State enterprises continue to pay enterprise income tax at the universal rate of 28% but some of them no longer enjoy tax relief provided for in the Enterprise Income Tax Law as from March 21, 2007.
Under Finance Ministry Circular No. 134/2007/TT-BTC of November 23, guiding the implementation of Government Decree No. 24/2007/ND-CP of February 14, 2007, detailing the Enterprise Income Tax Law, equitized state enterprises are no longer entitled to exemption from enterprise income tax for the first two years after equitization nor a 50% reduction for the subsequent two years.
Joint stock companies transformed from equitized state enterprises and granted business registration certificates after March 21, 2007 (the effective date of Decree No. 24), are no longer entitled to enterprise income tax relief like newly-founded businesses. Those obtaining business registration certificates from the effective date of Decree No. 108/2006/ND-CP of September 22, 2006, through March 21, 2007, are eligible for incentives provided for in Decree No. 108. Those with business registration certificates granted before Decree No. 108 took effect would continue enjoying tax relief for the remaining tax relief.
Foreign-invested enterprises and foreign parties to business cooperation contracts possessing investment licenses granted before January 1, 2004, and satisfying the conditions specified in their licenses would continue enjoying preferential enterprise income tax rates until the end of the preferential duration. Subsequently, they will enjoy the tax rate of 25% until the expiration of their investment licenses.
For textile and garment enterprises, the Finance Ministry nullifies the guidance on enterprise income tax relief applicable to enterprises using domestic materials or exporting textile or garment products at a prescribed percentage as from the 2007 tax year. Textile and garment enterprises that satisfy other conditions for enterprise income tax relief, such as economic development in difficulty-hit regions or creation of jobs for unemployed laborers, will continue enjoying those incentives for the remaining incentive duration.
The Circular also permits the application of the preferential tax rate of 10% to projects in business lines or domains on the list of business lines or domains eligible for special investment incentives and having great socio-economic impacts.-