Recent updates have also been made to corporate income tax and VAT regulations as discussed below.

Decree No 122/2011/ND-CP, issued in December 2011 and to take effect from March 1 2012, makes a number of changes to the current corporate income tax regulations. Definitions of taxable and tax exempt income have been supplemented. One notable item is that income from certified emissions reductions may be tax exempt for limited periods provided certain conditions are met, demonstrating the government's commitment to tackling environmental issues.

The calculation of corporate income tax on income arising from a number of activities has also been revised under the recent decree. Such activities include exploratory mining, production of petroleum, and security transfers. Conditions for eligibility to tax incentives have also been clarified under the recent decree. The CIT decree also impacts foreign contractor tax, which generally includes a CIT and VAT element – further details will be given in the next issue.

Decree No 121/2011/ND-CP, also issued in late December 2011 and effective from March 1 2012, provides revised VAT regulations. The recent VAT decree addresses a number of issues pertaining to the exemption of services which are purchased from or provided to foreign organisations. The VAT decree also clarifies various VAT calculations and procedures, including the crediting of input VAT and VAT refund procedures under the credit method.

Ronald Parks (ronald.parks@vn.gt.com)
Grant Thornton
Tel: +84 8 3910 9100
Website: www.gt.com.vn