Official Letter No. 2717/CT-THTT dated September 11th, 2020 issued by Bac Ninh Tax Department about Guidance on incentives of corporate income tax and depreciation cost of fixed assets.
1. Regarding CIT incentives.
In case the Company has a new investment project in an industrial park, Bac Ninh Management Board of Industrial parks granted the first Investment Registration Certificate on February 13th, 2019 with the project objective: product equipment, tools in clean room and the project puts into operation from February 2020.
On March 20th, 2019, the Company changed the Investment Registration Certificate to supplement the business lines: perform the right to export, import and the right to wholesale distribution of goods. The addition of business lines when the project is in the investment phase, has not yet put into operation, has not yet incur revenue from the investment project, is defined as the business line of the first investment project.
Therefore, income from export, import and distribute of goods (trading activities) arises in tax-incentive area (goods are purchased and sold with enterprises located in tax incentive areas) is entitled to CIT incentives as prescribed.
In case the income from trading activities arises from outside the tax-incentive area (goods are purchased or sold with an enterprise located outside the tax-incentive area), this income is not applied for CIT incentives.
The Company separately records income from trading activities arising in tax-incentive area and others to determine the incentive income. In case the Company cannot separately record the income of each locality, it shall allocate income according to the revenue in each locality to determine incentive income and non-incentive income.
2. Depreciation cost of fixed assets.
In case the depreciation cost of the Company during the period of suspension of production due to no order does not belong to temporary suspension due to seasonal production with a period of fewer than 9 months; temporarily suspension for repair, relocation, for periodic maintenance and maintenance, with a period of fewer than 12 months, therefore, the depreciation cost is not considered as deductible expenses when determining taxable income for CIT purpose.
For fixed assets which have not been put into use, which are not stated in Clause 1 Article 9 of Circular No. 45/2013/TT-BTC dated April 25th, 2013 of Ministry of Finance, the Company have to record the depreciation cost, but the cost is not deductible when determining taxable income for CIT purpose because the fixed assets have not been used for production and business activities of the Company
Please kindly find detail in the attached file.