CIRCULAR No. 115/1998/TT-BTC OF AUGUST 19, 1998 GUIDING THE AMENDMENTS AND SUPPLEMENTS TO CIRCULAR No.63/1998/TT-BTC OF MAY 13, 1998 GUIDING THE IMPLEMENTATION OF A NUMBER OF TAX REGULATIONS AIMED AT EN-COURAGING AND GUARANTEEING THE FOREIGN DIRECT INVESTMENT ACTIVITIES IN VIETNAM IN DECREE No.10/1998/ND-CP OF JANUARY 23, 1998

In order to encourage and guarantee foreign direct investment activities in Vietnam, the Ministry of Finance hereby guides the amendment and supplement to Point 2, Section I, Part B of Circular No.63/1998/TT-BTC of May 13, 1998 of the Ministry of Finance, and replace it with the new Point 2 as follows:

"Enterprises shall be eligible for the preferences on profit tax exemption or reduction according to their investment licenses. If the preferences on profit tax exemption or reduction under the new regulations are more favorable than those stipulated in their investment licenses, enterprises shall be eligible for the preferences under the new regulations if:

- The enterprises are in the period of enjoying the profit tax exemption or reduction under the new regulations;

- The enterprises are fully qualified for profit tax exemption or reduction under the new regulations.

The duration of enjoying the preferences on profit tax exemption or reduction shall be the remaining period calculated from the year the enterprise has the preferences on profit tax exemption or reduction readjusted by the investment licensing agency to the end of the duration of enjoying tax preferences under the new regulations.

For example: Enterprise A was issued investment license in 1995. According to its license, the enterprise is not eligible for profit tax exemption and/or reduction. In 1996, the enterprise made profit. Under the new regulations, the enterprise is eligible for profit tax exemption for two years from the date its operation becomes profitable and the 50% profit tax reduction for the three subsequent years. Therefore, in 1998, the enterprise shall have its license readjusted by the licensing agency in terms of profit tax exemption and/or reduction.

So, enterprise A shall be entitled to the 50% profit tax reduction for three years of 1998, 1999 and 2000."

This Circular takes effect after its signing.

For the Minister of Finance

Vice Minister

PHAM VAN TRONG