Guidelines for finalizing corporate income tax for 2009, applying the Law on Corporate Income Tax No. 14/2008/QH12. Regulations on tax calculation methods, taxable income, deductible expenses, tax incentives, and specific provisions for real estate transfer activities.
Đối tượng áp dụng
Enterprises engaged in business activities under all economic sectors, Provincial Tax Departments.
Các điểm cốt lõi
- Enterprises calculate corporate income tax by multiplying taxable income with the tax rate (25%).
- Taxable income includes gross revenue minus deductible expenses and other income.
- Deductible expenses include depreciation of fixed assets, salaries, meal allowances during work hours, uniforms, travel allowances, interest expenses,...
- Enterprises may apply corporate income tax incentives for the remaining period according to previous regulatory documents or from 2009 onwards.
- Income from real estate transfers must be subject to corporate income tax.
🌐 Tác động xã hội từ văn bản này
- Positive impact: Helps enterprises better understand new regulations and avoid tax law violations.
- Negative impact: Increased compliance costs for enterprises due to complex regulations.
❓ Câu hỏi thường gặp
What is the corporate income tax rate?
The general corporate income tax rate from 2009 is 25%. There are different preferential rates depending on industry, location, and specific business activities.
What can enterprises deduct as expenses?
Enterprises can deduct expenses such as depreciation of fixed assets, salaries, meal allowances during work hours, uniforms, travel allowances, interest expenses,... but not exceeding specified limits.
How is corporate income tax calculated for income from real estate transfers?
Enterprises must determine revenue based on actual transaction prices, with the revenue recognition point being the time when the real estate is transferred to the buyer. A provisional tax of 2% on revenue is paid initially, followed by final settlement.
How can enterprises apply corporate income tax incentives?
Enterprises can choose between continuing to benefit from incentives under previous regulatory documents or from 2009, depending on their specific conditions.
How is corporate income tax calculated for income from gaming and betting operations?
No corporate income tax incentives apply to income from gaming and betting operations as stipulated by law.
Toàn văn
| MINISTRY OF FINANCE | SOCIALIST REPUBLIC OF VIET NAM |
| Number: 353/TCT-CS | Hanoi, January 29, 2010 |
Respectfully submitted to: Provincial Tax Departments under the Central Government.
On June 3, 2008, the National Assembly issued the Corporate Income Tax Law No. 14/2008/QH12 which took effect from January 1, 2009. In 2009, the Government also implemented many measures to promote production and business activities, maintain economic growth, and ensure social security. To ensure that the finalization of corporate income tax for 2009 is carried out in accordance with the provisions of the Corporate Income Tax Law No. 14/2008/QH12; the Tax Administration Law No. 78/2006/QH11; Decree No. 124/2008/NĐ-CP dated December 11, 2008; Circular No. 130/2008/TT-BTC dated December 26, 2008 of the Ministry of Finance and related regulatory documents, the General Department of Taxation provides guidance on certain matters to be noted when finalizing corporate income tax for 2009 as follows:
PART 1: GENERAL CORPORATE INCOME TAX POLICY.
I - Method of calculating corporate income tax.
1. For organizations engaged in production and business activities (collectively referred to as enterprises), the following applies:
The corporate income tax payable for a tax period equals taxable income multiplied by the tax rate.
| Corporate Income Tax Payable | = | Taxable income | X | CIT Rate |
In cases where a business has set aside funds for scientific and technological development, the corporate income tax payable shall be determined as follows:
| Corporate Income Tax Payable | = | ( | Taxable income | - | The amount set aside for the science and technology fund | ) | X | CIT Rate |
In cases where an enterprise has already paid corporate income tax or a similar tax to corporate income tax outside Vietnam, the enterprise is allowed to deduct the amount of corporate income tax paid but not exceeding the amount of corporate income tax payable according to the provisions of the Corporate Income Tax Law.
2. The People's Committee at the provincial level decides or submits to the competent authority for decision on the allocation standards for the State budget per capita or per position and specialized activities as the basis for annual budget allocation and transfer to units.Public institutions that generate business activities involving goods and services subject to corporate income tax record revenue but do not record and determine costs and income from business activities shall be implemented as follows:
Tcorporate income tax payable calculated as a percentage of sales revenue, specifically:
- For services: 5%;
- For trading goods: 1%;
- For other activities: 2%.
In cases where public institutions are eligible for preferential corporate income tax benefits, they must implement accounting systems, invoices, and supporting documents as prescribed, declare and pay corporate income tax according to declarations, and when applying preferential corporate income tax, they shall not apply the corporate income tax rate based on sales revenue as mentioned above.
II - Taxable income.
Taxable income for the period is determined according to the following formula:
| Taxable income | = | Taxable income | - | Exempted income | + | Losses carried forward according to regulations |
III – Taxable income.
Taxable income for the tax period includes income from production and business activities of goods and services and other income.
Taxable income for the tax period is determined as follows:
| Taxable income | = | Revenue | - | Deductible Expenses | + | Other income |
Income from business activities involving goods and services is equal to the revenue from such business activities minus the deductible expenses of those business activities. Enterprises conducting multiple business activities with different tax rates must calculate the income of each activity separately corresponding to the applicable tax rate for that activity.
Other income includes all taxable income during the tax period as specified in Section V Part C Circular No. 130/2008/TT-BTC. Other income is subject to the general tax rate (25%) and cannot benefit from preferential tax rates.
IV – Revenue for tax calculation.
1. Revenue for calculating taxable income includes all money from selling goods, processing fees, service provision fees including subsidies, surcharges, and premiums that the enterprise receives regardless of whether the money has been collected or not.
- For enterprises paying value-added tax (VAT) under the tax deduction method, the revenue does not include VAT.
Example: Enterprise A (Enterprise A) is a taxpayer of VAT under the tax deduction method. The VAT invoice includes the following items:
Selling price: 100,000 VND.
VAT (10%): 10,000 VND.
Payment amount: 110,000 VND.
Revenue for determining taxable income is 100,000 VND.
- For enterprises paying VAT under the direct tax method on added value, the revenue includes VAT.
Example: Enterprise B (Enterprise B) is a taxpayer of VAT under the direct tax method on added value. The sales invoice only records the sale price at 110,000 VND (inclusive of VAT).
Revenue for determining taxable income is 110,000 VND.
2. The time point for determining revenue for determining taxable income is determined as follows:
a) For the sale of goods, the time point for determining revenue for taxable income is the time when ownership or usage rights of the goods are transferred to the buyer.
b) For service provision, the time point for determining revenue for taxable income is the completion of the service provision to the buyer or the issuance of the service provision invoice.
V - Deductible and non-deductible expenses when determining taxable income.
* Principles for determining deductible expenses when calculating taxable income: Expenses that meet the following conditions:
- Actual expenses incurred related to the production and business activities of the enterprise.
- The expense is supported by valid invoices and legal documents as prescribed by law.
* Non-deductible expenses when determining taxable income are expenses that do not meet the aforementioned conditions and the expenses listed in Clause 2 Section IV Part C Circular No. 130/2008/TT-BTC.
According to the Corporate Income Tax Law and its implementing regulations, there are principles for determining deductible expenses when calculating taxable income and 31 types of non-deductible expenses when determining taxable income. Therefore, units should base their determination of deductible expenses when calculating taxable income and note some specific expenses as follows:
1. Depreciation expenses of fixed assets:
From January 1, 2009 to December 31, 2009, it is applied according to the guidance in Circular No. 130/2008/TT-BTC and Decision No. 206/2003/QĐ-BTC dated December 12, 2003 of the Minister of Finance, and note the following points:
- When starting to accrue depreciation, the enterprise registers the depreciation method for fixed assets chosen to be applied with the directly managing tax authority.Each year, the enterprise decides the depreciation rate for fixed assets according to the current regulations of the Ministry of Finance on management, use, and depreciation of fixed assets, including accelerated depreciation. During the period of production and business operations, if the enterprise changes the depreciation rate within the prescribed limits, the enterprise can adjust the depreciation rate but the latest adjustment deadline is the deadline for submitting the declaration for finalizing corporate income tax for the year of depreciation.. - Regarding depreciation of fixed assets such as passenger cars with up to 9 seats, civil aircraft, and yachts:
- Regarding depreciation for motor vehicles carrying up to 9 passengers, civil aircraft, and yachts:
An enterprise shall not include in deductible expenses the depreciation corresponding to the portion of the original cost exceeding VND 1.6 billion per vehicle for new passenger cars with up to nine seats registered for use and recorded for depreciation from January 1, 2009 (except for cars specifically engaged in commercial passenger transport, tourism, and hotel services); the depreciation on fixed assets such as civil aircraft and yachts not used for the purpose of commercial cargo and passenger transportation, tourist transport.
Example 1: Enterprise A purchased a seven-seat car worth VND 2 billion excluding VAT in 2009, with all invoices and supporting documents in accordance with regulations. According to the above provision, Enterprise A can only deduct the depreciation of fixed assets into deductible expenses when determining taxable income based on the original cost of the vehicle with a cap of VND 1.6 billion.
Example 2: Enterprise B purchased a seven-seat car worth VND 1.5 billion, including VAT of VND 75 million, registration fee and stamp duty totaling VND 100 million in 2009. Since Enterprise B paid for the car in cash without bank transfer, it cannot deduct input VAT but must include the VAT in the original cost of the fixed asset. Therefore, the total original cost of the fixed asset at this point will be VND 1.675 billion (VND 1.5 + VND 0.075 + VND 0.1). Thus, Enterprise B can only deduct the depreciation of fixed assets into deductible expenses when determining taxable income based on the original cost of the vehicle with a cap of VND 1.6 billion.
Depreciation of fixed assets that are construction works on leased land:
In cases where construction works such as office headquarters, factories, retail stores serving production and business operations are built on leased or borrowed land from organizations, individuals, or households (not directly leasing from the state or within industrial parks, science and technology parks, export processing zones), enterprises can only deduct the depreciation of these works into deductible expenses if they meet the following conditions:
+ The lease or borrowing agreement is notarized according to the provisions of the law; the lease or borrowing period stipulated in the contract must not be lower than the minimum depreciation period of the fixed asset.
+ Invoices for the settlement of construction work volumes handed over along with the construction contract, contract termination, and final settlement of the construction work value must bear the name, address, and tax code of the enterprise.
+ The construction works on the land must be managed, monitored, and accounted for in accordance with current regulations on the management of fixed assets.
