Tax Policies for Rooftop Solar Power – Latest Updates in 2023

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Nowadays, people are gradually favoring solar power. Because of the benefits it brings such as savings, convenience and efficiency. However, for rooftop solar power projects, tax policies and tax incentives offered by the State are always of top concern. Because this has a big impact on the implementation of rooftop solar power projects.

What is a rooftop solar power system?

This is a solar power system installed on the roofs of buildings or other constructions. This system will utilize energy from sunlight. From there, it is converted into electricity for use in construction equipment or transferred to the grid for general consumption. 

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Rooftop solar power is currently the solution to maximize electricity cost savings. At the same time, it contributes to reducing the amount of CO2 released into the environment. However, the tax policy on rooftop solar power makes many people hesitant when installing or constructing. Therefore we will continue to learn about this issue in the next content. 

Evaluate the pros and cons of rooftop solar power

Before learning about tax policy for rooftop solar power. We will help you have an overview of the advantages and limitations of this system.

Advantage

  • Save energy costs: By using rooftop solar power, users will no longer have to pay power companies, thus reducing energy costs in the long term.
  • Environmental protection: Rooftop solar power is a renewable power source, does not create emissions that pollute the environment and does not affect natural resources.
  • Increase real estate value: Installing a rooftop solar power system will increase the real estate value of a building or house. This is especially important for business buildings, restaurants, and hotels, where saving on electricity costs is extremely important.

Defect

  • Initial investment cost: With the need to install solar battery packs and other control equipment, the initial investment cost for a rooftop solar power system is quite large.
  • Efficiency depends on the weather: Rooftop solar power systems operate more effectively in sunny conditions, when there is adequate sunlight. In bad weather conditions, the system will operate less effectively.
  • Needs periodic maintenance: Rooftop solar power systems need periodic maintenance to ensure stable operation and effective use.

Tax policies for rooftop solar power

Tax policy for rooftop solar power systems for individuals/household businesses is as follows:

Tax registration

For individuals and households implementing rooftop solar power projects and producing and selling electricity. They must be tax payers for their business activities. Therefore, they are subject to business registration and tax registration. 

Only after having a business registration certificate and tax registration can taxpayers buy individual invoices at the tax authority. At the same time, use them to settle electricity purchases at the end of the year.

Make tax declaration and payment

Based on tax registration, individuals/business households implementing rooftop solar power projects must be responsible for declaring and paying all taxes incurred according to regulations. These taxes include:

License fees

This is the amount of money that must be paid annually based on the individual/business household’s revenue during the year. In addition, the deadline for paying license fees is January 30 every year.

VAT and personal income tax

Individuals/business households implementing rooftop solar power projects with electricity sales revenue of over 100 million VND/year will be subject to VAT and personal income tax. At the same time, the tax rate on revenue is applied according to regulations. 

The VAT rate is 3% and personal income tax is 1.5%. Therefore, the total tax payable is 4.5% of total electricity sales revenue. Individuals/business households will have to issue sales invoices and declare. At the same time, pay tax each time it arises at the Tax Department where the individual resides. Ensure the deadline for submitting the application is no later than the 30th day of the quarter following the quarter in which taxable revenue is generated

However, if an individual/business household implementing a rooftop solar power project has electricity sales of less than 100 million VND/year, they are not subject to VAT, personal income tax and do not need to use invoices. Or if an individual/business household operates in another field with a total revenue of over 100 million VND/year, the revenue from rooftop solar power must still be declared and taxed according to regulations.

Things need to notice

To ensure their rights, business households implementing rooftop solar power projects need to register their business. At the same time, register for tax to receive an invoice issued by the tax authority to EVN when finalizing annual electricity sales. 

Furthermore, business households must be responsible before the law for the accuracy, truthfulness and completeness of tax declaration documents according to regulations.

Investment incentives for rooftop solar power projects

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In Clause 6, Part I, Appendix II, Decree 31/2021/ND-CP on Investment Law, renewable energy production, clean energy, and energy from waste destruction are in the list of special industries and occupations. receive investment incentives. Forms of investment according to Article 15 of the Investment Law 2020 include:

  • Corporate income tax incentives, including corporate income tax rates lower than normal tax rates applicable for a certain period or the entire duration of investment project implementation. In addition, receive tax exemption, tax reduction and other incentives according to the provisions of law on corporate income tax.
  • Tax exemption for imported goods for the purpose of creating fixed assets, as well as import tax exemption for imported raw materials, supplies and components used for production according to legal regulations.
  • Exemption or reduction of land rent, land use fees and land use tax.
  • Accelerated depreciation and increased costs are deductible when included in taxable income.

Investment incentive levels are specified in Article 26 of Decree 31/2021/ND-CP according to the guidance on the Investment Law. In which, investors are entitled to a 50% reduction in the project implementation guarantee in the following cases: investment projects in industries and occupations with special investment incentives. This includes clean energy production, renewable energy, and waste destruction energy.

Epilogue

Thus, understanding and understanding tax policies for rooftop solar power investment will help readers understand correctly and accurately who is subject to tax when implementing this project. At the same time, ensure compliance with legal regulations during the implementation of rooftop solar power projects.