Vietnamese law on corporate income tax

by NguyenThiThuTrang

Corporate tax is an important issue that any business cannot ignore, but not everyone understands this tax well. So in 2022, there are new regulations on CIT. Follow the article below of Lawyer X to learn about Vietnam’s regulations on corporate income tax

  • CIT Law 2008 Amendments and Supplements 2013

What is corporate income tax?

Currently, there is no specific concept of CIT. However, based on regulations such as corporate income tax law, decrees and circulars guiding the implementation, we can understand CIT as follows:

CIT is a direct tax, levied on taxable income of enterprises, including income from production and trading activities of goods and services and other incomes as prescribed by law.

To learn more about CIT, let’s learn more important concepts related to this tax.

CIT payers

CIT taxpayers are organizations engaged in production and trading of goods and services with taxable incomes under this Law (hereinafter referred to as enterprises), including:

Enterprises established in accordance with the law of Vietnam;
Enterprises established in accordance with foreign laws (hereinafter referred to as foreign enterprises) have a permanent establishment or do not have a permanent establishment in Vietnam;
Organizations established under the Law on Cooperatives;
Non-business units established in accordance with Vietnamese law;
Other organizations have production and business activities with income.

Enterprises with taxable incomes specified in Article 3 of this Law must pay CIT as follows:

Enterprises established in accordance with Vietnamese law pay tax on taxable income arising in Vietnam and taxable income arising outside Vietnam;
Foreign enterprises having a permanent establishment in Vietnam shall pay tax on taxable income arising in Vietnam and taxable income arising outside Vietnam related to the operation of such permanent establishment;
Foreign enterprises having a permanent establishment in Vietnam shall pay tax on taxable income arising in Vietnam which is not related to the operation of the permanent establishment;
Foreign enterprises that do not have a permanent establishment in Vietnam pay tax on taxable income arising in Vietnam.

A permanent establishment of a foreign enterprise is a production and business establishment through which a foreign enterprise conducts part or all of its production and business activities in Vietnam, including:

Branches, executive offices, factories, workshops, means of transport, oil fields, gas fields, mines or other places of exploitation of natural resources in Vietnam;
Construction sites, construction, installation and assembly works;
Establishments providing services, including consulting services through employees or other organizations or individuals;
Agent for foreign enterprises;
Representative in Vietnam in the case of a representative competent to sign contracts in the name of a foreign enterprise or a representative who is not authorized to sign contracts in the name of a foreign enterprise but regularly delivers goods or provides services in Vietnam.

Income is exempt from corporate income tax

Incomes from cultivation, husbandry, farming, processing of agricultural and aquatic products, and salt production of cooperatives; income of cooperatives operating in the fields of agriculture, forestry, fishery and salt production in areas with difficult socio-economic conditions or in areas with extremely difficult socio-economic conditions. towel; incomes of enterprises from cultivation, husbandry, farming and processing of agricultural and aquatic products in areas with extremely difficult socio-economic conditions; income from fishing activities.

Income from performing technical services directly serving agriculture.

Incomes from the performance of contracts for scientific research and technological development, products in the trial production period, products made from new technologies applied for the first time in Vietnam.
Incomes from production and business activities of goods and services of enterprises with 30% of the average number of employees in the year or more are disabled people, people after detoxification, people infected with viruses that cause decline syndrome acquired immunity in humans (HIV/AIDS) and has an average number of employees in a year of twenty or more, excluding businesses operating in finance and real estate business.

Income from vocational training activities exclusively for ethnic minorities, disabled people, children in extremely difficult circumstances, and subjects of social evils.

Dividend income from capital contribution, joint venture or association with domestic enterprises, after paying corporate income tax in accordance with this Law.

The grant received is used for education, scientific research, culture, art, charity, humanitarian and other social activities in Vietnam.

Income from the transfer of emission reduction certificates (CERs) of enterprises granted emission reduction certificates.

Incomes from performance of tasks assigned by the State of Vietnam Development Bank in the activities of development investment credit, export credit; income from credit activities for the poor and other policy beneficiaries of the Bank for Social Policies; income from state financial funds and other state funds operating for non-profit purposes as prescribed by law; income of organizations in which the State owns 100% of charter capital, established by the Government to handle bad debts of Vietnamese credit institutions.

The undivided income of an establishment performing socialization in the fields of education – training, health care and other socialized fields shall be left to invest in the development of that establishment in accordance with the provisions of specialized law on the field of socialization. education – training, health and other socialization sectors; part of income forming undivided assets of cooperatives established and operating under the provisions of the Law on Cooperatives.

Incomes from technology transfer in the fields of priority transfer to organizations and individuals in areas with extremely difficult socio-economic conditions.

Dossier for finalization of corporate income tax

Vietnamese enterprises need to prepare a full set of tax finalization documents, including:

CIT finalization declaration: Form 03/TNDN
Financial statements for the year of settlement or up to the time of decision on dissolution, division, merger, consolidation, transformation of the company type, ownership form, or shutdown of operation;
The following appendices depend on the situation of each enterprise:

Appendix of production and business results

  • Manufacturing, trading and service enterprises: Form 03-1A/TNDN
  • Banking and credit enterprises: Form 03-1B/TNDN
  • Securities company, securities investment fund management: Form 03-1C/TNDN

Appendix for loss transfer: Form 03-2/TNDN
Appendix of CIT incentives

  • For business establishments newly established from investment projects (investment projects), business establishments relocated, new investment projects: Form No. 03-3A/TNDN;
  • For expanded investment: Form No. 03-3B/TNDN;
  • For enterprises with ethnic minority workers, enterprises engaged in production, construction and transportation activities with between 10 and 100 female employees (accounting for more than 50% of the total number of regular employees) or more than 100 female employees ( accounting for more than 30% of the total number of employees regularly present): Form No. 03-3C/TNDN;

Appendix of CIT amount paid abroad with enterprises having foreign income to be deducted in the tax period: Form No. 03-4/TNDN
Appendix CIT from the transfer of real estate: Form No. 03-5/TNDN
Appendix to report on use of science and technology funds: Form No. 03-6/TNDN
Addendum for information about related-party transactions: Form No. 03-7/TNDN
Appendix for payment of corporate income tax of enterprises with dependent accounting production units located in a province or centrally run city, different from the locality where the head office is located: Form No. 03-8/TNDN
Enterprises with foreign investment projects: supplement according to the guidance of the Ministry of Finance
For the annual tax finalization file: The deadline for submission of the 2022 CIT finalization declaration is the last day of the 3rd month from the end of the calendar year or fiscal year;

For annual tax returns: No later than the last day of the first month of the calendar year or fiscal year.

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Frequently asked questions

What is the method of calculating CIT?

The payable corporate income tax amount in the tax period is calculated by multiplying the taxable income by the tax rate; In case an enterprise has paid income tax outside of Vietnam, the paid income tax amount may be deducted but must not exceed the payable enterprise income tax amount in accordance with this Law.

Where to pay CIT?

Enterprises pay tax at the tax office where the head office is located. In case an enterprise has a dependent cost-accounting production establishment operating in a province or centrally run city other than the area where the enterprise’s head office is located, the tax amount shall be calculated and paid according to the expense ratio between the place where the enterprise’s head office is located. have production facilities and headquarters. The decentralization, management and use of revenue sources comply with the provisions of the Law on State Budget.

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