The Government issued Decree 57/2021/ND-CP (“Decree 57”), supplementing Article 20.2(g) of 218/2013/ND-CP (“Decree 218”) on 4 June 2021 for regulations on enterprise income tax incentives (“EITI”) for projects that manufacture prioritised supporting industry products (“PMPSIP”) as stipulated under Decree 218, detailing and guiding the implementation of the Law on Corporate Income Tax 1997 (“LOCIT”).

1. Conditions of applying EITI

According to Article 20.2(g) of Decree 218, enterprises are entitled to receive tax incentives if they meet the following conditions:
(i) have investment projects which manufacture products on the list of prioritized supporting industrial products for development and have been implemented before 1 January 2015;(ii) satisfy the conditions of PMPSIP under the Law on Amending and Supplementing a Number of Articles of the Law on Taxes No. 71/2014/QH13, dated 26 November 2014;
(iii) have been granted certificates of incentives for production of supporting industry products by competent authorities (“CIPSIP”).

2. Cases of applying EITI

Depending on the current situation of applying tax incentives of each enterprise, an enterprise has a PMPSIP, but its income from such project:
(i) has not yet entitled to the EITI, the EITI will be applied as of the tax period which is granted CIPSIP.
(ii) has already enjoyed all EITI under other preferential conditions (in addition to the preferential conditions applicable to PMPSIP), the EITI will be applied for the remaining time from the tax period, which is granted CIPSIP.
(iii) is enjoying EITI under other preferential conditions (in addition to the preferential conditions applicable to PMPSIP), the EITI will be applied from the tax period, which is granted CIPSIP.

3. Determination of the remaining preferential period mentioned in Paragraphs 2.(ii) and 2(iii)

The incentive period is determined by the EITI period which is PMPSIP minus the number of years of tax exemption, the number of years of tax reduction and the number of years of enjoying incentives under other preferential conditions. Specifically:
(i) The remaining tax exemption period is equal to the tax exemption period according to the conditions of PMPSIP, minus the tax exemption period already enjoying incentives under other preferential conditions;
(ii) The remaining tax reduction period is equal to the tax reduction period according to the conditions of the enjoying incentives under other preferential conditions, minus the tax reduction period already enjoying incentives under other preferential conditions;
(iii) The remaining period of application of the preferential tax rate is equal to the period of tax incentives according to the conditions of the enjoying incentives under other preferential conditions, minus the time of tax incentives already enjoyed under any other preferential conditions.Decree 57 took effect on 4 June 2021.

Relevant article: DECREE 12 | PRICE APPRAISALS