Decree No. 12/2015/ND-CP (Decree 12), on the implementation of Law No. 71/2014/QH13 dated 26 November 2014 was issued on 12 February 2015. Decree 12, which is effective from 1 January 2015, supplements and amends a number of tax laws.

The main changes regarding corporate income tax (CIT) are summarized below:

  • Deductible expenses now include:
    • Expenses incurred on occupational education and training activities for employees;
    • The interest expense on loans obtained for investment purposes if the company’s capital is fully contributed; and
    • Actual amount on life insurance incurred for employees. The previously applicable cap of VND 1 million per month per employee has been removed.
  • CIT incentives on new investment projects in the manufacturing sector are entitled to be taxed at 10% for 15 years subject to certain conditions. Decree 12 clarifies that major manufacturing projects with an investment capital of at least VND 6 trillion and which have either an annual revenue of VND 10 trillion or 3,000 employees, would be eligible for the incentive
  • Also Decree 12 confirms that tax incentives will not apply to income from trading and service activities implemented outside the economic zones, industrial zones, hi-tech zones and incentivized locations.
  • Decree 12 restores a number of tax incentives previously available under Law 32/2013/QH13.
  • The tax incentives, which had been abolished, will run for the taxpayer’s respective remaining period (as per Decree 218), from the tax year 2015. The incentives generally apply to qualifying enterprises having investment expansion projects and having investment projects in prescribed industrial zones.
  • Decree 12 has also extends the list of tax incentive privilege areas.
  • Decree 12 introduce a new regulation to tax income from the capital transfer of foreign entities, i.e. offshore capital transfer transactions “irrespective of the place of business”. However, pertinent details on the scope and administration of this regulation are lacking and more guidance is thus required.