Tax Incentives For Information Technology Company

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Tax Incentives For Information Technology Company

In the past time, the concept of “Industrial Revolution 4.0” is mentioned many times on the mass media. The application of technology to life, in all fields becoming increasingly popular. In this trend, many enterprises operating in the field of technology has been established and operate vigorously in Vietnam, especially enterprises in the field of information technology.

In order to seize the opportunity in the industrial revolution flows 4.0, motivating and encouraging enterprises to strengthen the investment in the fields of technology, Vietnam has made regulations on tax incentives for enterprises operating information technology. As prescribed in Article 16 and Appendix I of Decree No. 118/2015/ND-CP, trades “production of software products, digital products, key information technology products, software service, information security services, information protection service according to regulations of law on information technology” are the special trades of the investment incentives. Based on Circular No. 78/2014/TT-BTC and Circular No. 96/2015/TT-BTC, the software manufacturing enterprise is preferred:

  • Tax Exemption four (04) years;
  • 50% reduction of payable tax in nine (09) next year;
  • The applicable preferential tax rate is 10% for a period of fifteen (15) years from the first year of enterprise turnover.
In addition, the enterprise does not need to perform any procedures to enjoy tax incentives that the enterprise determines the conditions of tax incentives, the preferential tax rate, tax exemption period, tax cut, the number of losses is deducted (-) on the tax computation income to self-declare and self-settlement of taxes with the tax authorities. The tax authority when check and inspection for enterprise must check for conditions enjoyed to tax incentives, tax cut, the number of losses is deducted on taxable income in accordance with the actual conditions that the enterprise meets. In case of the enterprise does not ensure the conditions for applying preferential tax rate and tax exemption period, tax cut is the tax authorities handling collect arrears of taxes and imposition of penalties for tax administrative violations as prescribed.
To determine whether your enterprise is tax-incentives, your enterprise needs to take note of some of the following issues:
Article 3 Decree No. 71/2007/ND-CP defined:
“Software product means software, and accompanying documents which are produced and displayed or stored in objects of any form and can be purchased, sold or transferred to other subjects for exploitation or use”.Article 9 Decree No. 71/2007/ND-CP regulations on software industry activities are:
“Software industry activities are activities of designing, manufacturing and supplying software products and services, including manufacturing packaged softwares, manufacturing softwares under orders or embedded softwares; processing softwares and providing software services”.

Software products are tax-incentives:

1. System softwares;
2. Application softwares;
3. Utility softwares;
4. Tool softwares;
5. Other softwares.

Enterprise detail List of software products promulgated together with Circular No. 09/2013/TT-BTTTT dated April 08, 2013 of Ministry of Information and Communications.

Software-services include:

1. ​​​Administration, warranty, maintenance of operations of softwares and information systems;
2. ​​​​​Software quality counseling, assessment and evaluation;
3. ​​​​​Software project counseling and formulation;
4. ​​​​​Software valuation counseling;
5. Software technology transfer;
6. ​​​​​System integration;
7. ​​​​​​Assurance of safety and security for software products and information systems;
8. ​​​​​​Distribution and supply of software products;
9. ​​​​​Other software services.

To meet the part or the whole software production process, depending on the specific case and details are as follows:

1. ​​​​​​Determination of requirements including the following tasks: determinations of customers’ requirements, analysis; collection and development of requirements; consultancy on process adjustment; aggregation and approval of requirements.

2. ​​​​​​Analysis and design, including the following tasks: description of requirements; establishment of development algorithms; data modeling; functional modeling; information flow modeling; determination of software solutions; design of software system; design software units and modules.

3. ​​​​​​Programming, coding, including the following tasks: software coding; programming of software units and modules; software adjustment and modification; integration of software units; integration of software system.

4. ​​​​​​Software testing, including the following tasks: development of testing scenarios for software units and modules; software testing; software system testing; software function testing; software quality inspection; assessment of possibility of errors; determination of customers’ satisfaction; software transfer.

5. ​​​​​Software completion and packaging, including the following tasks: software description documents, instructions on installation and use of software; software packaging; registration of designs; registration of intellectual property rights.

6. ​​​​​​Installation, transfer, instructions, maintenance, warranty, including the following tasks: instruction on software installation; software installation; giving instructions to users; software testing after transfer; software repair after transfer; support and warranty after transfer; software maintenance.

7. ​​​​​​Publishing, distribution of software product, including the following tasks: marketing, advertising, selling, distribution of software product; publishing of software product.

 

If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.

This article is for general information only and is not a substitute for legal advice.