THE PRIME MINISTER

DECIDES:

Article 1.- Scope of regulation and objects of application

1. This Decision prescribes a number of policies and measures to encourage organizations and individuals of all economic sectors at home, overseas Vietnamese and foreign organizations and individuals to invest in the production of software products and provision of software services in Vietnam (hereinafter called the software enterprises for short).

2. The incentives and preferences prescribed in this Decision shall apply to the software enterprises. In cases where an enterprise is engaged in different activities, it shall be entitled only to the preferences provided for herein for activities of producing software products and providing software services.

Article 2.- Terms used in this Decision

In this Decision, the following terms shall be understood as follows:

1. Software is understood as programs, program-describing documents, support documents and digitized information content.

a/ A program is a collection of commands and/or statements, denoted in any language, code or notation system, and displayed or stored in media (with or without relevant information), for direct or indirect use after either or both the following processes:

- Being converted into another language, code or notation system;

- Being reproduced to other media; and causing a tool capable of processing information to perform a certain function.

b/ Program-describing documents and support documents are those represented in any form with contents describing a program, recommending and guiding the program-setting, use, upgrading, error correction or other guidance related to the use and operation of such program.

c/ Digitized information contents include:

- The data base, which is a collection of data arranged and stored in the digitized electronic form;

- The collection of digitized works, which is a collection of works stored in the digitized electronic form.

2. Software products are software produced and represented or stored in any material objects, tradeable or transferable from one to another subject for use.

Various kinds of software products include:

a/ Embedded software are those already programmed and set up by their producers in equipment and can be used instantly with such equipment without further set-up by the users or a third party.

b/ Packed software are software products that can be used right after being programmed and set up by the users or service providers in equipment or systems. Such a software is usually supplied in forms of floppy disks, compact disks, any other media or via computer networks. Packed software are commonly categorized into two: the system software and the applied software (for example: operating systems, development tools, programming languages, document processors, calculating tables; anti-virus, accounting, teaching, financial management and supplies management programs; scientific and technical calculation software, graphics software, etc.).

c/ Special-use software are software products developed upon specific and particular demands of customers. A special-use software may be developed from its very initial from or designed upon the customers� demands on the basis of software already available on the market.

d/ Digitized information products are digitized information contents stored on certain objects.

3. Software services are used to refer to all activities in direct service of the production of software products, such as exploitation, research, use, training, popularization and other similar activities related to software industry.

Software services include: software consultancy; integration and supply of systems; software-related professional services; software processing; data processing services, drill and training services and services of organizing the software labor export.

a/ Software consultancy services include the provision of consultations, information and instructions, exchange of software, inquiry into demands, solutions and experiences in designing, program-setting and upgrading computer networks.

b/ System integrating and supplying services include consultations, connection of hardware, network equipment and special-use software into the whole system, accompanying drills and training.

c/ Software-related professional services include development of special-use software for customers, technical assistance, training, management, program-setting, upgrading, warranty and maintenance of information technology systems.

d/ Data processing services mean services of data input and digitized electronic data processing for customers.

e/ Software drill and training services mean the professional drill and training activities related to the software industry.

Article 3.- Enterprise income tax rates

1. Vietnamese software enterprises and foreign software enterprises operating in Vietnam, not under the Law on Foreign Investment in Vietnam shall enjoy the following enterprise income tax rates:

a/ The tax rate of 25%.

b/ The tax rate of 20%, for enterprises investing in geographical areas with difficult socio-economic conditions.

c/ The tax rate of 15%, for enterprises investing in geographical areas with particularly difficult socio-economic conditions.

Geographical areas where the investment is made mentioned at Points b and c of this Clause are specified in Lists B and C of the Appendix promulgated together with the Government�s Decree No.51/1999/ND-CP of July 8, 1999 detailing the implementation of the Law on Domestic Investment Promotion (amended).

2. Software enterprises subject to the Law on Foreign Investment in Vietnam shall enjoy the enterprise income tax rate of 10%.

3. Overseas Vietnamese investing in the country�s software industry under the Law on Foreign Investment in Vietnam and foreign investors operating in the software industry shall enjoy the rate of tax on transfer of profit abroad for incomes earned from software production and service activities according to the provisions of Article 50 of the Government�s Decree No.24/2000/ND-CP of July 31, 2000 detailing the implementation of the Law on Foreign Investment in Vietnam.

