12 INCOMES EXEMPTED FROM COMPANY INCOME TAX

I. Legal bases for incomes exempted from company income tax:

👉 Circular 78/TT-BTC.

👉 Also amended by Circular 151/2014/TT-BTC, Circular 96/2015/TT-BTC.

II. Latest incomes exempted from company income tax:

Includes the following 12 items:

1. Incomes exempted from company income tax related to cultivation, animal husbandry and farming activities in the agriculture, forestry, fishing and salt industries.

Specifics include:

1️⃣ Income from the following activities of the cooperative society:

+ Cultivation, animal husbandry, rearing, agricultural and marine products, salt production.

+ Agriculture, forestry, fishing and salt production in areas with difficult or extremely difficult socio-economic conditions.

2️⃣ Income from the following activities of the enterprise:

+ Cultivation, livestock, rearing and processing of agricultural and marine products in areas with extremely difficult socio-economic conditions.

+ Fishing activities.

3️⃣ Income from liquidation of crop, animal husbandry and rearing (except for the liquidation of rubber tree garden).

4️⃣ Income from selling scraps and wastes related to products of cultivation, animal husbandry, rearing and processing of agricultural and marine products.

NOTE:

- Taxpayers must determine separately income from products and goods processed from agricultural and marine products in order to enjoy company income tax incentives.

- Products from cultivation, animal husbandry and rearing mentioned above are determined according to the level 1 of the economic sector code of the agriculture, forestry and fishing sectors specified in the Economic Sectors System of Vietnam.

2. Incomes exempted from company income tax from technical service activities directly serving agriculture.

Include the following incomes:

1️⃣ Income from irrigation services; till the land; on-farm dredging canals; pest control services for plants and animals.

2️⃣ Harvest agricultural products services.

3. Incomes from scientific research contracts and technological development according to the Law on Science and Technology are incomes exempted from company income tax if eligible.

In order for these objects to be exempted from company income tax, the following conditions must be satisfied:

* Condition 1:

+ Tax exemption during the contract performance.

+ The maximum exemption period is not more than 03 years from the date of starting to have revenue. Particularly, income from selling products made from new technologies applied for the first time in Vietnam is exempted from tax for a maximum of 5 years from the date of starting to have revenue (must be certified by a competent authority).

+ Income from selling production trial products during production trial as prescribed by law.

* Condition 2: Incomes from contract performance must:

+ Having a certificate of scientific research activities registration;

+ Being certified by a competent science state management institution as a scientific research contract and technological development.

4. Incomes of enterprises with an average labor of 30% or more in the year who are disabled, after detoxification or infected with HIV belong to the incomes exempted from company income tax.

- Except the following cases:

+ Items belong to “other income” are specified in Article 7 of Circular 78/2014/TT-BTC.

+ Enterprises operating in the field of finance and real estate business.

NOTE:

- The employees who are disabled, after detoxification, infected with HIV must have a certificate from a competent authority

- The average number of employees in the year is at least 20 people and above so that the incomes belong to the incomes are exempted from company income tax.

5. Incomes exempted from company income tax from vocational training colleges exclusively for ethnic minorities, the disable, children in extremely difficult ambiences, subjects of social evils, people who are detoxification, people after detoxification, people infected with HIV/AIDS.

 – Conditions to be included in incomes exemption from company income tax:

+ Vocational training colleges are established and operated according to the regulations on vocational colleges.

+ There must be a list of students who are ethnic minorities, the disabled, children with extremely difficult ambiences, subjects of social evils, people who are detoxification, people after detoxification, people infected with HIV/AIDS.

NOTE:

- In case the vocational training college has other subjects. The incomes exempted from company income tax need to be distributed and determined as follows:

- Incomes exempted from company income tax = (students who are ethnic minorities, the disabled, children with extremely difficult ambiences, subjects of social evils, people who are detoxification, people after detoxification, people infected with HIV/AIDS/Total number of students) x Total income.

6. Income distributed from capital contribution, purchase shares, joint venture, economic association with domestic enterprises, after the recipient receiving capital contribution, issuing shares, joint venture or association has paid company income tax .

- Including the case where the recipient receiving capital contribution, issuing shares, joint ventures and associates are entitled to corporate income tax incentives.

7. The sponsorship belongs to the incomes exempted from company income tax. If used for educational activities, scientific research, culture, art, charity, humanitarian and other social activities in Vietnam.

NOTE:

- If the sponsorship is not used for the right purpose, the sponsorship’s owner must calculate and pay company income tax on the wrong purpose in that period of misuse.

8. Income from the transfer of emission reduction certificates (CERs) belongs to the incomes exempted from company income tax.

NOTE:

– This certificate must be certified by the competent environmental authority.

– The incomes exempted from company income tax in this case is only applicable to the first time the certificate of emission reduction is granted. In subsequent transfers, pay company income tax normally.

9. Incomes exempted from company income tax from performing tasks assigned by the State of units in accordance with law.

- If the units arise incomes different from performing tasks assigned by the State, then must calculate and pay company income tax for those revenues.

10. The undivided income belongs to the incomes exempted from company income tax.

- The undivided income of socialized colleges in the fields of education, healthcare and other socialized fields (including the Department of Judicial Assessment) is left for investment its college development in accordance with specialized laws on education, healthcare and other socialized fields.

- The above income is included in the company income tax exemption items, excluding the case that the unit left for investment in expanding other business lines and activities not in the fields of education, healthcare and other business activities and other socialized fields.

- The undivided income of the cooperative is left to form the assets of the cooperative.

NOTE:

- If the undivided income is left, then it is divided or spent for the wrong purposes then it will be arrears to collect company income tax with the tax rate at the time of division or improper spending. At the same time, they will be punishment for breaking the tax law according to regulations.

11. Incomes from technology transfer in the fields of priority transfer to organizations and individuals in areas with extremely difficult socio-economic conditions are incomes exempted from company income tax.

12. Incomes from bailiff's office during the pilot implementation period in accordance with the law on civil enforcement are incomes exempted from company income tax.

- Excluding income from others activities except bailiff operations.

Above are the incomes that are exempted from company income tax. These 12 non-company income tax amounts will be deducted when determining company income tax.

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