2. Registering reasonable consumption levels of raw materials, materials, fuel, energy, and goods used in production and business activities:
The reasonable consumption levels of raw materials, materials, fuel, energy, and goods used in production and business activities are established by the enterprise itself. These levels are set at the beginning of the year or production cycle and must be reported to the direct tax authority within three months from the start of production. If there are adjustments, the latest deadline for reporting these changes to the tax authority is the deadline for filing the annual corporate income tax return.
3. Employee salary costs:
- Enterprises may include in deductible expenses actual amounts spent on salaries, wages, and allowances paid to employees in accordance with the law; bonuses given to employees that are considered part of their salary and are clearly stated in the labor contract or collective labor agreement. In cases where enterprises establish a reserve fund to supplement the next year's wage fund to ensure uninterrupted payment and not use it for other purposes, the reserve fund can be established but should not exceed 17% of the actual wage fund.
- Enterprises shall not include in deductible expenses: expenditures on tuition fees for the children of employees specified in the labor contract.
4. Meal allowance during shifts:
Enterprises may include in deductible expenses meal allowances provided in cash or kind to employees if there are actual payments made and the expenses are supported by valid invoices and receipts as prescribed by law.
For State-owned Enterprises, Circular No. 22/2008/TT-BLDTBXH dated October 15, 2008 (effective until April 30, 2009) and Circular No. 10/2009/TT-BLDTBXH dated April 24, 2009 (effective from May 1, 2009) issued by the Ministry of Labor, Invalids, and Social Affairs provide guidance on implementing mid-shift meal allowances applicable to State-owned Enterprises: before May 1, 2009, the monthly allowance for mid-shift meals for employees shall not exceed VND 450,000, and from May 1, 2009, it shall not exceed VND 550,000. Therefore, if State-owned Enterprises are permitted by competent authorities to spend more than the aforementioned limits on mid-shift meal allowances and the expenses are supported by valid invoices and receipts as prescribed by law, they can be included in deductible expenses when determining taxable income.
5. Uniform costs:
Enterprises shall not include in deductible expenses:Expenditures on uniforms provided in kind to employees exceeding VND 1.5 million per person per year; expenditures on uniforms provided in cash to employees exceeding VND 1 million per person per year.
6. Enterprises shall not include in deductible expenses: Allowances for employees traveling domestically and abroad (excluding travel and accommodation expenses) exceeding twice the amount stipulated by the Ministry of Finance for civil servants and public officials. Domestic and foreign travel allowances for civil servants and public officials.
are currently implemented according to the following documents: - Domestic: Circular No. 23/2007/TT-BTC dated March 21, 2007 issued by the Ministry of Finance; - Foreign: Circular No. 91/2005/TT-BTC dated October 18, 2005 issued by the Ministry of Finance.
Interest expense on loans:
Enterprises shall not include in deductible expenses: Portion of interest expenses on production and business loans from non-financial institutions or economic organizations exceeding 150% of the basic interest rate published by the State Bank of Vietnam at the time of borrowing.
7. Interest expense costs:
The enterprise shall not be allowed to include in deductible expenses the following portion:interest expense costs on production and business borrowing from entities that are not credit institutions or economic organizations exceeding 150% of the basic lending rate published by the State Bank of Vietnam at the time of borrowing.. Payment of interest on borrowed funds for contributing to registered charter capital or payment of interest on borrowed funds corresponding to the shortfall of registered charter capital according to the progress stipulated in the company's articles of association, including cases where the company has commenced production and business activities.
Example: Company A registers a charter capital of 90 billion VND and stipulates in its articles of association that it will fully contribute the charter capital of 90 billion VND within a certain period (three years, each year contributing 30 billion VND). Therefore, if Company A contributes the required amount of charter capital according to the registered contribution schedule of 30 billion VND annually and if the company incurs interest payments on borrowed funds for production and business operations, such interest payments, provided they are supported by invoices and receipts and do not exceed the prescribed limit, shall be deductible expenses when determining taxable income.
In the above example, if Company A fails to fully contribute the registered charter capital according to the contribution schedule stipulated in the articles of association, then any interest payments on borrowed funds for production and business operations corresponding to the shortfall of the registered charter capital will not be deductible expenses when determining taxable income.
8. Provision for and utilization of provisions for inventory write-downs, provisions for losses on financial investments, provisions for doubtful debts, and provisions for product warranties, goods, and construction projects shall be carried out in accordance with Circular No. 228/2009/TT-BTC dated December 7, 2009, issued by the Ministry of Finance.
For provisions for securities investments, note the following contents:
a) The objects for which provisions are made: must meet the following conditions:
- They are types of securities invested in by the enterprise in compliance with the provisions of the law.
- They can be freely traded on the market, and at the time of inventory taking and financial statement preparation, the market price is lower than the book value recorded on the accounting books.
Securities that are not allowed to be freely traded on the market, such as restricted transfer securities under the law; treasury shares shall not have provisions for write-downs established.
Organizations engaged in securities trading activities, such as securities companies and fund management companies established and operating in accordance with the Securities Law, shall implement provisions for write-downs of securities in accordance with separate regulations.
b) Methods for establishing provisions:
The level of provision for write-downs on securities investments is calculated using the following formula:
| Amount of investment security impairment provision | = | Quantity of securities impaired at the time of financial statement preparation | x | Book value of securities on the accounting books | - | Actual market value of securities |
- For listed securities: the actual market price of the securities is determined based on the average transaction price on the Hanoi Stock Exchange (HNX) at the date of establishing the provision; and the closing price on the Ho Chi Minh City Stock Exchange (HOSE) at the date of establishing the provision.
- For unlisted securities on the securities market, the actual market price of the securities is determined as follows:
+ For companies that have registered for trading on the over-the-counter market of public companies (UPCom), the actual market price of the securities is determined as the average trading price on the system at the date of establishing the provision.
+ For companies that have not registered for trading on the over-the-counter market of public companies, the actual market price of the securities is determined as the average price based on the transaction prices provided by at least three (03) securities companies at the time of establishing the provision.
In cases where the market value of the securities cannot be determined, enterprises are not allowed to establish provisions for write-downs of securities.
- For listed securities that have been delisted or suspended from trading starting from the sixth trading day, the book value at the date of the most recent balance sheet preparation is used.
Enterprises must establish provisions separately for each type of securities investment that experiences a decline in value at the time of preparing financial statements and consolidate them into a detailed schedule of provisions for write-downs of securities investments, serving as the basis for accounting entries in financial costs of the enterprise.
9. Contribution to unemployment insurance fund of the enterprise:
On the basis of Social Insurance Law, Decree No. 127/2008/NĐ-CP dated December 12, 2008, detailing the implementation of the Social Insurance Law regarding unemployment insurance, effective from January 1, 2009, and Circular No. 130/2008/TT-BTC of the Ministry of Finance provide that:
The sources forming the unemployment insurance fund under Article 102 of the Social Insurance Law stipulate:
- Workers contribute 1% of their monthly salary or wage for unemployment insurance.
- Employers contribute 1% of the total salary or wage of workers participating in unemployment insurance.
- Annually, the State supports from the budget 1% of the total salary or wage of workers participating in unemployment insurance, transferred once a year.
Therefore, the unemployment insurance contributions made by enterprises for workers as stipulated above are mandatory insurance premiums, thus enterprises will be entitled to deduct these contributions (1% of salary or wage) from taxable income for corporate income tax purposes.
10. Establishment and utilization of the reserve fund for severance pay and payment of severance benefits to workers:
In 2009, enterprises that contribute to unemployment insurance for workers and if they establish a reserve fund for severance pay in accordance with current regulations for workers, such establishment can be deducted from taxable income for corporate income tax purposes.
Establishment of the reserve fund for severance pay and payment of severance benefits are implemented in accordance with Circular No. 82/2003/TT-BTC dated August 14, 2003, issued by the Ministry of Finance, guiding the establishment, management, utilization, and accounting of the reserve fund for severance pay at enterprises.
11. Foreign exchange rate differences:
According to Circular No. 177/2009/TT-BTC dated September 10, 2009 of the Ministry of Finance, enterprises with foreign currency payable debts shall include exchange rate losses arising from such debts during the period and exchange rate losses resulting from revaluation of foreign currency payable debts at year-end in their expenses when determining taxable income for the period. In cases where exchange rate losses from revaluing foreign currency payable debts included in expenses result in the enterprise reporting a loss, part of the exchange rate difference may be allocated to the following year to prevent the enterprise from incurring a loss, provided that the exchange rate difference included in expenses for the current year must at least equal the exchange rate difference of the foreign currency payable debts due within the year.
Example 1: In 2009, DNA determined its final income to be 300 million VND before deducting exchange rate differences. arising from revaluation of foreign currency payable debts at year-end.
In 2009: Exchange rate differences arising from revaluation of foreign currency payable debts at year-end were ( - ) 250 million VND, of which the exchange rate difference of foreign currency payable debts due within 2009 was (-) 100 million VND.
Therefore, in 2009, DNA will include exchange rate losses from revaluation of foreign currency payable debts at year-end in its expenses when determining taxable income amounting to 250 million VND. arising from revaluation of foreign currency payable debts at year-end. is 250 million VND.
Example 2: In 2009, DN B determined its taxable income to be 200 million VND before deducting exchange rate differences. arising from revaluation of foreign currency payable debts at year-end.
In 2009: Exchange rate differences arising from revaluation of foreign currency payable debts at year-end were ( - ) 250 million VND, of which the exchange rate difference of foreign currency payable debts due within 2009 was (-) 100 million VND.
Thus, if DN B includes all exchange rate differences in expenses in 2009, arising from revaluation of foreign currency payable debts at year-end, it would result in the enterprise reporting a loss. Therefore, DN B will include the exchange rate difference in expenses when determining taxable income in 2009 as follows:
- The exchange rate difference of foreign currency payable debts due within 2009 is (-) 100 million VND (this amount DN A must fully include in expenses for the period).
- However, the maximum exchange rate difference that can be included in expenses is (-) 100 million VND. rate differences arising from revaluation of foreign currency payable debts at year-end advertising, marketing, promotion, brokerage commissions; hospitality, ceremonial, conference expenses; marketing support costs, payment discounts; gift and donation expenses to media organizations directly related to production and business activities exceeding 10% of total deductible expenses; for newly established enterprises, this limit applies to excess expenses up to 15% over three years from the date of establishment. Total deductible expenses do not include controlled expenses as stipulated herein. For trading activities, total deductible expenses do not include the purchase price of goods sold.
