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| Workers produce printed circuit boards at a factory of the Korean-invested Synopex Vina2 Co. Ltd in the Yen Phong Industrial Park, Bac Ninh province__Photo: VNA |
The draft amended Law on Corporate Income Tax (CIT) has recently been submitted to the National Assembly for discussion at its 9th session, drawing the attention of lawmakers, the business community, and the public.
Increasing tax incentives, boosting sustainable development
According to Minister of Finance Nguyen Van Thang, who presented the draft law to the National Assembly, the draft has been developed to institutionalize the strategic directions of the Party and the State, particularly those aimed at promoting the development of priority sectors, industries, and geographical areas. The drafting body has conducted a comprehensive review of current tax and investment regulations, while also referencing international practices to improve the effectiveness of tax incentives and avoid the dispersion of benefits that could erode the tax base.
At the 8th session of the National Assembly, the Government proposed a range of measures to refine CIT incentive policies, with a focus on targeted beneficiaries, sectors, and localities. These include industries engaged in high value-added manufacturing, science and technology, digital transformation, innovation, the green economy, environmental protection, agricultural and rural development, as well as public service activities and regions with difficult or exceptionally difficult socio-economic conditions.
The review and reorganization of the incentive framework have been carefully designed to ensure the continuity of existing preferential policies while introducing more competitive and strategic incentives, aiming to create conditions for enterprises to expand investment in sectors and localities encouraged under the Party and State's socio-economic development orientations.
The Minister further noted that the drafting body has studied global experiences and emerging trends in tax incentive policies, particularly in the context of implementing Pillar Two of the OECD’s global minimum tax framework. This perspective has helped formulate appropriate and effective tax incentives, which are expected to sustain the attraction of foreign direct investment while fostering broader participation from all economic sectors—especially the private sector. In the course of implementing Pillar Two, the drafting agency has also provided advice to the Government and competent authorities on possible indirect support mechanisms for enterprises, ensuring compliance with Vietnam’s international commitments and agreements.
Ensuring consistency and coherence in the legal system
To ensure consistency and coherence in the legal system, the draft law adds a provision stipulating that, in cases where other laws contain provisions on CIT incentives that differ from those specified in the CIT Law, the provisions of the CIT Law shall prevail.
Minister Nguyen Van Thang said this principle aims to consolidate tax incentive policies within tax legislation, putting an end to the practice of embedding tax incentives in specialized laws. This approach is expected to enhance coherence, ensure consistency, and facilitate legal compliance for both state agencies and businesses.
The drafting agency will further review specialized laws that contain provisions on CIT, including laws passed by the National Assembly at the 8th session in late 2024, draft laws presented to the legislature at the 9th session, and those expected to be tabled at the 10th session—such as the Investment Law, the Law on Support for Small- and Medium-Sized Enterprises, and others.
Particularly, tax incentives specified in the Law on the Capital and National Assembly resolutions piloting special mechanisms and policies for specific localities, sectors, or fields will remain governed by current legal documents and are not included in this draft law for nationwide application.
Breakthrough tax incentives to promote science, technology, and innovation
Worthy of note, the draft law introduces breakthrough tax incentive policies aimed at accelerating the development of science, technology, and innovation.
For example, donations for scientific research, technological development, innovation, and digital transformation would be deductible for CIT purposes; expenditures by enterprises on these activities could also be deducted when calculating taxable income; income derived from contracts for scientific research, technological development, innovation, and digital transformation would be exempt from corporate income tax; and non-profit public science and technology organizations and public higher education institutions would also be exempt from CIT.
To ensure flexibility, the drafting body proposes authorizing the Government to stipulate additional funding levels and conditions, and the scope of application of expenditures for R&D activities, rather than setting a fixed rate of 150 percent or 200 percent as in other draft laws. This approach, according to Minister Thang, is drawn from international experience and aims to avoid frequent legislative amendments.- (VLLF)
