Vietnam – Ministry Of Finance Providing Guidance On Determination Of Regular Investments Before 2014.

7 July, 2016

 

Pursuant to the propositions of European Chamber of Commerce in Vietnam (EuroCharm) and with an aim to ensure the transparency and simplicity of the procedures in relation to the regular investment activities, the Ministry of Finance provides guidance as follows:

 

• Regular investments made by active enterprises from 2009 to 2013 are not deemed as expansion investments and are eligible for Corporate Income Tax (“CIT”) incentives being granted to the projects.
• Regular investments are financed by 1 of 3 independent sources to invest in machinery and equipment on a regular basis in a project that currently eligible for CIT incentives, including:
  • Corporate reserve for basic depreciation of fixed assets.
  • Net profit for reinvestment.
  • Funds from the investment capital registered with competent authorities.

 

The above regular investment in machinery and equipment must not increase the production capacity according to the registered or approved business plans of the project granted with CIT incentives.

 

Of note:

 

• In the event that the Investment Registration Certificate indicates the scale of project, the regular investments that enhance such scale shall not be considered as regular investments and shall not be entitled to CIT incentives.
• This provision is not applicable when the Investment Registration
• Certificate does not define the project's scale OR the enterprises only supplements / replaces machinery and equipment on a regular basis and not granted an Investment Registration Certificate.
• If the enterprise having regular investments that enlarge the output of production in comparison to the Investment Registration Certificate, CIT incentives shall not be applied to income generated from the excess output as defined in the Investment Registration Certificate.