Page 9 - VSIP News QII - 2013

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Legal Update
24 June 2013
New Laws on Corporate Income Tax (“CIT”) and Value Added Tax (“VAT”)
New CIT and VAT Laws were approved by the National Assembly on 19 June 2013. Based on the latest draft version of the
Laws that we have, notable changes include:
CIT Law
1. CIT rate reduced
The standard CIT rate will be reduced from 25% to 22% from 2014 and further reduced to 20% from 2016.
For enterprises with total revenue of less than VND20 billion (equivalent to approximately US$1 million),
20% CIT will apply from 2014.
2. CIT incentives
The scope of investments entitled to CIT incentives has been broadened to include large manufacturing
projects in excess of VND6,000 billion (equivalent to approximately US$300 million) and investment
projects in selected industrial zones.
CIT incentives will now be available to both new and expanded investment projects that meet the necessary
criteria.
3. Deductible expenses
• The deductibility cap applies to A&P expenses has been increased from 10% to 15% for all enterprises. Payment
discount is now not subject to the A&P cap.
• The requirement of registration of material consumption levels has been abolished.
• The debt/equity limitation that has been originally proposed as part of the amendments is not included in the
final version.
• Matching the VAT regulations, bank transfer vouchers are required to support the deductibility of expenses in
excess of VND20 million (equivalent to approximately US$ 1,000).
• Losses from the transfer of investment projects, the right to participate in investment projects, and the transfer
of properties can be offset against profits from the main business activities.