Vietnam’s Tax Exemptions for Preschools: Supporting Early Childhood Education

“Raising young children brings a hundred worries,” an old Vietnamese saying that still rings true today. Amidst the hustle and bustle of life, parents constantly seek the best educational environment for their children from their earliest years. Understanding this, the Vietnamese government has enacted numerous support policies, particularly tax exemptions for preschools, to alleviate the financial burden on educational institutions and indirectly benefit parents. What exactly are these tax exemption policies? Let’s delve into this topic in the article below.

Tax Exemptions for Preschools

Under current tax laws, preschools are entitled to several tax benefits:

Corporate Income Tax Exemption

Non-profit preschools are exempt from corporate income tax. This means that all income generated from educational activities, after deducting expenses, can be retained for reinvestment and enhancing the quality of education for children.

Value Added Tax Exemption

Preschool education services are exempt from value-added tax (VAT). This helps reduce costs for parents utilizing preschool services.

Land Use Tax Benefits

Preschools are exempt from land use tax for the land area directly used for educational activities.

Preschool land use tax exemption

Benefits of Tax Exemption Policies

These tax exemption policies offer numerous practical benefits, contributing to the development of preschool education:

• Reduce the financial burden on preschools, creating favorable conditions for schools to invest in improving facilities, teaching staff, and educational programs.
• Lower tuition fees for children, enabling more children, especially those in remote areas or disadvantaged circumstances, to attend school.
• Attract investment in the preschool education sector, contributing to the overall improvement of preschool education quality.

However, despite these benefits, challenges remain in implementing tax incentives. According to Nguyen Van A, an economist at the Institute for Socio-Economic Development Research, “Accessing information and completing administrative procedures related to tax policies is still quite complicated for many preschools, especially small and medium-sized institutions in remote areas.” (Excerpt from “Solutions for Perfecting Tax Policies for Preschool Education,” National Economics Publishing House, 2022)

Opportunities and Challenges

Tax exemption policies are a crucial driver for the sustainable development of preschool education. However, to maximize their effectiveness, collective efforts from society are necessary. The government needs to continue improving the legal framework, simplifying administrative procedures, and strengthening communication and dissemination of policies to beneficiaries. Preschools should proactively research and understand policies and enhance their financial management capacity to effectively utilize state incentives.

Opportunities and challenges of tax exemption policies

Private Preschools and the Tax Equation

For private preschools, tax issues are always a top concern. Despite enjoying numerous incentives, the increasing competitive pressure in the education sector requires schools to constantly innovate and improve service quality to attract parents.

To learn more about tax policies for private preschools, please refer to Tax Policies for Private Preschools.

Conclusion

Education is a top national priority; investing in education is investing in the future. Tax exemption policies for preschools clearly demonstrate the commitment of the Party and State to fostering a generation of Vietnamese children who develop comprehensively in physical, intellectual, and spiritual aspects. Hopefully, with the joint efforts of the community, Vietnamese preschool education will continue to thrive, contributing to a solid foundation for national construction and defense.

To learn more about other educational support policies, please visit the Policy Dialogue 9/11/2016 section on our website.

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