How do branches and dependent units declare, pay and finalize CIT in Vietnam ?

A company with head office in Hanoi, establishes a dependent accounting branch, which is an electronic component factory in Da Nang city, has its own accounting system, is decentralized for accounting to record undistributed after-tax profits, its production and business activities eligible for corporate income tax (CIT) incentives, can the Company declare, pay and finalize CIT for the Branch at the direct tax management authority of the Company or the must Branch declare, pay and finalize CIT at the branch's tax authority ?

DMS Law office in Danang, Vietnam advise about how can the company’s headquarters declare, pay and finalize CIT for branches and dependent units ?

For a dependent unit, business location which is a production facility, from January 1, 2022:

Tax declaration, provisional tax payment quarterly:

Taxpayers are not required to submit quarterly tax returns but must determine the quarterly temporary tax amount as prescribed in Point b Clause 6 Article 8 of Decree No. 126/2020/ND-CP to pay CIT in each province where there is a production facility, including the place where the unit is entitled to CIT incentives.

Tax finalization:

Taxpayers shall declare and finalize corporate income tax (CIT) for all production and business activities according to form No. 03/TNDN, submit a CIT tax distribution table appendix payable to localities enjoying tax revenue sources from manufacturing establishment according to form No. 03-8/TNDN issued together with Appendix II of this Circular for the direct management tax authority; pay the tax amount allocated to each province where the production facility is located as prescribed in Clause 4, Article 12 of this Circular.

For activities entitled to CIT incentives, taxpayers shall declare, finalize tax according to form No. 03/TNDN issued together with Appendix II of this Circular at the direct management tax authority and determine the payable CIT amount of the activities eligible for CIT incentives according to form No. 03-3A/TNDN, 03-3B/TNDN, 03-3C/TNDN, 03-3D/TNDN issued together with Appendix II of this Circular and file at the tax authority where the unit enjoys incentives in the other province and the direct management tax authority.

In case the provisional tax amount paid quarterly is smaller than the payable tax amount allocated to each province according to the tax finalization, the taxpayer must pay the outstanding tax amount for each province. In case the provisional tax amount paid quarterly is larger than the payable tax amount allocated to each province, it shall be determined as the overpaid tax amount and handled according to the provisions of Article 60 of the Law on Tax Administration and Article 25 of this Circular (Point c, Clause 3, Article 17 of Circular 80/2021/TT-BTC dated September 29, 2021).

Thus, in case the Branch is a manufacturing factory in Da Nang City and is eligible for CIT incentives, the Company can determine the provisional tax amount to pay CIT quarterly to the State budget account in Da Nang city, make annual tax finalization, declaration at the company's direct management tax auhority in Hanoi city, pay the tax amount allocated to Da Nang city where the manufacturing facility is located./.

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DMS LAW LLC
Director
(Signed)
Lawyer Do Minh Son