Learn about tax incentive policies for innovative startups

Article overview

Tax incentive policies for innovative startups contributing to promoting the development of the startup ecosystem in Vietnam. These policies are designed to support innovative startups to overcome initial difficulties, focusing on research, development and application of new technology. This article will delve into current tax incentive policies for innovative startups, as well as the benefits they bring.

Tax incentive policies for innovative startups
Tax incentive policies for innovative startups

What is a creative small and medium-sized startup?

According to Clause 2, Article 3 of the Law on Provision of Assistance for Small and Medium Sized Enterprises 2017 (Law on Support for SMEs 2017), creative small and medium-sized enterprises (SMEs) are small and medium-sized enterprises established to implement ideas on the basis of exploiting intellectual property, technology, and models. New business with rapid growth potential.

Tax incentive policies for innovative small and medium-sized startups

Tax incentive policy is one of the tools that the State uses to support SMEs. Currently, tax incentive policies focus on two main forms: preferential tax rates and preferential corporate income tax exemptions.

Preferential corporate income tax rates

Clause 1, Article 10 of the Law on Provision of Assistance for Small and Medium Sized Enterprises 2017 stipulates: “SMEs may apply the corporate income tax rate lower than the common tax rate applied to enterprises for a limited period of time according to regulations of law on corporate income tax”.

However, the law does not specifically stipulate preferential tax rates applicable to SMEs. Therefore, in reality, SMEs still have to apply the tax rate according to the provisions of the Law on Corporate Income Tax 2008.

Specifically, according to Clause 1, Article 13 of the Law on Corporate Income Tax 2008, amended and supplemented in 2013, SMEs can apply a preferential tax rate of 10% for a period of 15 years if operating in the following fields:

  • Scientific research and technology development.
  • High-tech applications in the High-tech List are given priority for investment and development.
  • High technology incubation, high technology business incubation.
  • Venture capital investment for high technology development belongs to the List of high technologies prioritized for development investment.
  • Investment in construction and business of high-tech incubators and high-tech business incubators.
  • Production of software products.

Incentives on corporate income tax exemption and reduction

In addition to tax rate incentives, SMEs can also enjoy corporate income tax exemptions and reductions.

Clause 1, Article 14 of the Law on Corporate Income Tax 2008, amended and supplemented in 2013, stipulates that SMEs operating in priority fields (as mentioned above) can be exempted from tax for 4 years and have a 50% reduction in taxes. Tax must be paid for a maximum of no more than the next 9 years. The tax exemption and reduction period is calculated continuously from the first year the enterprise has taxable income from the investment project.

Clause 3, Article 18 of the Law on Provision of Assistance for Small and Medium Sized Enterprises 2017 also mentions corporate income tax exemption and reduction for investors in SMEs. However, this regulation has not yet been specified in the Law on Corporate Income Tax, so in reality it has not brought practical benefits.

Tax incentives for innovative startups
Tax incentives for innovative startups

What are the benefits of tax incentive policies for innovative small and medium-sized startups?

Tax incentive policies play an important role in supporting and promoting the development of SMEs. Specific benefits include:

  • Reduce financial burden: Tax incentives help businesses reduce tax costs, thereby having more financial resources to reinvest and expand production and business.
  • Increase competitiveness: Lower tax costs help businesses have a competitive advantage over other businesses, especially in the early stages of establishment.
  • Attracting investment: Tax incentive policies are one of the important factors attracting domestic and foreign investors to invest in SMEs.
  • Promote innovation: Tax incentives encourage businesses to invest in research and development, apply new technology, and create products and services with high added value.

Tax incentive policy consulting services for creative startups

Understanding and applying tax incentive policies for SMEs can be difficult due to the complex and frequently changing legal system.

Long Phan providing professional consulting services on tax incentive policies for SMEs, including:

  • Consulting on determining conditions for tax incentives;
  • Consulting on choosing appropriate tax incentives;
  • Instructions on application procedures for tax incentives;
  • Drafting documents to send to tax authorities;
  • Business representative explains documents to tax authorities;
  • Business representatives work with tax authorities;
  • Update the latest regulations on tax incentive policies;
  • Consulting on arising issues related to tax incentives.
Consulting on tax incentives for creative startups
Consulting on tax incentives for creative startups

Tax incentive policies are one of the State’s important tools to support innovative startups. Mastering the regulations on tax incentives will help businesses make the most of development opportunities. Customers who need advice on tax incentive policies for innovative startups, please contact the hotline: 0906735386 for support.