Decree on corporate, personal income tax exemption in HCM City issued

Wednesday, Feb 07, 2024 07:35

A view of the HCM City skyline. The city is implementing tax exemption and reduction policies to further promote start-ups under Resolution 98. — VNA/VNS Photo

The Government has issued a decree which provides special policy mechanisms for corporate and personal income tax exemption in HCM City.

The move comes as a response to Resolution 98, a National Assembly-approved resolution on piloting special mechanisms and policies for the development of HCM City.

The decree exempts enterprises involved in innovative start-up activities, science and technology organisations, innovation centres, and intermediary organisations supporting innovative start-ups from corporate income tax on income generated from these activities.

The exemption will last for five years, including income generated from innovative start-up activities.

In addition, personal income tax and corporate income tax for individuals and organisations with income from capital contributions to start-ups will also be exempted.

The tax benefits aim to enhance the city’s appeal for foreign investors.

To be eligible for tax benefits, individuals and start-up businesses must meet specific conditions and obtain certification.

These conditions include operating in priority sectors, engaging in innovative activities, and possessing certification for tax exemption consideration.

The country’s largest economic hub has great potential for economic growth and job creation thanks to its thriving start-up ecosystem.

It is home to over 2,000 start-ups, making up about 50 per cent of all start-ups in Việt Nam.

The city is currently drafting regulations and guidelines to support these start-up activities, ensuring that the tax exemption policies are implemented properly.

Phan Văn Mãi, the chairman of the municipal People’s Committee, said the tax benefits and the attraction of top talent will contribute to the growth and development of a thriving start-up ecosystem, furthering economic growth and job creation.

Prime Minister Phạm Minh Chính, speaking at a meeting last week, called for a stronger implementation of the resolution, acknowledging its shortcomings in implementation.

The resolution, which took effect in August last year, outlines several tax benefits for start-ups in HCM City.

It encompasses 44 mechanisms and policies, addressing investment management, finance, budget, urban management, natural resources and environment, and science-technology management.

It also introduces a transport-oriented urban development model, a financial mechanism to reduce greenhouse gas emissions, and solar power installation on administrative office and public service unit roofs.

The new resolution replaces an older one on a pilot implementation of particular policies for HCM City’s development, issued in 2017.

The new resolution grants the city People’s Committee the authority to decide and adjust rates and fees not included in the Law on Fees and Charges, as well as the allocation of an unassigned portion of their budgets to the city’s district People's Committees.

In addition, HCM City is granted the authority to collect funds to maintain and regenerate infrastructure in industrial parks and export processing zones from businesses within these areas.

It also permits the piloting of financial mechanisms to reduce greenhouse gas emissions through exchanging, clearing and trading carbon credits with domestic and international investors.

The city is also allowed to install solar power systems on administrative office and public service unit roofs.

HCM City has a leading role in the nation’s economic landscape, contributing significantly to the country’s GDP, particularly in the industrial sector, and bolstering the State budget.

The city’s dynamic and pioneering spirit has driven reforms and development, and the resolution aims to restore its leading position after losing ground in recent years, experts said. — VNS

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