Update on CIT Incentives and Deductibles

Tax authorities clarified in June that corporate income tax incentives shall not apply to new business activities after a foreign company has already been granted an investment certificate.

Official Letter 2057 says a foreign invested company that decides to offer business activities in addition to the activities stated on its investment certificate shall be considered as expanding its business. The new activity will not be qualified for CIT incentives but will be charged a 25 percent tax.

In another letter also released in June, authorities announced that the value of destroyed goods already expired shall not be considered tax deductible when filing for corporate income tax. Official Letter 2009 will affect companies dealing with fast moving consumer goods since they will be expected to count the destruction of expired goods as a regular scheduled activity.

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