What is contribution to Fund for Science and Technology Development in enterprises in Vietnam?

What is contribution to Fund for Science and Technology Development in enterprises in Vietnam?

Article 2 of Circular 67/2022/TT-BTC (effective from December 23, 2022) stipulates contribution to Funds as follows:

1. Each enterprise shall annually make contribution as a percentage (%) of its income subject to corporate income tax (CIT) to the Fund as prescribed in Clause 1 Article 17 of the Law on corporate income tax No. 14/2008/QH12, Clause 1 Article 18 of the Government’s Decree No. 218/2013/ND-CP dated December 26, 2013, and Clauses 1, 2 Article 9 of the Government’s Decree No. 95/2014/ND-CP dated October 17, 2014. To be specific:

a) A state-owned enterprise shall make a contribution equaling 3% - 10% of its income subject to CIT in the tax period. The specific contribution amount shall be subject to the enterprise’s capacity and planned funding for science and technology activities;

b) The enterprise other than the one mentioned in Point a Clause 1 of this Article shall at its disposal decide its specific contribution amount to the Fund provided that it shall not exceed 10% of its income subject to CIT in the tax period.

2. Contributions to the Fund shall be determined in each CIT period and deducted from taxable income upon determination of CIT amount payable by the enterprise in the tax period.

What are rules for using the Fund for Science and Technology Development in enterprises in Vietnam?

Article 3 of Circular 67/2022/TT-BTC (effective from December 23, 2022) stipulates rules for using the Fund for Science and Technology Development in enterprises as follows:

1. The Fund of an enterprise shall be used for financing its science and technology research and development activities and other tasks to be financed by the Fund as prescribed by law.

2. Any payments using the Fund must be supported by adequate invoices and receipts as prescribed. With regard to payments made using the Fund without invoices or receipts as prescribed, the enterprise is required to fulfill obligations to state budget as prescribed in Clause 1 Article 4 of this Circular.

3. An enterprise is not allowed to include the following amounts in its deductible expenses upon determination of CIT in the tax period, including payments made using the Fund and late payment fines and/or interests on CIT amounts payable determined according to the provisions of Clauses 1, 2 Article 4 of this Circular.

4. The Fund shall be used following the first in first out principle.

5. If an enterprise needs to overspend the Fund in a year on science and technology tasks, it shall include spending amounts in its deductible expenses upon determination of CIT in the tax period or use the planned contributions to the Fund for subsequent years for covering the insufficient amount as prescribed in Clause 7 Article 10 of the Government’s Decree No. 95/2014/ND-CP dated October 17, 2014.

What are tax obligations incurred in case of misused Fund for Science and Technology Development in enterprises in Vietnam?

In Clause 1, Article 4 of Circular 67/2022/TT-BTC (effective from December 23, 2022), tax obligations incurred in case of misused Fund for Science and Technology Development in enterprises are as follows:

1. Tax obligations incurred in case of misused Fund

If an enterprise misuses the Fund, it shall incur the CIT on the portion of income which it has contributed to the Fund and misused, and also incur interests on such CIT amount payable. The interest rate used for calculating the interests on the CIT payable on misused amounts of the Fund shall be also employed for calculating late payment fine as prescribed in the Law on tax administration and its guiding documents. Interests shall be imposed for a consecutive period starting from the date following the date of contribution to the Fund and ending on the date preceding the date on which the enterprise pays the CIT amount payable to state budget.

Best Regards!