Công văn 1214/TCT-CS

To: Vietnam Brother Industrial Limited Liability Company.

On 09/02/2011, the General Department of Taxation has received official letters No.002/2011/ACC-BIVN of Vietnam Brother Industrial Co., Ltd on CIT incentives for export processing enterprises. In this regard, the General Department of Taxation has the following opinions:

- Clause 4, Article 2 of the Regulation of Industrial and export processing zones, hi-tech park, issued together with Decree No.36/CP dated 24/04/1997 of the Government guiding on export processing enterprises stipulates, "Processing enterprises are the enterprises specialized in producing goods for export, carrying out services for manufacturing exports and export activities are established and operating under this Regulation".

- Clause 6, Article 2 of Decree No.29/2008/ND-CP dated 14/03/2008 of the Government stipulating: "Export processing enterprises are the enterprises that are established and operating in the export processing zones or the enterprises that export all products operating in industrial zones, economic zones ".

- Clause 1 of Article 15 of Decree No.154/2005/ND-CP dated 15/12/2005 detailing some Articles of the Customs Law regarding customs procedures, inspection and supervision of customs stipulate "1. Exported goods in place considered as the exports and imported goods in place considered as imports, must comply with the provisions of law on the management of exports and imports, and tax policy for exports and imports”.

- Clause 4 of Article 46 of Decree No.24/2007/ND-CP dated 02/14/2007 of the Government on Corporate Income Tax (CIT) stipulates: "Business establishments which have been granted investment licenses, certificates of business registration, certificates of investment before the date that the Socialist Republic of Vietnam officially became a member of the World Trade Organization (dated 11/01/2007) that income from business activities (except for textile and garment provided in clause 2 of this Article) which are being enjoyed CIT incentives due to meet the conditions on the rate of export specified in legal documents on foreign investment in Vietnam, on encouragement of domestic investment, Corporate Income Tax and legal documents on investment shall continue to be enjoyed on corporate income tax incentives as stipulated in such legal documents until 2011 ".

- Point 2 of official dispatch No.2348/BTC-TCT dated 03/03/2008 of the Ministry of Finance on CIT incentives with instructions:

"2. For the enterprises that are being enjoyed CIT incentives due to meet the conditions of reduction ratio (excluding textiles) are enjoyed CIT incentives due to meet the conditions on the rate of export till the end of 2011.Since 2012, the enterprises that are being enjoyed CIT incentives due to meet the conditions on the rate of export, if it meets the other conditions of incentive on CIT (other than conditions of incentives due to meet the export rate) are selected and notified to the tax authorities on the CIT incentives for remaining time corresponding to the actual conditions that the enterprises satisfy investment incentives as stipulated in the legal documents of CIT at the time issued establishment license or under the provisions in the legal documents on CIT at the time of adjustment due to WTO commitments (end of 2011).

The application of incentives on CIT for the remaining time as mentioned above must be ensured the principle of the enterprises being in the time applied tax rate of referential CIT, in the time of tax exemption, reduction of CIT”.

- Point 2.3, Part XII of official dispatch No.353/TCT-CS on 29/01/2010 of the General Department of Taxation guides the settlement of CIT in 2009 with instructions:

"Export processing enterprises enjoyed the CIT incentive is the incentive enjoying due to meet the conditions of export so that export processing enterprises will be adjusted  CIT incentives to meet the export ratio in accordance provisions of Decree No.24/2007/ND-CP; and Decree No.124/2008/ND-CP; and Circular No.134/2007/TT-BTC; Circular No.130/2008/TT-BTC and Official Dispatch No.2348/BTC-TCT. If export processing enterprises meet the other preferential conditions other than conditions on the export ratio will be selected the preferential enjoying according to guidance in the official dispatch No.2348/BTC-TCT ".

Pursuant to the provisions on export processing enterprises as mentioned above, Brother Industrial Co., Ltd. is the export processing enterprise (engaged in direct export activities and export activities in place considered as export activities) are enjoyed CIT incentives due to meet the conditions of export so that Brother Industrial Co., Ltd. is being enjoyed CIT incentives due to meet the conditions of export (excluding textiles and garment) will be terminated CIT incentives for the export conditions to the end of 2011. If the company meets the other conditions of incentives other than the export conditions, the company is selected and notifies the tax office on the CIT incentives for remaining time corresponding to the actual conditions that the company meets the investment incentives under the guidance of the office dispatch No.2348/BTC-TCT as mentioned above.

General Department of Taxation informs Brother Industrial Co., Ltd Vietnam and suggests that the company should contact the local tax agency for specific instructions.