12. The enterprise shall not be allowed to include in deductible expenses the following portion:The controlled advertising, marketing, promotion, and brokerage commission expenses mentioned above do not include insurance brokerage commissions as prescribed by laws on insurance business; brokerage commissions paid to sales agents at the correct price; and expenses incurred domestically or internationally (if any): Market research costs: survey, interview, information collection, analysis, and evaluation; development and market research support costs; costs for hiring consultants to perform market research, development, and support services; Exhibition and product introduction costs, and organizing trade fairs and exhibitions: costs for setting up exhibition rooms or booths; costs for renting space for exhibitions and introductions; costs for materials and tools supporting exhibitions and introductions; transportation costs for exhibited products.
The 15% limit over the first three years only applies to new enterprises registered for business from January 1, 2009, and does not apply to enterprises newly established through mergers, divisions, spin-offs, consolidations, or changes in business form or ownership.
Company A was established in 2008, and in 2009, it prepared a tax settlement report for corporate income tax with the following expense figures recorded:
Example: - Advertising, marketing, promotion, and brokerage commission expenses; hospitality, ceremonial, conference expenses; marketing support costs, payment discounts, and gift and donation expenses to media organizations directly related to production and business activities, supported by valid invoices and receipts: 250 million VND
- Total deductible expenses (excluding advertising, marketing, promotion, and brokerage commission expenses; hospitality, ceremonial, conference expenses; marketing support costs, payment discounts, and gift and donation expenses to media organizations directly related to production and business activities): 2 billion VND
Therefore, the maximum controlled advertising, marketing, promotion, and brokerage commission expenses; hospitality, ceremonial, conference expenses; marketing support costs, payment discounts, and gift and donation expenses to media organizations directly related to production and business activities that can be deducted from expenses is:
2 billion VND multiplied (x) by 10% equals (=) 200 million VND
Therefore, the total deductible expenses included in expenses for 2009 is:
2 billion VND plus (+) 200 million VND equals (=) 2.2 billion VND
Enterprises are allowed to deduct from expenses: Amounts
13. contributed to social insurance, health insurance funds, and trade union fees exceeding the prescribed limits. Contributions forming management costs for higher levels and contributions to association funds as prescribed by law and not exceeding the prescribed limits. an Enterprises are not allowed to deduct from expenses: Expenses
14. not corresponding to taxable revenue; Advance expense provisions within a specified period that have not been utilized or fully utilized by the end of the period. Advance provisions include: advance provisions for major repairs of fixed assets according to cycles, advance provisions for ongoing obligations under contracts after recognizing revenue, and other advance provisions.
Therefore, enterprises are allowed to deduct from expenses: Expenses corresponding to taxable revenue if these expenses are supported by valid invoices and receipts as prescribed; Advance expense provisions within a specified period.
Example 1: Company A has provided software products for Company B but has not completed all services related to supplying software. Company A has temporarily received payment and recorded revenue for corporate income tax purposes but has not incurred all corresponding expenses for the recorded revenue. In this case, the entity may deduct in advance the portion of expenses corresponding to the declared revenue when determining taxable income for corporate income tax purposes, in accordance with the principle that expenses should correspond to taxable revenue. If the company has sold airline tickets to customers in December 2009 but the customers did not travel until February 2010, the company issued invoices to customers and recorded revenue for corporate income tax purposes in 2009 but has not incurred all corresponding expenses for the recorded revenue. In this case, the entity may deduct in advance the portion of expenses corresponding to the declared revenue when determining taxable income for corporate income tax purposes.
Example 2: If the company has sold airline tickets to customers in December 2009 but the customers did not travel until February 2010, the company issued invoices to customers and recorded revenue for corporate income tax purposes in 2009 but has not incurred all corresponding expenses for the recorded revenue. In this case, the entity may deduct in advance the portion of expenses corresponding to the declared revenue when determining taxable income for corporate income tax purposes.
15. Expenses for fines:
The enterprise shall not include in deductible expenses: Administrative fines including traffic violations, registration system violations, accounting and statistics system violations, tax law violations, and other administrative fines as prescribed by law.
Expenses for fines and compensation for breach of economic contracts, which are not the aforementioned fines, if such expenses are supported by valid invoices and receipts as prescribed, shall be included in deductible expenses when determining taxable income.
16. Taxes:
- Personal income tax deducted from employees' income by the enterprise and remitted to the state budget shall not be included in deductible expenses when determining taxable income. However, if the enterprise enters into labor contracts stipulating that wages and salaries paid to employees do not include personal income tax, the personal income tax paid on behalf of employees shall be considered as wage expenses and included in deductible expenses when determining taxable income.
- Corporate income tax (withholding tax) paid on behalf of foreign contractors shall be included in deductible expenses when determining taxable income if the contract between the contractor and the subcontractor stipulates that the income received by the foreign contractor or subcontractor does not include corporate income tax.
VI - Other Income.
Other income items are defined in Section V Part C Circular No. 130/2008/TT-BTC. Some additional notes on other income items are as follows:
- According to Circular No. 177/2009/TT-BTC dated September 10, 2009 of the Ministry of Finance, enterprises with foreign currency payable debts shall include exchange rate differential interest arising during the period and exchange rate differential interest resulting from revaluation of foreign currency payable debts at year-end in their incomewhen determining corporate income tax for the period. of each type of aircraft of the Vietnam Coast Guard - Revenue from penalties and compensation received due to breaches of economic contracts by counterparties shall be included in other income when determining taxable income. Where the enterprise has both revenue from penalty payments and expenses for penalty payments for breaches of economic contracts, the difference between revenue from penalties and expenses for penalty payments for breaches of economic contracts shall be included in other income when determining taxable income.
In cases where the enterprise only incurs expenses for penalties and compensation for breaches of economic contracts, it shall follow the guidance provided in Point 14 of Section V above.
- Revenue from bank deposit interest and late payment interest shall be included in other income when determining taxable income. Where the enterprise incurs expenses for bank deposit interest payments related to business operations, such expenses shall be included in operating costs for the period.
Reversal of provisions for inventory write-downs, provisions for losses on financial investments, provisions for doubtful debts, and reversal of provisions for product warranties, goods, and construction projects that have been established but are no longer needed or fully utilized
- shall be included in other income when determining taxable income. At the same time, off-balance-sheet accounting is recorded: - Revenue received in cash or kind from sponsorships shall be included in other income when determining taxable income. Where organizations receiving sponsorships use the sponsorship funds for educational activities, scientific research, cultural, artistic, charitable, humanitarian, and social activities in Vietnam,
such income shall be exempt from tax and deducted when determining taxable income for corporate income tax.
VII - Tax-exempt Income. Income from crop cultivation, animal husbandry, and aquaculture of organizations established under the Law on Cooperatives. Income from providing direct technical services to agriculture, including: irrigation and drainage services; plowing and harrowing services; dredging of internal canals and ditches; pest and disease control services for crops and livestock; harvesting services for agricultural products.
Income from performing research and development contracts; Income from sales revenue during the trial production period and income from sales revenue from products made using new technology applied for the first time in Vietnam. The maximum tax exemption period shall not exceed one (01) year, starting from the date of commencement of the research and development contract; the start date of the trial production period; the date of first application of new technology in Vietnam for production.
1. Income from performing research and development contracts must meet the following conditions:
2. Income from sales revenue from products made using new technology applied for the first time in Vietnam must be confirmed by competent state management authorities on science and technology.
3. Income from production and business activities of enterprises employing persons with disabilities, former drug addicts, and HIV-infected individuals, whose average number constitutes 51% or more of the total average number of employees in the enterprise.
3.1. Income from the implementation of scientific research and technological development contracts which are exempt from tax must meet the following conditions:
- Having a registration certificate for scientific research activities;
- Confirmed by the competent state management agency for science and technology;
3.2. Income from sales revenue generated from new technology applied for the first time in Vietnam shall be exempt from tax if such new technology is recognized by the competent state management agency for science and technology.
4. Income from the production and business operations of goods and services by enterprises where the average number of employees with disabilities, former drug addicts, and HIV-infected individuals constitutes 51% or more of the total average number of employees in the enterprise during the year.
Example: Enterprise A had 290 employees on its payroll for January 2009; it recruited 12 more employees in April 2008; two employees left in October; three employees left in December. Therefore, the average number of employees in 2009 is determined as follows:
| 290 + | (12 people x 9 months) – (2 people x 3 months) – (3 people x 1 month) |
| 12 |
= 290 -2017/BCT + 8 -2017/BCT = 298 employees
Thus, the average number of employees in 2009 for Enterprise A is 298 employees. If Enterprise A has 151 or more disabled workers (298 x 51%), then the income from production and business activities will be exempted from tax.
- The income exempted under this clause does not include other income.
- For enterprises to qualify for tax exemption under this point, they must meet the following conditions:
4.1. Enterprises employing disabled workers (including war invalids and disease invalids) must have confirmation from authorized health authorities regarding the number of disabled workers.
4.2. Enterprises employing workers who have completed drug rehabilitation must have certificates of completion from rehabilitation centers or confirmation from relevant authorized authorities.
4.3. Enterprises employing workers infected with HIV must have confirmation from authorized health authorities regarding the number of HIV-infected workers.
5. Income from vocational training exclusively for ethnic minorities, disabled persons, children in difficult circumstances, and social delinquents shall be exempted from tax. In cases where the training institution also serves other groups, the exempted income shall be determined proportionally based on the ratio of trainees from ethnic minorities, disabled persons, children in difficult circumstances, and social delinquents among the total number of trainees.
Income from vocational training activities exempted under this point must meet the following conditions:
- The vocational training institution must be established and operate in accordance with the provisions of guiding documents on vocational training.
- There must be a list of trainees from ethnic minorities, disabled persons, children in difficult circumstances, and social delinquents.
6. Income distributed from capital contributions, share purchases, joint ventures, and economic associations with domestic enterprises, after the receiving party has paid corporate income tax according to the Corporate Income Tax Law, including cases where the receiving party is exempted or granted tax reductions, shall be exempted from corporate income tax for the contributing enterprise.
Example: Enterprise B receives capital contribution from Enterprise A. The pre-tax income corresponding to Enterprise A's capital contribution in Enterprise B is 100 million VND.
- Case 1: Enterprise B is not eligible for corporate income tax benefits and has fully paid corporate income tax, including the income received by Enterprise A, then the income that Enterprise A receives from the capital contribution is 75 million VND [(100 million - (100 million x 25%)], and Enterprise A is exempted from corporate income tax on this amount.
