- Regarding investment incentives:
Clause 6, Section I, Part A of Decree No. 118/2015/ND-CP dated November 12, 2015 of the Government detailing and guiding the implementation of a number of articles of the Law on Investment stipulates that the industry “Production of renewable energy, clean energy, energy from waste destruction” belongs to the industry with special investment incentives. Accordingly, for example, the case of a rooftop solar power project that produces electricity from solar energy belongs to the industry of “producing renewable energy, clean energy” and belongs to the industry with special investment incentives.
- Regarding import tax:
– In Clause 11 Article 16 of the Law on Import Tax and Export Tax No. 107/2016/QH13 stipulates “Goods imported to create fixed assets of subjects entitled to investment incentives in accordance with the law on investment, consists of:
a) Machinery and equipment; components, parts, attachments, spare parts for synchronous assembly or synchronous use with machinery and equipment; raw materials and supplies used to manufacture machinery and equipment or to manufacture components, parts, attachments and spare parts of machinery and equipment;
b) Specialized means of transport in the technological line directly used for production activities of the project;
c) Construction materials that cannot be produced domestically.
The import tax exemption for imported goods specified in this Clause is applicable to both new investment projects and expansion investment projects.
– In Clause 13, Article 16 of the Law on Import Tax and Export Tax No. 107/2016/QH13 stipulates that “Raw materials, supplies and components that cannot be produced domestically and are imported for production of investment projects on the list of industries or trades with special investment incentives or in areas with extremely difficult socio-economic conditions as prescribed by the law on investment, hi-tech enterprises, science and technology enterprises, science and technology organizations shall be exempt from import tax for a period of 5 years from the date commencement of production.
– In Clause 2, Article 10 of Decision No. 11/2017/QD-TTg stipulates that “Solar power projects are exempt from import tax on goods imported to create fixed assets for the project; comply with the current law on export tax and import tax for goods imported to serve the project’s production which are raw materials, supplies and semi-finished products that cannot be produced domestically.”
Pursuant to the above regulations, rooftop solar power projects with a capacity of less than 50kw shall implement the preferential import tax exemption policy for imported goods to create fixed assets for the project as prescribed in Clause 2 Article 10 of Decision No. 11/2017/QD-TTg and in case the rooftop solar power projects with a capacity of less than 50kw belong in industries with special investment incentives according to the provisions of the law on investment, in addition to implementing in accordance with the provisions of Clause 2, Article 10 of Decision No. 11/2017/QD-TTg, the project shall implement the policy of exemption from import tax within 5 years from the date of commencement of production for raw materials, supplies, components that cannot be produced domestically and are imported for production of the project according to the provisions of Clause 13, Article 16 of the Law on Import and Export Tax No. 107/2016/QH13. Tax exemption dossier procedures comply with Articles 30 and 31 of Decree No. 134/2016/ND-CP dated September 1, 2016 detailing the implementation of a number of articles and measures to implement the Law on Export Tax, Import Tax.
- Regarding corporate income tax (CIT):
– In Clauses 1 and 2, Article 15 of Decree No. 218/2013/ND-CP dated December 26, 2013 of the Government detailing and guiding the implementation of the Law on Corporate Income Tax, stipulating “1. The preferential tax rate of 10% for a period of 15 years applies to:
…
b) Incomes of enterprises from implementing new investment projects in the fields of: … production of renewable energy, clean energy, energy from waste destruction; biotechnology development.
…
2. The tax rate of 10% is applied to the following incomes:
a) Income of enterprises from performing socialization activities in the fields of education – training, vocational training, health, culture, sports and environment.
The list of types, criteria, scale and standards of enterprises conducting socialization specified in this Clause shall be prescribed by the Prime Minister;
…”.
– In Clauses 1 and 2, Article 16 of Decree No. 218/2013/ND-CP stipulates: “1. Tax exemption for 4 years, 50% reduction of payable tax for the next 9 years for:
a) Incomes of enterprises from the implementation of new investment projects specified in Clause 1, Article 15 of this Decree;
b) Incomes of enterprises from implementing new investment projects in the field of socialization implemented in geographical areas with difficult or extremely difficult socio-economic conditions specified in the Appendix issued together with this Decree.
2. Tax exemption for 4 years, 50% reduction of payable tax for the next 5 years, for enterprises’ incomes from implementing new investment projects in the field of socialization in localities that are not on the list of geographical areas with difficult or extremely difficult socio-economic conditions specified in the Appendix issued together with this Decree”.
