Business households converted to enterprises can be exempted from tax for 2 years

(Dan Tri) - Newly established enterprises from business households can be exempted from corporate income tax for two consecutive years from the time taxable income arises.

In the draft decree detailing certain provisions of the Corporate Income Tax Law, which is currently open for public comment, the Ministry of Finance proposes a regulation on corporate income tax exemption for businesses that convert from household or individual businesses.

This document states that the Corporate Income Tax Law stipulates that newly established businesses converted from household businesses will be exempt from corporate income tax for two consecutive years from the time taxable income is generated.

In accordance with the above regulations, the Ministry proposes applying a policy of corporate income tax exemption for the first two years for newly established businesses converted from household businesses, including individual businesses converting to enterprises, provided they meet the requirements specified in Clauses 2 and 3 of Article 10 of the guiding Decree.

The corporate income tax exemption period is calculated continuously from the first year the business generates taxable income. If there is no taxable income in the first three years, starting from the first year with revenue, the tax exemption period will be calculated from the fourth year.

If, during the first tax period, the business operation period eligible for tax exemption is less than 12 months, the enterprise may choose to apply the tax exemption immediately in that tax period or register with the tax authorities to postpone the start date of the tax exemption to the next tax period.

If a business chooses to be exempt from tax starting from the next tax period, it must still determine and pay the tax payable in the first tax period in accordance with regulations.

After the tax exemption period as stipulated above, if the enterprise implements an investment project in a tax-incentive industry, profession, or geographical area, it will continue to enjoy corresponding preferential policies such as preferential tax rates or tax exemptions and reductions as prescribed by law.

Upon the expiration of any tax exemption or preferential tax period, the business will apply the corporate income tax rate according to the current general regulations.

The Ministry of Finance proposes regulations on tax exemption for businesses converting from household or individual businesses (Photo: Manh Quan).

The Ministry of Finance notes that, in order to be exempt from corporate income tax, business households or individual businesses must ensure that they have registered and operated in accordance with the law, and have had continuous production and business activities for at least 12 months up to the time of initial issuance of the business registration certificate.

Newly established businesses eligible for tax exemptions and incentives must be businesses registering for the first time.

This policy does not apply to newly established businesses where the legal representative, unless not a contributing member, general partner, or the person with the highest capital contribution, has previously participated in business activities in a similar role at another business that is currently operating or has been dissolved within the past 12 months prior to the establishment of the new business.

Source: https://dantri.com.vn/kinh-doanh/ho-kinh-doanh-chuyen-len-doanh-nghiep-co-the-duoc-mien-thue-2-nam-20250715161938624.htm