- Case 2: Enterprise B is granted a 50% reduction in corporate income tax payable and has fully paid corporate income tax, including the income received by Enterprise A, then the income that Enterprise A receives from the capital contribution is 87.5 million VND [100 million - (100 million x 25% x 50%)], and Enterprise A is exempted from corporate income tax on this amount.
- Case 3: Enterprise B is exempted from corporate income tax, then the income that Enterprise A receives from the capital contribution is 100 million VND, and Enterprise A is exempted from corporate income tax on this amount.
7. Grants received to be used for educational, scientific research, cultural, artistic, charitable, humanitarian, and other social activities in Vietnam.
If the organization receiving sponsorship uses the funds for purposes other than those intended, the organization must pay corporate income tax at a rate of 25% on the amount misused.
Organizations receiving sponsorship under this clause must be established and operate in accordance with the law and comply with accounting and statistical regulations.
VIII - Guidelines for determining losses and loss carryforwards.
Losses arising during the tax period are the negative difference in taxable income.
After finalizing corporate income tax, if an enterprise incurs a loss, it may offset the loss against taxable income in subsequent years. The carryforward period is five consecutive years starting from the year following the year in which the loss was incurred.
Losses arising from 2009 onwards can be carried forward for up to five consecutive years starting from the year following the year in which the loss was incurred. Losses arising before 2009 shall be carried forward according to the provisions of the laws in effect at that time. If there remains a carryforward period beyond 2009, the remaining period shall continue uninterrupted.
If the competent authority determines a different amount of loss carryforward than the amount self-reported by the enterprise during tax settlement and audit, the amount of loss carryforward shall be determined according to the authority's conclusion but must ensure that the carryforward period does not exceed five consecutive years starting from the year following the year in which the loss was incurred.
Beyond the five-year period starting from the year following the year in which the loss was incurred, any unoffset losses will not be further deductible against future income.
Example: Enterprise A had a total loss of 5 billion VND in 2008 and declared a carryforward period of five consecutive years. In 2009, when Enterprise A finalized its tax, it declared taxable income (profit) of 1 billion VND and transferred a loss of 1 billion VND from 2008 to the taxable income of 2009. When the tax authority reviewed the 2009 corporate income tax settlement, it recalculated the income and expenses, resulting in a taxable income of 1.5 billion VND for 2009. Therefore, the loss incurred by Enterprise A in 2008 will be offset against the recalculated taxable income (the offset amount is 1.5 billion VND), and depending on the violation, the competent authority may impose penalties according to the law.
IX - Corporate Income Tax Rate.
From the tax period of 2009, the general corporate income tax rate is 25%. In addition, there are some other rates (such as preferential rates for certain industries, investment incentive areas; preferential rates for socialized activities... and rates applicable to exploration, exploitation of oil and gas and rare resources in Vietnam). activities in Vietnam).
If a business applies a fiscal year different from the calendar year, for the 2008 tax period, it shall apply the corporate income tax policy stipulated in Circular No. 134/2007/TT-BTC; for the 2009 tax period, it shall apply the corporate income tax policy stipulated in Circular No. 130/2008/TT-BTC. In cases where a business applies a fiscal year different from the calendar year and does not enjoy the preferential corporate income tax rate, when calculating the corporate income tax payable, the tax rate of 25% shall be applied corresponding to the number of months occurring in 2009. d) Determine the average monthly business travel distance of the position TCircular No. 134/2007/TT-BTC; for the 2009 tax period, it shall apply the corporate income tax policy stipulated in d) Determine the average monthly business travel distance of the position Circular No. 130/2008/TT-BTC. In cases where a business applies a fiscal year different from the calendar year and does not enjoy the preferential corporate income tax rate, when settling the corporate income tax, the business shall allocate the tax payable as follows:
Example: x 3 months x 28% + Tx 9 months x 25%
| Amount of Corporate Income Tax payable | = | Taxable income during the tax period | X - Place of Corporate Income Tax payment. | Taxable income during the tax period | A business pays tax at its main office location. In cases where a business has production bases (including processing and assembly facilities) that are dependent accounting units operating in provinces or centrally-administered municipalities different from the location of its main office, the tax payable shall be calculated and paid at both the main office and the production base locations. |
| Twelve months | Twelve months |
The provisions on tax payment set forth in this clause shall not apply to
1. 确定:
construction projects, project components, or dependent accounting units for construction sites.
Determination of tax amount and declaration procedures: The corporate income tax payable at the province or centrally-administered municipality where the dependent production base is located shall be determined by multiplying the total corporate income tax payable during the period by (x) the ratio of the costs of the dependent production base to the total costs of the business.
2. In cases where a business is currently operating with dependent production bases in various localities, the data for determining the cost ratio of the main office and the dependent production bases shall be self-determined by the business based on the final settlement of the corporate income tax for 2008, and this ratio will be used consistently from 2009 onwards.:
In cases where a newly established business, or a business currently operating and establishing or reducing dependent production bases in various localities, the business must self-determine the cost ratio for the first tax period for these cases. From the subsequent tax period, the cost ratio will be determined according to the aforementioned principle.
The business at the main office location is responsible for declaring and paying corporate income tax for the income generated at the main office and at the dependent production bases according to Form No. 07/TNDN issued together with Circular No. 130/2008/TT-BTC.
Procedures for transferring documents between the Treasury and the tax authority:
The business pays the corporate income tax generated at the main office to the State Treasury at the same level as the tax authority where the business registers for tax declaration, while also paying on behalf of the tax payable of the dependent production bases in various localities. Tax payment receipts are prepared separately for each State Treasury collecting the budget revenue, accompanied by a photocopy of the declaration form according to Form No. 07/TNDN issued together with Circular No. 130/2008/TT-BTC.
3. Settlement of tax:
The business declares and settles the corporate income tax at the main office location, the remaining corporate income tax payable is determined by subtracting the provisional payments made at the main office and at the dependent production bases from the total corporate income tax payable according to the final settlement. When settling the annual tax at the main office and finding that the corporate income tax payable is more or less than the total provisional declarations over four quarters, the remaining corporate income tax payable or refundable upon settlement will be allocated according to the correct ratio at the main office and at the dependent production bases.
4. XI - Corporate income tax from the transfer of real estate.
Taxable income:
Income from the transfer of real estate includes income from the transfer of land use rights, the transfer of land lease rights, and the subletting of land by real estate businesses in accordance with the laws on land, regardless of whether there are existing infrastructure or architectural structures attached to the land.
1. Therefore, from January 1, 2009, all types of enterprises with income from the transfer of land use rights, the transfer of land lease rights; real estate businesses with income from subletting land fall within the scope of corporate income tax from the transfer of real estate.
Taxable revenue:
- Revenue from the activity of transferring real estate is determined based on the actual transfer price of the real estate (including additional charges and fees if any) at the time of transferring the real estate.
2. In cases where the price of transferring land use rights is lower than the price specified by the People's Committee of the province or centrally-administered municipality at the time of transferring the real estate, the calculation shall be based on the price specified by the People's Committee of the province or centrally-administered municipality at the time of transferring the real estate.
- The time for determining taxable revenue is the time when the seller delivers the real estate to the buyer, regardless of whether the buyer has registered ownership rights or usage rights with the competent state authorities.
- In cases where a business is granted land or leased land by the state to implement infrastructure projects, houses for transfer or leasing, and receives advance payments from customers according to progress under any form, the time for determining the provisional taxable revenue is the time of receiving payment from the customer.
+ In cases where a business receives payment from customers and can determine the corresponding expenses for the revenue, the business shall declare and pay provisional corporate income tax based on the revenue minus the expenses.
- In cases where the enterprise is allocated land or leased land by the state to implement infrastructure projects, houses for sale or lease, and receives advance payments from customers according to the progress under any form, the time point for determining the revenue subject to provisional corporate income tax is the time point when the enterprise receives payment from the customer.
+ In cases where the enterprise has received payment from customers and can identify corresponding costs to the revenue, the enterprise shall declare and pay provisional corporate income tax based on revenue minus costs.
In the case where a business collects money from customers but has not yet determined the corresponding costs for revenue, the business shall declare and temporarily pay corporate income tax at a rate of 2% on the revenue collected and this revenue shall not be included in the taxable income for corporate income tax in that year.
Businesses that collected money from customers according to the progress of construction projects before 2009 but did not declare and pay corporate income tax shall declare the amount collected from customers in 2009 to determine the temporary corporate income tax payable according to the above principle.
When transferring real estate, the business shall re-calculate the corporate income tax payable. If the temporarily paid corporate income tax is lower than the corporate income tax payable, the business must pay the remaining tax due to the State Budget. If the temporarily paid corporate income tax is higher than the tax payable, the business may deduct the excess tax paid from the corporate income tax payable in the following period or have the excess tax refunded.
- A business implementing a housing construction project for sale before 2008, including some completed houses sold with land use rights transfer, when the project is completed from 2009 onwards, when settling corporate income tax for the entire project, the business must separately identify the houses handed over to customers with land use rights transfer from before 2008, which have been taxed according to the tax policy regulations up to 2008, and calculate and pay corporate income tax according to Law on Corporate Income Tax No. 09/2003/QH11 and guiding documents; houses sold with land use rights transfer from January 1, 2009 onwards shall be calculated and paid corporate income tax according to Law on Corporate Income Tax No. 14/2008/QH12 and guiding documents.
3. Declaration, payment, settlement of tax:
- The business submits the tax declaration form and pays corporate income tax on income from real estate transfers to the local tax authority where the transferred real estate is located.
The tax declaration form, payment, and tax receipt for corporate income tax arising from real estate transfers at the location where the transferred real estate is located serve as the basis for tax settlement procedures at the main office location.
- The business declares corporate income tax on a transaction-by-transaction basis for real estate transfer activities according to Form 09/TNDN issued together with Circular No. 130/2008/TT-BTC. The temporarily paid corporate income tax from advance payments received from customers according to the progress is paid at the local tax authority where the transferred real estate is located and declared in Part II of Form 09/TNDN. Upon transferring real estate, the business must officially settle corporate income tax for real estate transfer activities and declare it in Part I of Form 09/TNDN.
A business frequently engaging in real estate transfer activities if it requests to pay taxes on a transaction-by-transaction basis and has declared corporate income tax as a business not frequently engaging in real estate transfer activities, then it does not need to declare quarterly provisional corporate income tax but only needs to declare annual corporate income tax settlement.
XII - Tax incentives for corporate income tax.
1. Some additional principles for applying corporate income tax incentives should be noted:
- The duration of applying preferential tax rates is counted continuously from the first year the enterprise generates revenue from activities eligible for tax incentives.
