MoF proposes tax exemption for non-profit schools

MoF proposes tax exemption for non-profit schools

Minister of Finance Ngo Van Tuan has explained a proposal to exempt public and non-profit private educational institutions from corporate income tax under a draft law amending several tax laws.

Photo: National Assembly

Speaking on November 6, the minister clarified the proposal, part of a draft law amending and supplementing a number of articles of the Law on Corporate Income Tax, the Law on Non-Agricultural Land Use Tax, and the Law on Personal Income Tax.

The bill amends Clause 5, Article 15 of the Law on Corporate Income Tax, whose provisions state that public science and technology organisations, public educational institutions, and non-profit private educational institutions are exempt from tax in accordance with government regulations.

According to the proposal, these educational institutions would enjoy an exemption of VND2 trillion ($80 million) in corporate income tax per year.

At the meeting, several delegates gave remarks about the importance to clearly distinguish what is an educational institution that is not for profit purposes.

Pham Van Hoa, a delegate from Dong Thap province, argued that distinguishing between for-profit and non-profit educational institutions is not simple, as the two models are interconnected and intertwined.

“If all corporate income tax is exempted, many private educational institutions may switch to a non-profit model in the future to benefit from the preferential treatment. So, the questions are: how will the tax authorities inspect them, and how will they ensure that these institutions do not exploit the policy to obtain tax exemptions,” Hoa said.

Nguyen Cao Son, a delegate from Phu Tho province, requested that the drafting agency provide a more specific report on the actual beneficiaries of the corporate income tax exemption for non-profit private educational institutions.

“Surveys in the locality show that private educational institutions currently have no tax issues and that there are no non-profit private educational institutions currently operating. Private educational institutions currently operate primarily in large cities. If a tax exemption policy is implemented, the biggest beneficiaries would likely be international schools and high-tuition schools in urban areas, rather than students from remote and rural regions,” Son said.

Regarding this content, Minister Tuan explained that the determination of this type of educational institution has been stipulated in the Education Law. The tax authority will base its decision on the business certificate, in which the competent authority clearly defines the non-profit private educational institution, to implement tax exemption.

“Taking care of education is the responsibility of the entire people, showing the concern of the Party that has clearly identified education as a top national policy. We continue to study policies to promote education development,” the minister said.

Minister Tuan also explained that the tax exemption regulation for meals at educational institutions and medical facilities aims to support care for students and patients.

According to the provisions of the Law on Corporate Income Tax, income subject to tax incentives must be accounted for separately.

VIR