SOLAR POWER PROJECTS GET BIG TAX BREAKS

Good news for solar power in Vietnam! New rooftop solar power projects can get a bunch of tax breaks to help them get started and grow. Here’s the breakdown:

• Tax Holiday: You won’t have to pay any taxes for the first 4 years.
• Reduced Tax: For the next 9 years after that, you’ll only pay 50% of the usual tax amount.
• Lower Tax Rate: For a total of 15 years, your project will enjoy a special low tax rate of just 10%.

Sell Extra Power Back to the Grid

Rooftop solar projects can also use a special two-way meter. This means you can buy electricity from the grid when you need it, and you can also sell any extra solar power you generate back to the grid. This system keeps track of electricity flowing in both directions separately.

Rooftop solar projects are implemented under a mechanism of electricity trading based on separate delivery and receipt directions of the bidirectional electricity meter.

Government Wants More Clean Energy

According to Ms. Nguyen Thi Thanh Hang, a Deputy Director from the Ministry of Finance, the Vietnamese government is pushing for more solar power. Back in early 2019, the Prime Minister updated the rules to encourage solar projects in Vietnam (Decision 02/2019/QĐ-TTg, which changed some parts of Decision 11/2017/QĐ-TTg). The Ministry of Finance also made guidelines about taxes for rooftop solar projects that are 50kW or smaller, based on instructions from Deputy Prime Minister Vuong Dinh Hue.

New Rules for Buying and Selling Solar Power
The new rules make it clear that rooftop solar projects use those two-way meters to buy and sell electricity separately. Everyone involved needs to follow the current tax and fee laws.

Because solar power is considered “renewable and clean energy,” it gets special treatment as a top priority for investment, according to Decree 218/2013/NĐ-CP. To make it easier and more attractive for businesses to invest in solar, the Ministry of Finance is giving clear guidance on tax breaks for things like import and export taxes, corporate income tax, value-added tax, special consumption tax, personal income tax, and other fees.

Import/Export Tax Savings

• No Import Tax on Equipment: Solar projects don’t have to pay import taxes on equipment they bring in to set up their business (fixed assets).
• Import Tax Break on Materials: For the first 5 years of production, solar projects also get a break on import taxes for materials, supplies, and parts that Vietnam doesn’t make yet and are needed to build and run the project.

Pick the Best Tax Deal

The rules say that if a business qualifies for different tax breaks on the same income, it can choose the tax break that saves it the most money (Clause 4, Article 18 of the Corporate Income Tax Law).

No Special Tax on Electricity

The good news is that electricity is not subject to the special consumption tax. So, solar power projects don’t have to worry about this tax either.

Big Breaks on Corporate Income Tax (CIT)

Ms. Hang explained that there are significant corporate income tax (CIT) incentives. Based on Decree 218/2013/NĐ-CP and Circular 78/2004/TT-BTC, new solar projects get:

• 4 Years Tax-Free: No corporate income tax for the first four years.
• 50% Tax Cut for 9 Years: Pay only half the corporate income tax for the next nine years.
• 10% Tax Rate for 15 Years: Enjoy a super low 10% corporate income tax rate for 15 years.

If a solar power company is officially recognized as a “renewable energy production facility” (meeting specific criteria in Decision 693/QĐ-TTg), they can also get that 10% CIT rate for income from certain “socialized activities” (likely meaning activities that benefit the community).

Even solar projects in areas that are considered economically disadvantaged can get the same 4-year tax holiday and 50% tax reduction for 9 years.

Normal Fees Still Apply (Mostly)

Ms. Hang also pointed out that regular fees related to electricity and business licenses still apply, as listed in the Law on fees.

However, there’s an exception: rooftop solar projects smaller than 50kW (less than 1MW) don’t need an electricity operation license. Individuals and households who install rooftop solar panels and register to sell extra power back to the grid will still need to pay the normal business registration fee.

(According to Vietnam Financial Times)