Công văn 4125/BTC-TCT

Based on the Prime Minister’s instructions in the Government Office’s Official Letter No. 1102/VPCP-KTTH of February 23, 2009, regarding business income tax on the transfer of the right to rent land in industrial parks and export-processing zones; and after consulting the Ministry of Planning and Investment (Document No. 7591/BKH-KCN&KCX of October 17, 2008), and the Ministry of Natural Resources and Environment (Document No. 4958/BTNMT-TCQLDD of December 8, 2008), the Ministry of Finance specifically guides a number of provisions related to the collection of business income tax from organizations dealing in development of infrastructure in industrial parks, export-processing zones, hi-tech parks and industrial complexes (below referred to as industrial park infrastructure enterprises) as follows:

Pursuant to Business Income Tax Law No. 09/2003QH11; the Government’s Decree No. 164/2003/ND-CP of December 12, 2003, and Decree No. 24/2007/ND-CP of February 14, 2007, detailing the Business Income Tax Law; and the Finance Ministry’s Circular No. 128/2003/TT-BTC of December 22, 2003, and Circular No. 134/2007/TT-BTC of November 23, 2007, providing guidance on business income tax:

1. In case industrial park infrastructure enterprises are allocated or leased by the State land in industrial parks, export-processing zones or hi-tech parks under investment licenses, business registration certificates or investment incentive certificates for building infrastructure and sublease but do not build infrastructure under the granted licenses and have transferred the right to use or rent such land to other enterprises for building and subleasing infrastructure, such will be regarded as the transfer of the right to use or rent land and liable to business income tax. These industrial park infrastructure enterprises will not be entitled to business income tax incentives for the income from such transfer.

2. In case industrial park infrastructure enterprises are allocated or leased land by the State for building infrastructure under investment licenses, business registration certificates or investment incentive certificates and have invested in building infrastructure under the granted licenses then sublease such land with built infrastructure to other enterprises in industrial parks, export-processing zones or hi-tech parks under contracts which clearly indicate the rights and responsibilities of the lessors and lessees, the whole income from such sublease will be regarded as income from infrastructure development and operation and eligible for business income tax incentives under regulations (if any).

In case industrial park infrastructure enterprises which are enjoying business income tax incentives sublease land with infrastructure and collect lump-sum rents for many years, if they select the method of using the whole rent prepaid by the lessee for many years for calculating annual taxable incomes, the profit from this activity is the profit of many years. Therefore, these enterprises shall determine the preferential business income tax amount in each year of tax exemption or reduction by dividing the total business income tax amount of the number of years for which the lessee has prepaid the rent by (:) that number of years.

3. From January 1, 2009, industrial park infrastructure enterprises which are allocated or leased land by the State for infrastructure development and sublease such land with infrastructure to other enterprises in industrial parks or export-processing zones shall pay income tax in accordance with Business Income Tax Law No. 14/2008/QH12; the Government’s Decree No. 124/2008/ND-CP of December 11, 2008; and the Finance Ministry’s Circular No. 130/2008/TT-BTC of December 26, 2008, providing guidance on business income tax.

The Ministry of Finance notifies the above guidance to ministries and provincial-level People’s Committees for directing its implementation for concerned units. Any problems arising in the course of implementation should be reported to the Ministry of Finance for timely settlement.