According to Joint Circular No. 12/2016/TTLT-BKHCN-BTC dated June 28, 2016 guiding the expenditure and management of the "Science and technology development fund" (hereinafter referred to the “Fund”), enterprises are allowed to choose the fund allocation amount within 10% of pre-tax income in the period for the purpose of science and technology development besides the normal production and business activities.
On November 7, 2022, the Ministry of Finance issued Circular 67/2022/TT-BTC (“Circular 67”) instructing on tax obligations of enterprises after the Fund allocation and use. Circular 67 has the following notable contents:
Tax obligations for enterprises in case the Fund is used for wrong purposes, is not used or is used less than 70%
Under Clauses 1 and 2, Article 4 of Circular 67, in case the Fund is used for wrong purposes, or is not used or is used less than 70% within 05 years from its establishment date, the enterprise shall subject to the following tax obligations:
- In case the Fund is used for wrong purposes, the payable corporate income tax shall be calculated on the deducted income corresponding to the improper use and the interest arising from the Fund as per regulations of the Law on Tax management.
- In case the Fund is not used or is used less than 70% within 05 years from its establishment date, the payable corporate income tax shall be calculated on the income deduction that has yet been used or used less than 70% of the annual Fund deduction, and at the same time, shall include the interest arising from such payable The interest rate is the yearly treasury bond interest rate applicable at the withdrawal time and the interest calculation period is two years.
Cases where fixed assets related to the Fund are subject/mot subject to depreciation
Fixed asset depreciation is a crucial operation in the corporate income tax calculation process. However, not all types of fixed assets are eligible for depreciation.
According to Clauses 4 and 5, Article 5 of Circular 67, the depreciation of fixed assets related to the Fund in the following cases shall be done as follows:
- In case where the fixed assets being formed from the Fund have yet been fully depreciated and are used for both scientific research and production and business activities of the enterprise, they only require management monitoring as regulated by the Ministry of Finance, instead of depreciation when determining the enterprise’s taxable income.
- In case where the fixed assets are formed from the results of performing scientific and technological tasks of the enterprise and then put into the production and business process, their value shall be calculated into other income and shall be depreciated when determining taxable income.
Circular 67 shall take effect from December 23, 2022.
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