- The duration of tax exemption and reduction is counted continuously from the first year the enterprise generates taxable income from investment projects eligible for tax incentives; In cases where the enterprise does not generate taxable income in the first three years from the first year of generating revenue from the investment project, the duration of tax exemption and reduction is counted from the fourth year.
Example: + Enterprise A has its first tax period starting from 2009 and is eligible for tax exemption and reduction periods according to the regulations, the duration of tax exemption and reduction is counted continuously from the first year the enterprise generates taxable income from investment projects eligible for tax incentives. In cases where Enterprise A does not generate taxable income in the first three years from the first year of generating revenue from the investment project, the duration of tax exemption and reduction is counted from the fourth year.
+ Enterprise B has its first tax period starting from 2007 and is eligible for tax exemption and reduction periods according to the regulations, having generated revenue, the duration of tax exemption and reduction is counted continuously from the first year of generating taxable income. In cases where there is no taxable income until the end of 2009, the duration of tax exemption and reduction is counted from 2010.
+ Enterprise C has its first tax period before 2007 and is eligible for tax exemption and reduction periods according to the regulations, having generated revenue but not taxable income and not counting the tax exemption and reduction period, the duration of tax exemption and reduction is counted from the 2009 tax period.
Within the same tax period, if there is an income item subject to different preferential corporate income tax rates and tax exemption/reduction periods, the enterprise may choose the most beneficial tax incentive among those applicable.
During the tax incentive period, if the enterprise fails to meet one of the conditions for tax incentives stipulated in a tax year, the enterprise will not enjoy the tax incentive in that tax year and must pay corporate income tax at a rate of 25%.
In the tax period, if the enterprise simultaneously engages in business activities eligible for tax incentives and those not eligible, it must separately account for the income from business activities eligible for tax incentives and those not eligible for tax incentives to declare and pay taxes separately.
In cases where business activities eligible for tax incentives incur losses, while non-eligible business activities (excluding real estate transfers) generate income (or vice versa), the enterprise may offset the income against the taxable income of other profitable business activities chosen by itself. The remaining income after offsetting is subject to the corporate income tax rate applicable to the profitable business activities.
- A business currently enjoying corporate income tax incentives (including preferential tax rates, tax exemption periods, and tax reduction periods) pursuant to previous legal regulations on corporate income tax or according to Investment Licenses or Investment Incentive Certificates issued shall continue to enjoy these incentives for the remaining period. Where the corporate income tax incentives include both preferential tax rates and tax exemption/reduction periods that are lower than those stipulated in the Law on Corporate Income Tax No. 14/2008/QH12 and its guiding documents, such businesses shall apply the tax incentives as prescribed in the Law on Corporate Income Tax No. 14/2008/QH12 and its guiding documents from the tax year 2009 onwards.
- During the period when a business is enjoying corporate income tax exemptions or reductions pursuant to the provisions, the competent authority conducting inspection, audit, or inspection, and discovering an increase in corporate income tax during the tax-exempt or reduced-tax period, the business shall continue to enjoy the tax exemptions or reductions as provided. Depending on the business's fault, the competent authority conducting inspection or audit shall impose penalties for violations of tax laws as prescribed. If additional corporate income tax for the tax-free period or reduced tax period is discovered, the enterprise shall enjoy tax exemption or reduction according to regulations. Depending on the fault of the enterprise, the competent authority for inspection and audit shall apply penalties for violations of tax laws according to regulations.
- Corporate income tax incentives shall not be applied to the following types of income:
+ Other income.
+ Income from oil and gas exploration, development, and other rare resources.
+ Income from operating games of chance and betting activities as regulated by law.
+ Other cases as specified by the Government..
2. Some specific cases to note:
2.1. For businesses whose tax incentives have been terminated due to meeting conditions regarding the use of domestic materials and export ratios for textile and garment activities under the WTO accession commitments: The Ministry of Finance has issued Circular No. 2348/BTC-TCT dated March 3, 2009. According to this circular, there are guidelines:
Businesses engaged in the textile and garment industry that enjoy tax incentives for using domestic materials, if they meet other corporate income tax incentive conditions (other than the conditions related to export ratios and the use of domestic materials) such as production in industrial zones, production in export processing zones, and implementation in areas with difficult socio-economic conditions listed in the investment incentive area directory, and employing many workers... shall continue to enjoy corporate income tax incentives corresponding to the conditions met for the remaining incentive period. These businesses are allowed to choose one of the two options below: Option 1: Continue to enjoy corporate income tax incentives corresponding to the conditions met (excluding the conditions related to export ratios and the use of domestic materials) for the remaining incentive period as prescribed in previous legal regulations on corporate income tax at the time the Business Registration Certificate was issued.
Option 2: Continue to enjoy corporate income tax incentives corresponding to the conditions met (excluding the conditions related to export ratios and the use of domestic materials) for the remaining incentive period as prescribed in previous legal regulations on corporate income tax at the time of adjustment due to the WTO commitment (January 11, 2007).
Therefore, businesses engaged in the textile and garment industry that enjoy tax incentives for using domestic materials, if they meet other corporate income tax incentive conditions (excluding the conditions related to export ratios and the use of domestic materials), can choose one of the two options above to enjoy corporate income tax incentives for the remaining incentive period as prescribed in previous legal regulations on corporate income tax at the time the Business Registration Certificate was first issued or at the time of adjustment due to the WTO commitment (January 11, 2007). Export processing zone enterprises engaged in the production of garments for export, with projects implemented in industrial zones. The enterprise was established in 1997, according to the investment license, it was subject to a corporate income tax rate of 10% throughout the project; exempted from tax for 4 years from the date of taxable income and reduced by 50% for the next 4 years. The enterprise had taxable income from 1997.
- According to the provisions of the aforementioned Investment License, the enterprise was exempted from tax for 4 years (from 1997 to 2000), reduced by 50% for the next 4 years (2001 to 2004), and applied a tax rate of 10% from 1997 until the end of the project.
Example 1: - According to the provisions of Decree No. 152/2004/NĐ-CP dated August 6, 2004, export processing zone enterprises in the production sector were transferred to a tax exemption period of 4 years (from 1997 to 2000) and a tax reduction period of 7 years (from 2001 to 2007), applying a tax rate of 10%.
- According to the provisions of Decree No. 24/2007/NĐ-CP and Circular No. 134/2007/TT-BTC, starting from 2007, the company will no longer enjoy the preferential corporate income tax rate of 10% based on export conditions and tax reduction in 2007. However, the company meets the condition of being a production facility in an industrial zone.
If determined to enjoy tax incentives according to the corporate income tax regulations at the time of issuance of the Business Registration Certificate for the remaining incentive period (the legal document issued in 1997 is Decree No. 36/CP dated April 24, 1997), the company, as a production facility in an industrial zone, enjoys a preferential corporate income tax rate of 15% throughout the project duration; exempted from corporate income tax for 2 years from the date of taxable income, without tax reduction. By January 11, 2007 (the date of the WTO commitment), the company had enjoyed tax exemption for 4 years and tax reduction for 6 years, so if choosing Option 1, the company would switch to enjoying a tax rate of 15% from 2007 onwards until the end of the project duration.
- According to the provisions of Decree No. 24/2007/ND-CP and Circular No. 134/2007/TT-BTC, from 2007, the Company will no longer be eligible for preferential corporate income tax rates of 10% based on export conditions and tax reductions in 2007. However, the Company meets the criteria for being a production facility within an industrial zone.
Option 2: If it is determined that the Company is entitled to benefits under the corporate income tax regulations at the time of issuance of the establishment permit for the remaining period of preference (the regulatory document issued in 1997 was Decree No. 36/CP dated April 24, 1997), then: The Company, as a production facility within an industrial zone, shall enjoy a preferential corporate income tax rate of 15% throughout the duration of the project; be exempt from corporate income tax for two years from the date of taxable income, without tax reduction. By January 11, 2007 (the date of the WTO commitment), the Company had been exempt from tax for four years and had its tax reduced for six years, so if option 1 is chosen, the Company would switch to enjoying a 15% tax rate from 2007 until the end of the project's operational period.
Therefore, businesses engaged in the textile and garment industry that enjoy tax incentives for using domestic materials, if they meet other corporate income tax incentive conditions (excluding the conditions related to export ratios and the use of domestic materials), can choose one of the two options above to enjoy corporate income tax incentives for the remaining incentive period as prescribed in previous legal regulations on corporate income tax at the time the Business Registration Certificate was first issued or at the time of adjustment due to the WTO commitment (January 11, 2007). If it is determined that the company is entitled to tax benefits under the regulations on corporate income tax at the time of adjustment due to the WTO commitment (January 11, 2007) for the remaining benefit period (the regulatory document at the time of the WTO commitment was Decree No. 24/2007/NĐ-CP), then: The company, being a production facility within an Industrial Zone, enjoys a preferential corporate income tax rate of 15% for 12 years from the start of business operations; is exempted from corporate income tax for 3 years from when it begins to generate taxable income, and has its tax payable reduced by 50% for the next 7 years. As of January 11, 2007, the company had been exempted from tax for 4 years and had its tax reduced by 50% for 6 subsequent years (from 1997 to 2006), thus the company does not continue to shift to a reduced tax rate for the remaining period, instead applying a corporate income tax rate of 15% for 12 years (from 1997 to 2008). Therefore, if option 2 is chosen, the company will be subject to a 15% tax rate for the remaining years 2007 and 2008, and from 2009 onwards, the tax rate will revert to 25%.
Example 2: Company Limited B, located in the Industrial Zone, is a wholly foreign-owned enterprise with the function of producing export-oriented garments over 80%, established according to the Investment License, began production and business operations in 2003. The company enjoys a preferential corporate income tax rate of 10% throughout the project's operational period; is exempted from corporate income tax for 4 years from when it generates profit, and has its tax payable reduced by 50% for the following 4 years. The year 2005 was the first year the company generated income.
- According to the provisions of the aforementioned Investment License, the company is exempted from tax for 4 years (from 2005 to 2008), has its tax reduced by 50% for the next 4 years (2009 to 2012), and applies a tax rate of 10% from 2003 until the end of the project's operational period.
- According to the provisions of Decree No. 24/2007/NĐ-CP and Circular No. 134/2007/TT-BTC, from 2007, the company will no longer enjoy a corporate income tax rate of 10% and will not be eligible for tax exemptions or reductions based on export conditions. However, the company meets the criteria for being a production facility within an Industrial Zone.
