Official Letter No. 33/CTCTH-TTHT on Corporate Income Tax Incentives for Socialized Facilities

The Can Tho City Tax Department has received Official Letter No. 11/2024/CV-VC dated December 18, 2024, from Vietnam Medical Investment Joint Stock Company, requesting guidance on tax policy and corporate income tax (CIT) incentives. The Can Tho City Tax Department provides the following comments:

• Pursuant to Decree No. 69/2008/ND-CP dated May 30, 2008, by the Government on policies encouraging socialization in education, vocational training, healthcare, culture, sports, and the environment:

  • Article 1 (as amended by Clause 1, Article 1 of Decree No. 59/2014/ND-CP dated June 16, 2014) stipulates:

    "Article 1. Scope and Subjects of Regulation

    1. The scope of regulation of the Decree: The socialization sectors include: Education, vocational training, healthcare, culture, sports, the environment, and judicial expertise.
    2. The subjects of regulation: a) Private institutions established and qualified to operate according to the regulations of state authorities with jurisdiction in socialization fields; …"

  • Article 2 stipulates:

    "Article 2. Conditions for enjoying the socialization development incentives A facility implementing socialization must meet the categories, scale, and criteria specified by the Prime Minister to enjoy the policies outlined in this Decree."

  • Article 8 stipulates:

    "Article 8. Application of Corporate Income Tax: Socialized facilities with income from socialization activities will apply a 10% CIT rate throughout their operational period. New socialized facilities established from the effective date of this Decree will be exempt from CIT for 4 years, starting from the time they have taxable income, and will receive a 50% reduction in CIT for the next 5 years. If a new socialized facility is established in preferential investment areas under Appendix B of Decree No. 108/2006/ND-CP dated September 22, 2006, then it will be exempt from CIT for 4 years, starting from when taxable income is generated, and will receive a 50% CIT reduction for the next 9 years and will apply a 10% CIT rate throughout its operational period. …"

• Based on Decision No. 1466/QD-TTg dated October 10, 2008, by the Prime Minister on the detailed list of categories, criteria, scale, and standards for socialized facilities in the fields of education, vocational training, healthcare, culture, sports, and the environment; Decision No. 693/QD-TTg dated May 6, 2013, on amendments to the list; and Decision No. 1470/QD-TTg dated July 22, 2016, on further amendments.

• Based on Circular No. 78/2014/TT-BTC dated June 18, 2014, by the Ministry of Finance, guiding the implementation of Decree No. 218/2013/ND-CP dated December 26, 2013, of the Government on the Law on Corporate Income Tax (amended by Circular No. 96/2015/TT-BTC dated June 22, 2015):

  • Article 18 stipulates:

    "Article 18. Conditions for applying corporate income tax incentives:

    1. Corporate income tax incentives apply only to businesses that comply with accounting, invoicing, documentation, and tax filing regulations.
    2. During the period of enjoying CIT incentives, if a business carries out multiple production and business activities, the business must separately calculate income from tax-incentivized activities and income from non-incentivized activities for tax filing."

  • In Article 19, paragraph 3(a) stipulates:

    "Article 19. Preferential Tax Rates 3. A 10% preferential tax rate applies throughout the operational period to: a) The income from businesses' socialization activities in education, vocational training, healthcare, culture, sports, the environment, and judicial expertise."

  • Article 20 specifies:

    "Article 20. Tax Exemption and Reduction Time: 2. Exemption for 4 years, followed by a 50% reduction for the next 5 years for income from a new investment project in socialization, except in areas listed as having difficult or extremely difficult socio-economic conditions."

  • Article 22 specifies:

    "Article 22. Procedures for Implementing Corporate Income Tax Incentives The business determines the eligibility for tax incentives, the preferential tax rate, tax exemption/reduction period, and losses to be deducted from taxable income, self-declaring and self-settling taxes with the tax authorities."

Based on the regulations above and the content of the Official Letter from Vietnam Medical Investment Joint Stock Company (No. 11/2024/CV-VC dated December 18, 2024):

If Vietnam Medical Investment Joint Stock Company is a private facility performing socialization activities in healthcare according to the law, and if the company is carrying out new investment projects in the socialization sector that meet the categories, scale, and criteria in Decision No. 1466/QD-TTg dated October 10, 2008 (as amended), the company is eligible for CIT incentives. Specifically, the company will be exempt from CIT for 4 years and receive a 50% reduction in CIT for the next 5 years.

Regarding procedures for applying CIT incentives, the company is responsible for determining the conditions, applying the preferential tax rate, and self-declaring and settling taxes with the tax authorities. If the authorities conduct inspections and determine the company does not meet the criteria for applying preferential tax rates and exemptions, the company will be required to pay back taxes and penalties as per regulations.

Therefore, according to current regulations, Vietnam Medical Investment Joint Stock Company must self-determine tax incentives conditions and file accordingly. If the company does not meet the criteria for socialization facilities in healthcare as per the Prime Minister’s decisions, it will not be eligible for CIT incentives.

The Can Tho City Tax Department advises Vietnam Medical Investment Joint Stock Company to consult the above-mentioned provisions and comply with the current legal framework.

See details here.