On January 11, 2021, the Minister of Finance issued Circular No. 03/2021/TT-BTC guiding tax exemption and reduction of corporate income tax for science and technology enterprises.

The Circular regulates for conditions for enjoying tax exemption and reduction of corporate income tax for science and technology enterprises as follows:

1. The certificate of science and technology enterprise is issued by a competent state management agency.
2. The annual revenue from the production and trading of products formed from scientific and technological results reaches at least 30% of the total annual revenue of the enterprise.
3. Revenue generated from services applying science and technology results in information technology is revenue from new services, excluding services already on the market.
4. Separately accounted incomes from production and business activities of products formed from scientific and technological results in the period to enjoy corporate income tax incentives. 
5. Must apply the accounting, invoices and documents in accordance with the law and pay taxes according to the declaration.

Accordingly, science and technology enterprises that meet the above conditions will be exempt from tax for 04 years and reduce the amount of tax payable by 50% over the next 09 years. The period of tax exemption and reduction is calculated continuously from the date of issuance of the Certificate of science and technology enterprises. In case there is no taxable income for the first three years from the first year of issuance of the Certificate of science and technology enterprises, the first year of tax exemption and reduction shall be calculated from the fourth year.

During the time of enjoying tax exemption or reduction of corporate income tax, if a science and technology enterprise fails to meet the condition No. 3 above, that year is not entitled to the incentive and it will be deducted from the time to enjoy preferential corporate income tax.

This Circular takes effect on March 1, 2021.