Tax breaks for support industry firms to apply retroactively

07:00 | 27/07/2021 Industry

(VEN) - A newly issued government decree provides corporate income tax (CIT) incentives to support industry enterprises that were previously ineligible for such tax breaks.

tax breaks for support industry firms to apply retroactively
Support industries are subject to development priorities and eligible for investment incentives

Vu Thu Nga, Tax Partner at Deloitte Vietnam, explains that Decree 57 retroactively benefits enterprises that have been producing support industry components prior to 2015, not only those that started production since 2015. Accordingly, eligible enterprises will be entitled to CIT exemption for four years, 50 percent CIT reduction for the next nine years, and 10 percent preferential tax rate for the first 15 years on income arising from such production.

The decree stipulates that enterprises can retroactively calculate the amount of CIT that they overpaid and ask local tax authorities to offset their outstanding tax liability or those arising in the following tax periods, Nga said.

According to Nga, the tax savings will provide businesses with more financial resources for their regular business activities in order to overcome the economic impact of the Covid-19 pandemic. In addition, Nga said she believes that Decree 57 is the necessary “mental vaccine” to ease the minds of investors, gain more trust in the government, and continue growing their business, hence limiting the disruption of production and supply chains.

The amendments in Decree 57 will strengthen the confidence of support industry enterprises and the whole business community’s faith in the government's commitment to innovation, creating a new favorable environment for production and business development, Nga said.

Decree 57 reflects the government’s attentiveness to the recommendations of the business community, associations, ministries and sectors.

Vu Thu Nga, Tax Partner at Deloitte Vietnam: From the government agencies’ perspective, it is necessary to urgently disseminate the contents of Decree 57 so that businesses can understand and take advantage of them. At the same time, it is necessary to ensure the consistency and synchronization with local tax authorities in implementing the decree.

Hoang Lan