A glance at corporate income tax (CIT) in Vietnam

A glance at corporate income tax (CIT) in Vietnam

Vietnam corpartateincome taxrates:

The current standard CIT rate in Vietnam is 20% (Point 1, Article  11, Circular 78/2014/TT-BTC, dated June 18, 2014).

Exception: Oil and gas industry are subject to CIT rates ranging from 32% to 50%; prospecting, exploration and exploitation of certain mineral resources are subject to CIT rates of 40% or 50%.

Vietnam corporate income tax incentives, include:

Preferential tax rates.

According to Article 19 of Circular No. 78/2014/TT-BTC, amended by Article 11, Circular 96/2015/TT-BCT dated June 22, 2015), tax incentives are granted to new investment projects based on regulated encouraged sectors, encouraged locations and the size of the project. There are three types of tax rate incentives, as follows:

1. Preferential tax rate of 10% for 15 years, starts from the commencement of generating revenue from the incentivised activities and can be extended in certain cases.

2. Preferential tax rate of 10% over the entire operating period in certain cases.

3. Preferential rate of 15% for the entire project life in certain cases.

Tax exemption and reduction period.

Taxpayers may also be eligible for tax exemption and reductions for a certain period beginning immediately after the enterprise first makes profits from the incentivised activities, followed by a period where tax is reduced at 50% of the tax payable.

However, enterprise does not have taxable income in the first 03 years, the period of tax exemption/reduction begins in the 4th year from the first year revenue is generated by the new project.

There are three types of tax exemption/reduction periods:

1. Tax exemption for 4 years, reduction of 50% of taxpayable for the next 9 years,  applied to prescribed cases.

2. Tax exemption for 4 years,  reduction of 50% of taxpayable for the next 5 years, applied to prescribed cases.

3. Tax exemption for 2 years,  reduction of 50% of taxpayable for the next 4 years, applied to prescribed cases.

Taxable profit:

Taxable profit is the difference between total taxable revenue and deductible expenses, plus other assessable income.

Taxable losses:                    

Taxable losses may be carried forward fully and consecutively for a maximum of five years.

Profit Remittance:

Foreign investors are permitted to repatriate their profits annually based on audited financial statements and corporate income tax finalization or upon termination of the investment in Vietnam. Foreign investors are not permitted to remit profits if the investee company has accumulated losses.

Ways to minimize corporate income tax within the laws:

To invest in prescribed encouraged sectors, locations, sizes of projects so that you may be eligible for tax incentives.

To keep proper invoices, supporting documents, accounting books that help you to be able to claim as much as possible deductible expenses, so lowering your taxable profit and the tax payable.

To follow the applicable tax laws and regulations, soprevent non-compliance costs and non-deductible expenses. 

To make proper, timely tax declaration and payment to avoid penalty, late payment charge.

Corporate income tax (CIT) in Vietnam

  Prepared by:
Thi-Ha Nguyen, ACCA

DMS Law firm in Vietnam
Approved by:

Director
Lawyer Do Minh Son 


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