Circular guiding the calculation of additional corporate income tax on income from joint ventures, specifically in cases where enterprises reinvest received capital into production and business activities.
Scope of application
Enterprises engaging in joint venture capital contributions
Key points
- Enterprises are not required to pay additional corporate income tax on income retained by the joint venture for reinvestment as stipulated (Article 1)
- Income from joint ventures is exempt from taxation only when used for the purpose of reinvesting and developing production and business activities
- Provincial Tax Departments shall implement this guidance for enterprises within their jurisdiction
- This guidance applies to income from joint ventures in accordance with current legal regulations
🌐 Social impact of this document
- Assisting enterprises to have more opportunities to reinvest and develop production and business activities without additional tax liability
- Increasing investment capital for joint venture projects, promoting economic activity
- Provincial Tax Departments reduce the burden of collecting additional taxes on reinvestment income from enterprises
❓ Frequently asked questions
Must an enterprise pay additional corporate income tax when reinvesting received capital from a joint venture?
No, if the enterprise uses it correctly for the purpose of reinvesting and developing production and business activities.
How does the Provincial Tax Department guide enterprises on this matter?
The Provincial Tax Department shall provide guidance to enterprises within their jurisdiction in accordance with the circular issued by the Ministry of Finance.
Full text
LETTER
OF THE MINISTRY OF FINANCE NO. 2178TC/TCT DATE MARCH 14, 2002
REGARDING THE CALCULATION OF ADDITIONAL ENTERPRISE INCOME TAX
Dear: Provincial Tax Departments
Recently, the Ministry of Finance has received many enterprises' proposals regarding the calculation of additional enterprise income tax on income distributed from joint venture activities. Regarding this issue, the Ministry of Finance provides the following opinion:
Based on the Law on Enterprise Income Tax, the Law on Domestic Investment Promotion and the actual situation of enterprises.
The Ministry of Finance instructs as follows:
For income received from capital contributions to a joint venture but left in the joint venture unit for continued reinvestment and development according to regulations, the enterprise is not required to include this income in post-tax income for calculating additional enterprise income tax.
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