Vietnam – New Measures Encouraging The Construction Of Apartments And Social Infrastructure Facilities Serving Workers In Industrial Parks And Economic Zones.

Circular No. 43/2019/TT-BTC guiding Article 24.4 Decree No. 82/2018/ND-CP on the management of industrial parks and economic zones

New Circular No. 43/2019/TT-BTC issued by the Ministry of Finance on 12 July 2019, guiding Article 24.4 of Decree No. 82/2018/ND-CP dated 22 May 2018 of the Government regulating management of industrial zones (IZs) and economic zones (EZs) (Decree 82), came into effect on 26 August 2019 (Circular 43).

Article 24.4 of Decree 82 states that reasonable expenses for investment in construction, operation or lease of apartments and social infrastructure facilities servicing workers working in IZs and EZs of enterprises with investment projects in such IZs or EZs shall be deductible when determining taxable income for corporate income tax (CIT) of such enterprises (Deductible Expenses). Accordingly, Circular 43 provides further guidance on such Deductible Expenses as follows:

(i) Value of fixed assets is calculated into construction value and its depreciation is deemed as Deductible Expense when determining CIT provided that the relevant assets satisfy the conditions on fixed assets provided for in the regulations issued by Ministry of Finance on the regime on management, use and calculation of depreciation of fixed assets (currently being Circular No. 45/2013/TT-BTC of the Ministry of Finance, dated 25 April 2013 on the said matters);

It should be noted that such expenses for investment in construction, operation or lease of apartments and social infrastructure facilities servicing workers working in IZs and EZs of enterprises with investment projects in such IZs or EZs incurred after 10 July 2018 (being the effective date of Decree 82) shall be treated in accordance with Decree 82 alongside with the aforesaid guidelines under Circular 43.