As provided in Ministry of Finance Circular No. 104/2011/TT-BTC of July 12, revising Circular No. 11/2010/TT-BTC of January 19, 2010, guiding the performance of tax obligations by Vietnamese investors making offshore investment, losses incurred by offshore investment projects of Vietnamese enterprises are not allowed to be cleared against from domestically generated incomes of these enterprises upon calculation of corporate income tax.
However, in case an ineffective offshore investment project terminates its operation ahead of schedule, its losses which have not yet fully offset and are still borne by the Vietnamese enterprise implementing it may be declared for clearing against domestically earned taxable incomes of the Vietnamese enterprise.
The loss conversion will be made from the period of corporate income tax calculation following the period during which losses are made and in compliance with the Corporate Income Tax Law.
The duration of loss conversion is continuous and does not exceed 5 years from the year in which the Vietnamese enterprise receives unoffset losses.
Losses allowed to be converted into disbursed offshore investment capital amounts must not exceed capital amounts already invested in offshore projects as indicated in offshore investment certificates granted by the Ministry of Planning and Investment.
The new regulation specifies tax declaration and finalization dossiers for Vietnamese offshore investment enterprises applicable to losses incurred by offshore investment projects as well as responsibilities of tax offices when receiving, examining and processing these dossiers.
Another salient point of this Circular, effective as of August 26, is that machinery, equipment and knocked-down parts brought offshore for creating fixed assets of offshore investment projects, when being liquidated upon completion or termination of these projects and permitted for re-import into Vietnam, may be eligible for refund of paid export duty corresponding to their actually re-imported quantities and exempt from import duty.-