Article 4.- Enterprise income tax exemption

Software enterprises shall be exempt from enterprise income tax for four years from the date the taxable income is generated, and shall not have to pay enterprise income surtax for incomes earned from software production and service activities.

The Finance Minister shall provide detailed guidance on the enterprise income tax exemption according to the provisions of this Article.

Article 5.- Income tax on high-income earners

For professional laborers who are Vietnamese and personally engaged in software production and service activities, the minimum taxable income level and progressive tax rates prescribed for foreigners shall apply.

Article 6.- Value added tax

Software products and services shall enjoy the highest value added tax preferences.

The Finance Minister shall provide detailed guidance on the implementation of value added tax according to provisions of this Article.

Article 7.- Export tax and import tax

1. Import tax shall be exempt for raw materials and materials in direct service of activities of producing software products , which cannot be turned out at home. The Ministry of Science, Technology and Environment shall promulgate the list of raw materials and materials in service of the production of software products, which can be turned out at home, for use as basis for the determination of import tax preferences. The said list shall be annually readjusted.

2. Software products shall be exempt from export tax.

Article 8.- Credit preferences

Vietnamese enterprises engaged in software production and service activities shall enjoy investment assistance in various forms from the State�s Development Assistance Fund according to the provisions of the Government�s Decree No.43/1999/ND-CP of June 29, 1999 on the State�s development investment credit.

Article 9.- Land use and rent preferences

1. Vietnamese software enterprises shall be entitled to land use levy, land rent and/or land use tax exemption or reduction according to the provisions of the Government�s Decree No.51/1999/NQ-CP of July 8, 1999.

2. Software enterprises subject to the regulation of the Law on Foreign Investment in Vietnam shall enjoy preferences according to the current regulations on land rent.

Article 10.- Protection of copyright over software products

The Ministry of Culture and Information shall assume the prime responsibility and coordinate with the concerned ministries and branches in revising the current legal documents, to promulgate according to its competence or submit to competent bodies for promulgation legal documents concerning the protection of copyright over software products; enhancing the capability and operation effectiveness of the agencies in charge of managing and enforcing the copyright over software.

Article 11.- Training and development of human resources

1. Organizations and individuals of all economic sectors are allowed to establish information technology training establishments. Such establishments shall enjoy preferences for their information technology training activities as for software enterprises.

2. The Ministry of Education and Training shall assume the prime responsibility and coordinate with the Ministry of Science, Technology and Environment, the General Department of Post and Telecommunications and the concerned ministries and branches in proposing to the Government plans on the training of human resources to meet the software industry building and development requirements and the Internet project in service of education and training.

3. The General Department of Post and Telecommunications shall assume the prime responsibility and coordinate with the Ministry of Finance, the Ministry of Education and Training and the concerned ministries and branches in promulgating policies whereby lecturers, teachers, students and pupils of schools in the national education system can benefit from the regime of Internet access fee exemption or reduction at training establishments.

Article 12.- Creation of favorable telecommunications infrastructure

The General Department of Post and Telecommunications shall assume the prime responsibility and coordinate with the concerned ministries and branches in promulgating specific policies and regulations aimed at boosting a competitive environment, creating conditions for software enterprises to engage in telecommunications and Internet service activities; fully and conveniently supplying telecommunications and Internet services to the users with high speed and quality, at a charge level lower than or equal to that of the regional countries; permitting the software industry parks to hook up their own Internet gates to the worldwide Internet system, so that all software enterprises in such parks and those registered to provide Internet services via such parks can easily access to all Internet services at competitive prices as compared to the regional countries.

Article 13.- Publication and inspection of software export and import

The Ministry of Culture and Information shall assume the prime responsibility and coordinate with the concerned ministries and branches in guiding and improving the procedures for quick publication, export and import of software, especially programs, program-describing documents, supporting documents, without causing troubles, obstacles or damage to organizations and individuals with relevant rights and interests; and at the same time, taking comprehensive and synchronous measures to tackle abusing acts detrimental to the national security and national cultural identity preservation.

Article 14.- Implementation effect

This Decision takes effect 15 days after its signing.

The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government and the presidents of the People�s Committees of the provinces and centrally-run cities shall have to implement this Decision.

For the Prime Minister
Deputy Prime Minister
PHAM GIA KHIEM