In case an enterprise converts its business type as prescribed, it may inherit the enterprise income tax incentives for the remaining time after the conversion, if it continues to meet the conditions for enterprise income tax incentives.

The Tam Tan Private Enterprise (in Hau Giang Province) is facing difficulties in implementing enterprise income tax incentives when converting the type of the company from a private company to a limited liability company, specifically as follows:

On December 23, 2008, the Tam Tan Private Enterprise was granted a Business Registration Certificate, operating from April 1, 2009 to the present.

Pursuant to Clause 1, Article 15 and Clause 1, Article 16 of Decree No. 218/2013 / ND-CP dated December 26, 2013 of the Government detailing and guiding the implementation of the Law on Enterprise Income Tax, The company has self-determined and registered with the competent authorities the preferential tax rate of 10% for 15 years (2010–2024) and 4 years of tax exemption (2010–2013), reducing 50%. The amount of tax payable in the next 9 years (2014-2022) is in accordance with current law.

On December 23, 2008, the Tam Tan Private Company was granted a Business Registration Certificate, operating from April 1, 2009 to the present.

Pursuant to Clause 1, Article 15 and Clause 1, Article 16 of Decree No. 218/2013 / ND-CP dated December 26, 2013 of the Government detailing and guiding the implementation of the Law on Enterprise Income Tax, the enterprise has self-determined and registered with the competent authorities the preferential tax rate of 10% for 15 years (2010–2024) and 4 years of tax exemption (2010–2013), reducing 50%. The amount of tax payable in the next 9 years (2014-2022) is in accordance with current law.

On December 26, 2016, the State Bank of Vietnam based on the provisions of the  Civil Code 2015 on subjects in civil relations including only legal entities and individuals who issued Circular No. 32/2016 / TT-NHNN amending and supplementing a number of articles of Circular 23/2014 / TT-NHNN of the State Bank of Vietnam guiding, opening and using payment accounts at payment service suppliers; which stipulates that organizations without legal status are not eligible for opening payment accounts.

As Tam Tan Private Enterprise understands, this means that organizations without legal status such as: Households, cooperative groups, private enterprises, lawyers' offices, etc. will not be allowed to open bar accounts.

The bank where Tam Tan Private Company is opening a payment account has announced and requested the company to convert to a legal account's payment account according to the State Bank's schedule (if the company wishes to open an account for bank payments, the company type must be converted from a private enterprise to a limited liability company (one member or two members or more).

However, the Tam Tan Private Company is still in the period of enjoying the preferential enterprise income tax as mentioned above.

Through the receiving and answering System of the businesses’ recommendations, the Tam Tan Private Company would like to request the authorities to answer and change the form of business from private company to limited liability company (one member or with two or more members) on the basis of keeping the status quo, inheriting the organizational structure, place of business, facilities, assets, capital, etc., will the enterprise still be able to enjoy preferences for Corporate income tax for the remaining time or not?

Regarding this issue, the General Department of Taxation - Ministry of Finance gives the following opinion:

In Clause 3, Article 20, Chapter 5 of Decree No. 218/2013 / ND-CP dated December 26, 2013 of the Government:

 “3. Enterprises established or having investment projects from the conversion of type of enterprise, conversion of owner, separation, splitting, merger or consolidation are responsible for paying the corporate income tax (including penalty if any) while inheriting the incentives of corporate income tax (including enterprises’ losses not yet carried forward) or investment projects prior to separation, splitting, merger or consolidation if they continue to meet the conditions for incentives of corporate income tax and conditions for transfer of loss as prescribed by law;”.

At Point b, Clause 3, Article 10 of Circular No. 96/2015 / TT-BTC of the Ministry of Finance (amended and supplemented some contents in Article 18 of Circular No. 78/2014 / TT-BTC) Regarding corporate income tax:

 “Enterprises that establish or have projects of investment from enterprise conversion, change of owner, division, acquisition, and consolidation may inherit CIT incentives of the enterprises or projects of investment before the conversion, division, acquisition, consolidation for the remaining incentive period if all conditions for CIT incentives are satisfied.”.

Based on the above provisions, if a company changes its business type as prescribed, the company may inherit the enterprise income tax incentives for the remaining period after the conversion if it continues to meet the following conditions for corporate income tax incentives.

The Tam Tan Private Enterprise is requested to contact the supervisory tax authority for guidance and determine corporate income tax incentives in accordance with tax regulations.