In this case, Company B will choose one of two options as directed in Circular No. 2348/BTC-TCT as follows:
Option 2: If it is determined that the company is entitled to tax benefits under the regulations on corporate income tax at the time of issuance of the establishment license for the remaining benefit period (the regulatory document at the time of issuance of the license in 2003 was Decree No. 27/2003/NĐ-CP), then: The company, being a production facility within an Industrial Zone, enjoys a preferential corporate income tax rate of 15% throughout the project's operational period; is exempted from corporate income tax for 2 years from when it begins to generate taxable income, and does not have its tax reduced. Thus, if option 1 is chosen, the company will be exempted from tax for 2 years (2005, 2006), and will apply a tax rate of 15% for the remaining period from 2007 until the end of the project's operational period.
Therefore, businesses engaged in the textile and garment industry that enjoy tax incentives for using domestic materials, if they meet other corporate income tax incentive conditions (excluding the conditions related to export ratios and the use of domestic materials), can choose one of the two options above to enjoy corporate income tax incentives for the remaining incentive period as prescribed in previous legal regulations on corporate income tax at the time the Business Registration Certificate was first issued or at the time of adjustment due to the WTO commitment (January 11, 2007). If it is determined that the company is entitled to tax benefits under the regulations on corporate income tax at the time of adjustment due to the WTO commitment (January 11, 2007) for the remaining benefit period (the regulatory document at the time of the WTO commitment was Decree No. 24/2007/NĐ-CP), then: The company, being a production facility within an Industrial Zone, enjoys a preferential corporate income tax rate of 15% for 12 years from the start of business operations; is exempted from corporate income tax for 3 years from when it begins to generate taxable income, and has its tax payable reduced by 50% for the next 7 years. Thus, if option 2 is chosen, the company will begin generating taxable income from 2005, and as of January 11, 2007, the company will be exempted from tax for an additional year (2007), have its tax reduced by 50% for the next 7 years (from 2008 to 2014), and apply a tax rate of 15% for a period of 12 years (from 2002 to 2013). Thus, by 2007, the company will apply a tax rate for the remaining period of 7 years (from 2007 to 2013), and from 2014, the tax rate will revert to 25%.
Example 3: A textile and garment enterprise with a project implemented in an Industrial Zone, established in 2000, with an export ratio of over 80% of products, is subject to a corporate income tax rate of 10% throughout the project; is exempted from corporate income tax for 4 years from when it begins to generate taxable income, and has its tax reduced by 50% for the next 4 years.
According to the provisions of Decree No. 24/2007/NĐ-CP and Circular No. 134/2007/TT-BTC, from 2007, the company will no longer enjoy a corporate income tax rate of 10% and will not be eligible for tax exemptions or reductions based on export conditions. However, the company meets the criteria for being a production facility within an Industrial Zone.
According to the example provided above, if a company has exhausted its 4-year tax exemption period by the time the WTO commitment benefit period ends and chooses option 2 (tax exemption for 3 years and a 50% reduction in tax for the next 7 years; application of a 15% tax rate for 12 years from the start of business operations), the company will not transition to the tax exemption and reduction conditions stipulated in Decree No. 24/2007/NĐ-CP but will only be able to choose to apply a 15% tax rate for 12 years from the start of business operations for the remaining benefit period.
2.2. For corporate income tax benefits due to meeting export ratio conditions (excluding textile and garment activities): the company is entitled to corporate income tax benefits due to meeting export ratio conditions up to the end of 2011.
From 2012, enterprises currently enjoying corporate income tax benefits due to meeting export ratio conditions, if they meet other corporate income tax benefit conditions (other than those due to meeting the export ratio condition), can choose and notify the tax authority to enjoy corporate income tax benefits for the remaining period corresponding to the actual investment incentive conditions met by the enterprise as stipulated in the regulatory documents on corporate income tax at the time of issuance of the establishment license or as stipulated in the regulatory documents on corporate income tax at the time of adjustment due to the WTO commitment (end of 2011).
2.3. - Clause 4 Article 2 of the Regulation on Industrial Zones, Export Processing Zones, and High-Tech Zones issued together with Decree No. 36/CP dated April 24, 1997 of the Government provides: "An export processing enterprise is an enterprise specializing in producing goods for export, providing services exclusively for the production of exported goods, and conducting export activities established and operating under this Regulation." On April 24, 1997, the Government issued Decree No. 36/CP which stipulates in Clause 6 Article 2: "An export processing enterprise is an enterprise specializing in producing goods for export, providing services exclusively for the production of exported goods, and conducting export activities established and operating under this Regulation."
- Clause 6 Article 2 of Decree No. 29/2008/NĐ-CP Article dated March 14, 2008, of the Government stipulates that "An export processing enterprise is an enterprise established and operating within an export processing zone or an enterprise exporting all its products operating within an industrial park or economic zone."
Therefore, export processing enterprises enjoying corporate income tax incentives due to meeting export conditions will be subject to adjustments in corporate income tax incentives based on the export ratio as provided for in Decree No. 24/2007/NĐ-CP; Decree No. 124/2008/NĐ-CP; Circular No. 134/2007/TT-BTC; Circular No. 130/2008/TT-BTC and Circular No. 2348/BTC-TCT. Export processing enterprises that meet other eligibility criteria besides the export ratio will have the option to choose to enjoy incentives according to the guidelines set out in Circular No. 2348/BTC-TCT.
2.4. Regarding business activities for developing infrastructure in industrial parks, export processing zones, and science and technology parks: The Ministry of Finance has issued Circular No. 4125/BTC-TCT dated March 23, 2009, and Circular No. 13480/BTC-TCT dated September 23, 2009. These circulars provide guidance as follows:
- Enterprises engaged in developing infrastructure in industrial parks, which are granted land or lease land by the State to invest in building infrastructure but do not carry out such investment as stipulated in their Investment License or Business Registration Certificate and instead transfer the right to use land or lease land to other enterprises for them to continue investing in infrastructure and leasing it out, must pay corporate income tax from the transfer of the right to use land or lease land and cannot enjoy corporate income tax incentives for this activity.
- Enterprises established before January 1, 2009, with projects to develop infrastructure in industrial parks, export processing zones, and science and technology parks, and these projects were granted land or lease land before January 1, 2009, to build infrastructure, then these enterprises subsequently invest in infrastructure development and lease the developed land back to enterprises within the industrial parks, export processing zones, and science and technology parks, the income from this activity is considered income from infrastructure development business and can enjoy corporate income tax incentives as prescribed.
In 2009,projects currently enjoying corporate income tax incentives will continue to enjoy such incentives for the remaining period based on the conditions met by the project.
- Enterprises established before January 1, 2009, with projects to develop infrastructure in industrial parks, export processing zones, and science and technology parks, and these projects were granted land or lease land from January 1, 2009, to build infrastructure, and enterprises engaged in infrastructure development established from January 1, 2009, do not enjoy corporate income tax incentives for infrastructure development business.
2.5. Regarding mineral exploitation activities: The Ministry of Finance has issued Circular No. 10254/BTC-TCT dated July 20, 2009. According to this circular, there is guidance: Income from mineral exploitation activities of enterprises established and granted investment licenses for mineral exploitation activities from January 1, 2009, shall not be eligible for corporate income tax incentives.For enterprises engaged in mineral exploitation activities prior to January 1, 2009, which are currently enjoying corporate income tax incentives under the provisions of Corporate Income Tax Law No. 09/2003/QH11, Petroleum Law, and government regulations promulgated before January 1, 2009, they will continue to enjoy incentives under the provisions of Corporate Income Tax Law No. 09/2003/QH11, Petroleum Law, and government regulations already issued for the remaining period. In cases where an enterprise has both income-generating activities that enjoy tax incentives and those that do not during a tax period, separate accounting must be made for income from activities that enjoy tax incentives and those that do not, and taxes must be declared and paid separately.
2.6. Regarding socialization activities: The Ministry of Finance has issued Circular No. 11660/BTC-TCT dated August 20, 2009. According to this circular, there is guidance as follows:
- In cases where the entity subject to adjustment under Decree No. 69/2008/NĐ-CP dated May 30, 2008, of the Government (not subject to adjustment under Decree No. 124/2008/NĐ-CP dated December 11, 2008, of the Government), if it generates income from socialization activities listed in the category and meets the scale and standard criteria issued together with Decision No. 1466/QĐ-TTg dated October 10, 2008, of the Prime Minister and registers with the tax authority when operating, the application of a 10% corporate income tax rate throughout the operation period will start from the date Decree No. 69/2008/NĐ-CP dated May 30, 2008, of the Government comes into effect.
- In cases where entities subject to adjustment under Decree No. 124/2008/NĐ-CP dated December 11, 2008, of the Government are also subject to adjustment under Decree No. 69/2008/NĐ-CP dated May 30, 2008, of the Government, if they generate income from socialization activities listed in the category and meet the scale and standard criteria issued together with Decision No. 1466/QĐ-TTg dated October 10, 2008, of the Prime Minister and register with the tax authority when operating, the application of a 10% corporate income tax rate throughout the operation period will start from the date Decree No. 69/2008/NĐ-CP dated May 30, 2008, of the Government comes into effect.
- In cases where entities subject to adjustment under Decree No. 124/2008/NĐ-CP dated December 11, 2008, of the Government are not subject to adjustment under Decree No. 69/2008/NĐ-CP dated May 30, 2008, of the Government:
+ Enterprises operating in other sectors but generating income from socialization activities or business establishments generating income from socialization activities without establishing independent accounting units operating in the socialization sector, if they meet the criteria of the category, scale, and standards regarding the socialization sector issued together with Decision No. 1466/QĐ-TTg dated October 10, 2008, of the Prime Minister, will apply a 10% corporate income tax rate throughout the operation period for the portion of income generated from educational, vocational training, healthcare, cultural, sports, and environmental activities starting from January 1, 2009.
+ Enterprises that were operating in the field of socialization before January 1, 2009, which are currently applying a higher tax rate than 10%, if they meet the conditions set out in the List of Types, Scale Criteria, and Standards for Socialization Fields issued together with Decision No. 1466/QĐ-TTg dated October 10, 2008 of the Prime Minister, shall be allowed to switch to applying a 10% tax rate on income from socialization activities starting from January 1, 2009.
Some additional points to note when finalizing corporate income tax:
- Revenue subject to taxation for ticket sales and membership card sales at golf courses shall be implemented according to Circular No. 06/2010/TT-BTC dated January 13, 2010 of the Ministry of Finance.