– Clause 5, Article 3 of Circular No. 78/2014/TT-BTC dated June 18, 2014 stipulates: “5. Non-business units, other organizations other than enterprises established and operating in accordance with Vietnamese law, enterprises paying value added tax by the direct method engaged in goods and service trading activities. If they have incomes subject to corporate income tax, but these units can determine the revenue but cannot determine the expenses and income of business activities, they shall declare and pay corporate income tax calculated as a percentage of the sales of goods and services, specifically as follows:
+ For services (including deposit interest, loan interest): 5%.
Particularly for educational, medical and performing arts activities: 2%.
+ For goods trading: 1%.
+ For other activities: 2%”.
– Clause 4, Article 18 of the Law on CIT stipulates: “In the same period of time, if an enterprise enjoys many different incentives for the same income, the enterprise may choose to apply the most favorable preferential rate”.
Pursuant to the above provisions, the income of enterprises from rooftop solar power projects with a capacity of less than 50 kW shall be implemented with the preferential corporate income tax policy as prescribed in Clause 1, Article 15 and Clause 1, Article 16 of Decree No. 218/2013/ND-CP.
– In case the enterprise produces electricity from a rooftop solar power project with a capacity of less than 50kw in the type of occupation that is a renewable energy production facility from sunlight and meets the criteria, scale, standards of renewable energy production facilities from sunlight specified at Point 8, Section VI – List of types, scale criteria, and standards of facilities implementing socialization in the field of environment (issued together with the Prime Minister’s Decision No. 693/QD-TTg dated May 6, 2013 on amending and supplementing a number of contents of the detailed list of types, criteria, standard, scale of facilities implementing socialization in the fields of education and training, vocational training, health, culture, sports and environment, issued together with Decision No. 1466/QD-TTg dated October 10, 2008 of the Prime Minister), the enterprise shall apply the preferential tax rate policy for the income from socialization activities as prescribed in Clause 2, Article 15 of Decree No. 218/2013/ND-CP.
For investment projects in the field of socialization that are new projects implemented in areas with difficult or extremely difficult socio-economic conditions or implemented in other areas, the preferential policies of CIT exemption and reduction shall be applied according to the provisions of Clause 2, Article 16 of Decree No. 218/2013/ND-CP.
– In case the enterprise producing electricity from a rooftop solar power project with a capacity of less than 50kw is a non-business unit or organization other than an enterprise established and operating under Vietnamese law, enterprises paying value added tax by the direct method have business activities in goods and services with incomes subject to corporate income tax, but these units can determine revenue but cannot determine expenses, income from business activities shall declare and pay corporate income tax at the rate of CIT on sales of goods and services, for revenues from rooftop solar power projects according to regulations applicable to other activities in Clause 5, Article 3 of Circular No. 78/2014/TT-BTC dated June 18, 2014 of the Ministry of Finance.
In the same period of time, if an enterprise enjoys many different incentives for the same income, the enterprise may choose to apply the most favorable preferential rate.
- Regarding special consumption tax (SCT):
According to the provisions of the SCT Law, electrical goods are not subject to SCT.
- Regarding Value Added Tax (VAT):
– In Clause 25, Article 4 of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the implementation of the Law on Value-Added Tax and Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government detailing and guiding the implementation of a number of articles of the Law on Value-Added Tax stipulating “Goods and services of business households and individuals with an annual revenue of one hundred million dong or less” are not subject to VAT.
– In Article 11 of Circular No. 219/2013/TT-BTC stipulating: “The tax rate of 10% applies to goods and services not specified in Articles 4, 9 and 10 of this Circular”.
– In Clause 2, Article 13 of Circular No. 219/2013/TT-BTC stipulating the method of calculating directly on VAT: “2. The amount of value added tax payable by the method of direct calculation on VAT is equal to the percentage multiplied by the applicable revenue as follows:
a) Subjects of application:
– Operating enterprises and cooperatives with annual revenue below the threshold of one billion dong, except for the case of voluntary registration to apply the tax credit method specified in Clause 3, Article 12 of this Circular;
– Newly established enterprises and cooperatives, except for voluntary registration under the guidance in Clause 3, Article 12 of this Circular;
– Business households and individuals ;
…
– Other economic organizations that are not enterprises or cooperatives, except for registration to pay tax by the withholding method.
b) The percentage for calculating VAT on revenue is prescribed for each activity as follows:
…
– Production, transportation, services associated with goods, construction with raw materials: 3%;
– Other business activities: 2%.
c) Revenue for VAT calculation is the total amount of sales of goods and services actually written on the sales invoice for goods and services subject to VAT, including additional surcharges and fees to which business establishments are entitled”.
