Photo: Dinh Huong/TTXVN

This decree details some provisions of Resolution No. 98/2023/QH15 dated June 24, 2023 of the National Assembly on piloting some mechanisms and policies for the special development of Ho Chi Minh City (Resolution No. 98/2023/QH15) including: Loan interest after construction period, reasonable profits, payment method, investment project settlement under BT contract (hereinafter referred to as BT project) in Ho Chi Minh City in accordance with the provisions of Resolution No. 98/2023 / QH15; exemption from corporate income tax (CIT), exemption from personal income tax (PIT) as specified in Resolution No. 98/2023/QH15.

This decree applies to the following subjects: Parties to the BT contract; agencies, organizations, individuals related to investment activities of BT projects in Ho Chi Minh City; enterprises, agencies, organizations, individuals related to startup innovation and creative startup activities in Ho Chi Minh City.

The decree does not specify the content related to Interest rates during the construction period of BT projects implemented in accordance with the construction law regulations; the rate of equity capital that investors mobilize to implement the BT project in accordance with Article 77 of the Investment Law via the PPP method.

Determine the ceiling interest rate for post-construction capital loans

The decree stipulates the basis for determining the ceiling interest rate for post-construction capital loans, the ceiling profit rate after tax on equity capital. Specifically, regarding the proposed reference interest rate, the ceiling interest rate for post-construction capital loans, the average medium and long-term lending interest rate of 4 commercial banks (CBs) in Ho Chi Minh City provided by the State Bank of Vietnam Ho Chi Minh City Branch, including: Joint Stock Commercial Bank for Foreign Trade of Vietnam, Joint Stock Commercial Bank for Investment and Development of Vietnam, Vietnam Joint Stock Commercial Bank for Industry and Trade, Agribank; interest rate of capital loans of similar BT projects (if any).

Exemption from CIT for startup innovation activities

Regarding the exemption from CIT in Ho Chi Minh City. The decree stipulates that innovative startups, scientific and technological organizations, innovation and creative startup centers, and intermediary organizations supporting innovative startups with income from innovation startup activities arising in Ho Chi Minh City are exempt from CIT for this income.

The tax exemption period is 5 years from the time that the enterprise generates CIT to be paid from innovation startup activities arising in the city during the period of effectiveness of Resolution No. 98/2023/QH15 of the National Assembly on piloting some mechanisms and policies for the special development of Ho Chi Minh City.

The government decree also emphasizes that during the period of effectiveness of Resolution No. 98/2023/QH15, organizations with income from the transfer of capital contribution, capital contribution rights to innovative startup enterprises in the city are exempt from CIT for this income; innovative startups in Ho Chi Minh City specified in this item must meet the regulations of the City People’s Council on priority fields; criteria, conditions, content of innovation startup activities.

Exemption from PIT

The government decree also states that during the period of effectiveness of Resolution No. 98/2023/QH15, individuals with income from the transfer of capital contribution, capital contribution rights to innovative startup enterprises in Ho Chi Minh City are exempt from personal income tax on this income.

Innovative startups in the city specified in this item must meet the regulations of the Ho Chi Minh City People’s Council on priority fields; criteria, conditions, content of innovation startup activities.

The income from the transfer of capital, capital contribution specified in this item is income obtained from the transfer of part or the entire capital, capital contribution to innovative startup enterprises in the city (including the case of selling enterprises), except for income from the transfer of shares, bonds, fund certificates and other types of securities as prescribed; in case of selling the entire enterprise owned by individuals in the form of capital contribution associated with real estate, it is necessary to declare and pay personal income tax according to the real estate transfer activity.

The determination of the income from the transfer of capital, capital contribution and the declaration to the tax authority shall be implemented in accordance with the personal income tax law, tax administration law.

SOURCEcafef
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