- The application of the allocation coefficient for land use value to apartments in high-rise residential buildings for calculating corporate income tax shall be carried out according to the guidance provided in Circular No. 18044/BTC-TCT dated December 23, 2009 of the Ministry of Finance.
- Regarding the allocation of costs for gas cylinder shells when determining taxable corporate income, it shall be implemented according to the guidance provided in Circulars No. 1484/BTC-TCT dated February 10, 2009 and No. 7776/BTC-TCT dated June 2, 2009 of the Ministry of Finance.
- The period for applying preferential corporate income tax rates on interest from deposits and loans shall be implemented according to the guidance provided in Circular No. 118/BTC-TCT dated January 5, 2010 of the Ministry of Finance.
PART 2: ON CORPORATE INCOME TAX POLICIES RELATED TO GOVERNMENT MEASURES TO STIMULATE INVESTMENT AND CONSUMPTION; TO COMBAT ECONOMIC DECLINE AND TO RESOLVE DIFFICULTIES FOR ENTERPRISES., REMOVING DIFFICULTIES FOR ENTERPRISES.
Based on Resolution No. 30/2008/NQ-CP dated December 11, 2008; Decision No. 16/2009/QĐ-TTg dated January 21, 2009; Decision No. 96/2009/QĐ-TTg dated July 22, 2009 of the Prime Minister, the Ministry of Finance has issued Circular No. 03/2009/TT-BTC dated January 13, 2009; Circular No. 12/2009/TT-BTC dated January 22, 2009; Circular No. 181/2009/TT-BTC dated September 14, 2009, and Circulars No. 1326/BTC-CST dated February 4, 2009, No. 10588/BTC-TCT dated July 24, 2009, and No. 17665/BTC-TCT dated December 16, 2009 to guide the implementation of the above Resolutions and Decisions of the Prime Minister. When finalizing corporate income tax related to cases eligible for tax exemption, reduction, and extension of tax payment periods according to government stimulus policies, specific provisions and guidelines in the aforementioned documents must be referred to, specifically:
1. Determining the subjects and scope:
1.1. On tax exemption and reduction:
- Small and medium-sized enterprises (SMEs) shall have their corporate income tax payable for the fourth quarter of 2008 and the year 2009 reduced by 30%, including:
+ Organizations such as cooperatives, people's credit funds; units directly under enterprises but independently accounting; independent member units with legal personality of economic groups and corporations if they meet the conditions stipulated in Circular No. 03/2009/TT-BTC.
The criteria specified in Section I of Circular No. 03/2009/TT-BTC shall apply to the headquarters and subordinate units of enterprises that are accounted for and pay corporate income tax centrally at the headquarters, such as factories, workshops, stores, offices, etc., if applicable.
+ Public service organizations with revenue
+ Local investment development funds: Local investment development funds established and operated according to the provisions of Decree No. 138/2007/NĐ-CP of the Government dated August 28, 2007 on the organization and operation of local investment development funds fall within the scope regulated by the Law on Credit Institutions dated February 12, 1997 and the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions dated May 16, 2004.
SMEs are enterprises meeting one of the following criteria:
“- Registered capital recorded in the Business Registration Certificate or Investment Certificate currently in effect before January 1, 2009 does not exceed 10 billion VND; in the case of newly established enterprises from January 1, 2009, the registered capital recorded in the first Business Registration Certificate or Investment Certificate does not exceed 10 billion VND.
- Average number of employees employed in the fourth quarter of 2008 does not exceed 300 people, excluding short-term contracts under three months; in the case of newly established enterprises from October 1, 2008, the number of employees receiving wages or remuneration in the first month (with full 30 days) with revenue not exceeding 300 people.”
- Exemption from corporate income tax payable for the year 2009 on the following incomes:
+ Income from investing and operating housing for rent to students and trainees of universities, colleges, vocational high schools, and technical colleges during their study period;
+ Income from investing and operating housing for rent to workers in industrial zones;
+ Income from investing and operating housing for sale, rent, or lease-purchase for low-income individuals facing housing difficulties.
1.2. On extension of tax payment:
The amount of corporate income tax eligible for deferred payment is determined as follows:
- For small and medium-sized enterprises, it is the provisional quarterly corporate income tax for 2009 after being reduced according to the guidance provided in Section II Circular No. 03/2009/TT-BTC.
- For enterprises engaged in production, processing, and manufacturing of agricultural, forestry, aquatic products, textiles, footwear, electronic components, it is the provisional corporate income tax for the quarter of 2009 on income from these activities.
In cases where enterprises cannot determine the provisional corporate income tax of production, processing, and manufacturing activities of agricultural, forestry, aquatic products, textiles, footwear, and electronic components separately from other business activities, the provisional corporate income tax for these production and manufacturing activities shall be extended based on the ratio between the total revenue of these extended production and manufacturing activities and the total revenue of the enterprise in 2008.
- The corporate income tax payable arising in 2009 from the following business incomes (excluding small and medium-sized enterprises which are implemented according to the guidance provided in Circular No. 03/2009/TT-BTC dated January 13, 2009 issued by the Ministry of Finance)+ Production of mechanical equipment as means of production;:
+ Production of construction materials, including: various types of bricks, tiles; lime; paint;
+ Construction and installation;
+ Tourism services;
+ Grain trading;
+ Fertilizer trading.
: Company Limited Construction ABC has a registered charter capital recorded in the Business Registration Certificate issued on July 1, 2007, amounting to nine billion VND (during its business operations, the enterprise did not adjust its capital at the Business Registration Certificate). Its business scope includes construction and installation of civil and industrial building projects.
ExampleSince Company Limited Construction ABC has a registered charter capital recorded in the Business Registration Certificate issued on July 1, 2007, amounting to nine billion VND, meeting the criteria for small and medium-sized enterprises, it is entitled to enjoy tax reduction and extension benefits for corporate income tax according to the guidance provided in Circular No. 03/2009/TT-BTC dated January 13, 2009 issued by the Ministry of Finance, and does not enjoy tax extension benefits according to the guidance provided in Circular No. 12/2009/TT-BTC dated January 22, 2009 issued by the Ministry of Finance.
2. Determination of tax exemptions and extensions:
Determination of the amount of corporate income tax exempted and reduced:
2.1. - Small and medium-sized enterprises
are entitled to a 30% reduction in the corporate income tax payable for the fourth quarter of 2008 and the corporate income tax payable for 2009. Specifically as follows: a) The amount of corporate income tax reduced for the fourth quarter of 2008 is 30% of the corporate income tax payable for the fourth quarter of 2008. Enterprises shall determine the corporate income tax payable for the fourth quarter of 2008 as follows:
- In cases where revenue, expenses, and taxable income for the fourth quarter of 2008 can be determined, the corporate income tax payable for the fourth quarter of 2008 is determined based on the taxable income of the fourth quarter of 2008 that the enterprise records.
- In cases where revenue, expenses, and taxable income for the fourth quarter of 2008 cannot be determined, the corporate income tax payable for the fourth quarter of 2008 is determined as follows:
Corporate income tax payable
| for the fourth quarter of 2008 Corporate income tax payable for 2008 | = | b) The amount of corporate income tax reduced for 2009 is 30% of the corporate income tax payable for the year. |
| 4 |
- Exemption of corporate income tax payable for 2009 from income from investment and business activities related to renting housing for students and trainees of universities, colleges, vocational high schools, and technical colleges during their study period; Income from investment and business activities related to renting housing for workers in industrial zones; Income from investment and business activities related to selling, renting, and leasing housing to low-income individuals with housing difficulties is determined based on the business accounting results of the enterprise if the enterprise can record income from such exempted business activities separately. In cases where the enterprise cannot record the corporate income tax payable for such exempted business activities separately, the exempted corporate income tax is determined based on the ratio between the revenue of the exempted business activities and the total revenue from all business activities of the enterprise in 2009.
Determination of the amount of corporate income tax eligible for deferred payment:
2.2. - For small and medium-sized enterprises, it is the provisional corporate income tax for the quarter of 2009 after being reduced by 30% according to the above guidance.
The amount of corporate income tax eligible for deferred payment is determined as follows:
The corporate income tax payable arising in 2009 from the following business incomes:
- For enterprises engaged in production, processing, and manufacturing of agricultural, forestry, aquatic products, textiles, footwear, electronic components, it is the provisional corporate income tax for the quarter of 2009 on income from these activities.
In cases where enterprises cannot determine the provisional corporate income tax of production, processing, and manufacturing activities of agricultural, forestry, aquatic products, textiles, footwear, and electronic components separately from other business activities, the provisional corporate income tax for these production and manufacturing activities shall be extended based on the ratio between the total revenue of these extended production and manufacturing activities and the total revenue of the enterprise in 2008.
- The amount of corporate income tax eligible for deferred payment is determined based on the business accounting results of the enterprise if the enterprise can record income from such deferred payment business activities separately.
+ Production of construction materials, including: various types of bricks, tiles; lime; paint;
+ Construction and installation;
+ Tourism services;
+ Grain trading;
+ Fertilizer trading.
: Company Limited Construction ABC has a registered charter capital recorded in the Business Registration Certificate issued on July 1, 2007, amounting to nine billion VND (during its business operations, the enterprise did not adjust its capital at the Business Registration Certificate). Its business scope includes construction and installation of civil and industrial building projects.
In cases where the enterprise cannot record the corporate income tax payable for such deferred payment business activities separately, the deferred payment corporate income tax is determined based on the ratio between the revenue of the deferred payment business activities and the total revenue from all business activities of the enterprise in each quarter.
3. Some notes:
Small and medium-sized enterprises
3.1. and the corporate income tax payable for 2009, including the corporate income tax payable calculated on the total income from all activities of small and medium-sized enterprises, including income from land use rights transfer, income from real estate transfer, and other income. and the corporate income tax payable for 2009. Specifically as follows: . In cases where enterprises are currently enjoying corporate income tax incentives under the Corporate Income Tax Law, the 30% reduction in corporate income tax is calculated
3.2on the remaining tax after deducting the corporate income tax incentives stipulated by the Corporate Income Tax Law. . For cases where small and medium-sized enterprises generate non-recurring income from activities involving the transfer of land use rights, land lease rights, and real estate transfers subject to declaration and payment of corporate income tax (CIT) on a case-by-case basis:
3.3. For small and medium-sized enterprises generating occasional income from activities involving the transfer of land use rights, land lease rights, and real estate transfers, which are subject to corporate income tax declarations on a per-occurrence basis:
- When determining the amount of corporate income tax (CIT) to be reduced or extended, it must be determined separately (without offsetting) the CIT reduction or extension from main business activities with the CIT reduction or extension from land use rights transfer, land lease rights transfer, and real estate transfer.