– Article 2 of Circular No. 92/2015/TT-BTC dated June 15, 2015 of the Ministry of Finance guiding the implementation of value-added tax and personal income tax for residents conducting business activities; guiding the implementation of a number of amendments and supplements to personal income tax specified in the Law amending and supplementing a number of articles of the Law on Taxation No. 71/2014/QH13 and Decree No. 12/2015/ND-CP dated February 12, 2015 of the Government detailing the implementation of the Law amending and supplementing a number of articles of the Law on Taxation and amending and supplementing a number of articles of the Decrees on taxation stipulates: “Article 2. Tax calculation methods applied by business individuals paying flat tax
1. Applied principles
a) Business individuals who pay flat tax (hereinafter referred to as flat tax payers) are those who generate revenue from trading in goods and services in all fields and sectors, except for business individuals mentioned in Articles 3, 4 and 5 of this Circular.
b) If the revenue subject to personal income tax (PIT) earned by the business individual who pays flat tax in the year is 100 million VND/year or lower, the individual shall not pay VAT and PIT.
…
2. Basis for tax calculation
…
b) Tax rate on revenue
b.1) The tax rate on revenue includes the rate of value added tax and the rate of personal income tax applicable to each business field as follows:
…
– Production, transportation, services associated with goods, construction including raw materials: the value-added tax rate is 3%; personal income tax rate is 1.5%.
– Other business activities: value-added tax rate is 2%; personal income tax rate is 1%.
b.2) The detailed list of business lines and corresponding tax rates is provided in Appendix 01 issued together with this Circular.
Pursuant to the above provisions:
– Individuals and households implementing rooftop solar power projects with a revenue of over 100 million VND/year are subject to the rate of value-added tax on revenue prescribed for production activities as prescribed in Article 2 of Circular No. 92/2015/TT-BTC.
– Individuals and households implementing solar power projects with a revenue of 100 million VND/year or less, the revenue from electricity sales is not subject to VAT as prescribed in Clause 1, Article 2 of Circular No. 92/2015/TT-BTC.
– Enterprises with solar power projects paying VAT by credit method and selling electricity shall issue invoices and declare and pay output VAT according to the provisions of Article 11 of Circular No. 219/2013/TT-BTC.
– In case an enterprise implementing a rooftop solar power project with a capacity of less than 50kw is subject to the application of the method of direct calculation on VAT, it shall declare and pay VAT prescribed for production activities as specified at Point b, Clause 2, Article 13 of Circular No. 219/2013/TT-BTC.
- Regarding personal income tax (PIT):
According to the provisions of Law No. 71/2014/QH13 amending and supplementing a number of articles of the Law on Taxation and guiding documents, business individuals pay personal income tax at the percentage of revenue corresponding to each field, business line. Business individuals with revenue of 100 million VND/year or less are not required to declare and pay PIT and VAT according to the provisions of Clause 1, Article 2 of Circular No. 92/2015/TT-BTC.
In case individuals and households implement rooftop solar power projects with a revenue of over 100 million VND/year, the rate of personal income tax on income prescribed for production activities specified at point b.1 Article 2 of Circular No. 92/2015/TT-BTC above shall apply.
- Regarding the policy of fees and charges:
According to the Law on Fees and Charges, fees for assessment and issuance of electricity activity licenses and business registration fees related to power projects (including solar power projects) are fees and charges listed in the list promulgated together with the Law. The level of collection and management of collection, payment, and use of these fees and charges shall comply with the regulations of the Ministry of Finance (charges for assessment and issuance of electricity activity licenses) or regulations of the provincial People’s Council (business registration fees)
– Fees for assessment and issuance of electricity activity licenses comply with the provisions of Circular 167/2016/TT-BTC dated October 26, 2016 of the Ministry of Finance on electricity operating licenses assessment fees, collection, transfer, management and use thereof. According to the provisions of Clause 2, Article 3 of Circular No. 12/2017/TT-BCT dated July 31, 2017 of the Ministry of Industry and Trade stipulating the order and procedures for issuing and revoking electricity operating licenses “In case of electricity with an installed capacity of less than 01 MW to sell electricity to other organizations and individuals that are exempt from electricity operating licenses”. Accordingly, rooftop solar power projects with installed capacity of no more than 50kW (<01MW) are exempted from electricity operating license.
– Regarding business registration fees: According to the list of fees and charges attached to the Law on Fees and Charges, the business registration fee shall be prescribed by the People’s Council of the province. Individuals and households that install solar power on the roof when registering their business to sell excess electricity into the power system will have to pay a business registration fee (according to regulations of the provincial People’s Councils).
* The above information is for reference only.