- Regarding the declaration location for CIT reduction and extension: Enterprises shall declare, reduce, and extend payment of CIT on income from land use rights transfer, land lease rights transfer, and income from real estate transfer at the locality where the transferred real estate is located.
3.4. Handling the difference in CIT when finalizing tax:
- In cases where enterprises self-finalize CIT for the year 2009 and there is a higher amount of CIT benefiting from tax incentives such as exemption, reduction, or extension compared to the total provisional tax of four quarters, the enterprise continues to benefit from tax incentives regarding exemption, reduction, or extension for the additional difference between the finalized amount and the total provisional tax of four quarters in 2009. The latest deadline for extending tax payment is until October 30, 2010.
- In cases where enterprises self-finalize CIT for the year 2009 and there is a lower amount of CIT benefiting from tax incentives such as exemption, reduction, or extension compared to the total provisional tax of four quarters, enterprises shall prepare supplementary declarations for adjustment according to the provisions at Point 5.1, Section I, Part B, Circular No. 60/2007/TT-BTC dated June 14, 2007, issued by the Ministry of Finance.
3.5. Exemption, reduction, and extension of corporate income tax payments apply to enterprises that have implemented accounting systems, invoices, and receipts, and have registered tax payments based on declarations.
3.6. In cases where enterprises have finalized CIT for the year 2009 but have not declared tax incentives for exemption or reduction, enterprises may prepare supplementary declarations for adjustment according to the provisions at Point 5.1, Section I, Part B, Circular No. 60/2007/TT-BTC dated June 14, 2007, issued by the Ministry of Finance. Enterprises can submit supplementary tax declarations before the tax authority announces the decision to inspect or audit taxes at the taxpayer's office; if the tax authority has already announced the decision to inspect or audit taxes at the taxpayer's office, enterprises cannot submit supplementary declarations.
3.7. For units with revenue: Units with revenue, if they meet the conditions of small and medium-sized enterprises, have implemented accounting systems, invoices, and receipts, and have registered tax payments based on declarations, will be considered for CIT reduction and extension according to Circular No. 03/2009/TT-BTC dated January 13, 2009, issued by the Ministry of Finance.
3.8. Industries eligible for exemption, reduction, or extension must be recorded in the Business Registration Certificate and actually engaged in business operations.
PART 3: REGARDING TAX DECLARATION.
Law on Corporate Income Tax No. 14/2008/QH12 took effect from January 1, 2009. The year 2009 was also the year the Government implemented many measures (including measures to reduce and extend corporate income tax payments) to promote production and business, maintain economic growth, and ensure social welfare.
According to the provisions of Law on Corporate Income Tax No. 14/2008/QH12 and guiding documents, some regulations on corporate income tax have been changed compared to Law on Corporate Income Tax No. 09/2003/QH11; Decree No. 24/2007/NĐ-CP dated February 14, 2007, and guiding documents. To comply with the declaration and finalization of corporate income tax for the year 2009, it should be carried out in accordance with the provisions of Law on Corporate Income Tax No. 14/2008/QH12; Law on Tax Administration No. 78/2006/QH11; Decree No. 124/2008/NĐ-CP dated December 11, 2008, and guiding circulars of the Ministry of Finance.
While the forms for finalizing corporate income tax have not yet been revised according to Circular No. 60/2007/TT-BTC dated June 14, 2007, the finalization tax declaration package for 2009 includes:
1. Declaration form for finalizing corporate income tax model number 03/TNDN issued together with Circular No. 60/2007/TT-BTC
2. Model number 07/TNDN issued together with Circular No. 130/2008/TT-BTC (if the enterprise has dependent production units in provinces or centrally administered cities different from the locality where the headquarters is located).
3. Annual financial report issued together with Decision No. 15/2006/QĐ-BTC dated March 20, 2006, of the Minister of Finance (for taxpayers applying the Enterprise Accounting System) or issued together with Decision No. 48/2006/QĐ-BTC dated September 14, 2006, of the Minister of Finance (for taxpayers applying the Small and Medium-Sized Enterprise Accounting System).
One or several annexes attached to the declaration form (depending on the actual situation of the taxpayer):
- Annex on business operation results model number 03-1A/TNDN, model number 03-1B/TNDN, or model number 03-1C/TNDN issued together with Circular No. 60/2007/TT-BTC.
- Annex on loss carryforward model number 03-2/TNDN issued together with Circular No. 60/2007/TT-BTC (Part I: Loss carryforward plan arising from previous tax periods and this period, enterprises do not need to declare this part, only declaring Part II: Determining the amount of loss that can be carried forward in the current tax period).
- Annex on corporate income tax for land use rights transfer, land lease rights transfer model number 03-3/TNDN.
- Annexes on tax incentives for corporate income tax:
+ Model number 03-4A/TNDN: Corporate income tax benefits for newly established businesses from investment projects and businesses relocating according to planning.
+ Model number 03-4B/TNDN: Corporate income tax benefits for businesses investing in new production lines, expanding scale, modernizing technology, improving ecological environment, enhancing production capacity.
+ Model number 03-4H/TNDN: Corporate income tax benefits for businesses engaged in production, construction, transportation using a large number of female workers.
In cases where enterprises employ ethnic minority workers and are entitled to CIT reduction according to Point 2, Section IV, Part H, Circular No. 130/TT-BTC they shall use Annex Model number 03-4H/TNDN to declare the amount of CIT reduction.
In cases where enterprises are entitled to CIT reduction under government stimulus measures for investment and consumption, anti-economic downturn measures, and solutions to alleviate difficulties for enterprises, they shall use Annex Model number 03-4H/TNDN to declare the amount of CIT reduction or exemption.
- Annex on corporate income tax paid abroad deductible in the tax period model number 03-5/TNDN.
- Annex number 04/TNDN applicable to units with revenue declaring corporate income tax calculated as a percentage of sales revenue if this unit does not engage in business activities subject to corporate income tax on goods and services, record revenue but do not record and determine costs and income from business activities.
Do not use the tax benefit annexes for corporate income tax (as these revenues have been defined under exempt income):
+ Form 03-4C/TNDN: Corporate income tax benefits for income from scientific research and technological development activities; scientific and technological information services as provided for in Clause 1, Article 37 of Decree No. 24/2007/NĐ-CP Clause 1 Article 37 Decree No. 24/2007/ND-CP
+ Form 03-4D/TNDN: Corporate income tax benefits for income from sales revenue of trial products, products produced using new technology first applied in Vietnam as provided for in Clause 2, Article 37 of Decree No. 24/2007/NĐ-CP Clause 2 Article 37 Decree No. 24/2007/ND-CP
+ Form 03-4Đ/TNDN: Corporate income tax benefits for income from direct technical service contracts serving agriculture as provided for in Clause 4, Article 37 of Decree No. 24/2007/NĐ-CP Clause 4 Article 37 Decree No. 24/2007/ND-CP
+ Form 03-4E/TNDN: Corporate income tax benefits for income from business operations of goods and services by businesses exclusively serving ethnic minorities, person disabled individuals and income from vocational training activities exclusively for ethnic minorities, disabled individuals, children in particularly difficult circumstances, and social delinquents as provided for in Clauses 5, 6, and 7, Article 37 of Decree No. 24/2007/NĐ-CP Clause 5, Clause 6, Clause 7 Article 37 Decree No. 24/2007/ND-CP
+ Form 03-4G/TNDN: Corporate income tax benefits for investors contributing capital in the form of patents, technical secrets, production processes, and technical services as provided for in Article 40 of Decree No. 24/2007/NĐ-CP Article 40 Decree No. 24/2007/ND-CP
When filing the Corporate Income Tax Finalization Return Form 03/TNDN, note:
1. At item [B22] – Other adjustments reducing pre-tax profit reflect additionally:
- Income exempted as stipulated in Section VI Part C of Circular No. 130/2008/TT-BTC dated December 26, 2008 issued by the Ministry of Finance (excluding income distributed from joint ventures and joint operations within the country which has already been reflected at item [B18]) Section VI Part C Circular No. 130/2008/TT-BTC - The amount set aside for the development of science and technology funds as stipulated in Section VIII Part C of Circular No. 130/2008/TT-BTC dated December 26, 2008 issued by the Ministry of Finance.
- The amount set aside for the development fund for science and technology by the enterprise as stipulated in For small and medium-sized enterprises eligible for a 30% reduction in corporate income tax for the year 2009 as stipulated in Circular No. 03/2009/TT-BTC dated January 13, 2009 issued by the Ministry of Finance, the reduced corporate income tax amount shall be recorded on Annex Form 03-4H/TNDN as follows: Enterprises record supplementary: Corporate income tax reduction according
2. to government stimulus measures
= (Corporate income tax payable for 2009 x 30%). On the Corporate Income Tax Finalization Return Form 03/TNDN: At item [C4]: Corporate income tax exemptions and reductions during the tax period: Enterprises report the total amount of corporate income tax exemptions and reductions during the tax period (including both exemptions and reductions under the Corporate Income Tax Law (if applicable) and exemptions and reductions under government stimulus measures for investment and consumption; measures against economic downturns, and solutions to difficulties faced by enterprises (if applicable).
3. For enterprises specializing in real estate trading that collect advance payments according to project progress, have declared provisional corporate income tax at 2% on collected amounts, and have completed delivery to customers in 2009, when filing the Corporate Income Tax Finalization Return, in addition to reporting the corporate income tax payable for real estate transactions completed in 2009 at item [C7], at item [C9] - Corporate income tax from land use rights transfer and land lease rights transfer paid to provinces/cities outside the main headquarters location,
4. enterprises must also report the provisional corporate income tax of 2% declared based on advance payment progress for delivered real estate projects and final corporate income tax for 2009 (based on tax payment receipts). The deadline for submitting the annual tax finalization declaration is the 90th day following the end of the calendar year or fiscal year. The above are some key points to note when finalizing corporate income tax for 2009. We request the Tax Departments to implement and disseminate these guidelines based on current laws and regulations and this circular to ensure proper completion of the 2009 corporate income tax finalization process. If there are any issues during implementation, please promptly report them to the General Department of Taxation for guidance and resolution./.
- Leadership of the General Department (for comments);
- Tax Inspection Department (to post on the Ministry of Finance's website);
| Place of Receipt: | DIRECTOR OF THE GENERAL DEPARTMENT |
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