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MINISTRY OF FINANCE
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SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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No: 123/2012/TT-BTC
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Ha Noi, July 27, 2012
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CIRCULAR
GUIDANCE ON THE
IMPLEMENTATION OF A NUMBER OF ARTICLES OF LAW ON ENTERPRISE INCOME TAX NO.14/2008/QH12
AND GUIDELINES ON IMPLEMENTATION OF DECREE NO.124/2008/ND-CP DATED DECEMBER 11,
2008, DECREE NO.122/2011/ND-CP DATED DECEMBER 27, 2011 OF THE GOVERNMENT
DETAILING THE IMPLEMENTATION OF A NUMBER OF ARTICLES OF LAW ON ENTERPRISE
INCOME TAX
Pursuant to the Law
on Enterprise Income Tax No. 14/2008/QH12 dated June 03, 2008;
Pursuant to the Tax
Administration Law No. 78/2006/QH11 dated November 29, 2006;
Pursuant to Decree
No. 124/2008/ND-CP dated December 11, 2008 of the Government detailing the implementation
of a number of articles of the Law on Enterprise Income Tax;
Pursuant to Decree
No. 122/2011/ND-CP dated December 27, 2011 of the Government amending and
supplementing a number of articles of Decree No. 124/2008/ND-CP of the
Government stipulating in detail and guiding the implementation of a number of
articles of the Law on Enterprise Income Tax;
Pursuant to Decree
No. 118/2008/ND-CP dated November 27, 2008 of the Government regulating the
functions, duties, powers and organizational structure of Ministry of Finance;
At the proposal of
the Director General of Taxation, the Minister of Finance makes guidance on the
implementation of the Law on Enterprise Income Tax:
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GENERAL PROVISIONS
Article 1. Scope of adjustment
This Circular shall detail
and guide the implementation of a number of articles of the Law on Enterprise
Income Tax No. 14/2008/QH12 dated June 03, 2008, Decree No. 124/2008/ND-CP
dated December 11, 2008 of the Government detailing the implementation of a
number of articles of the Law on Enterprise Income Tax and Decree No.
122/2011/ND-CP dated December 27, 2011 amending and supplementing a number of
articles of Decree No. 124 / 2008/ND-CP of the Government detailing and guiding
the implementation of a number of articles of the Law on Enterprise Income Tax.
Article
2. Taxpayers
1. The taxpayers of
Enterprise Income Tax are the organizations of production and business of goods
and services with taxable income (hereinafter referred to as enterprise),
including:
a) Enterprises established
and operating under the Enterprise Law, Investment Law, Law on Credit
Institutions, Insurance Business Law, Securities Law, Petroleum Law, Commercial
Law and other legal normative documents in the forms: Joint Stock Companies;
Limited Liability Companies; Joint-Venture Companies; Private Enterprises;
State Enterprises, Lawyer Offices, Private Notary Public Offices; The parties
in the contracts of business cooperation; The parties in oil product sharing
contract, Oil and Gas Joint Venture Enterprise and Joint Operating Companies.
b) Public
non-business units, non-public non-business unit with production and business
of goods and services having income in all areas.
c) Organizations
established and operating under the Cooperative Law.
d) Enterprises established
under foreign law (hereinafter referred to as foreign enterprises) have their
permanent establishments in Vietnam.
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- Branches, executive
offices, factories, workshops, means of transportation, mining, oil and gas
field or other sites of extraction of natural resources in Vietnam;
-
Construction sites, constructions, installation or assembly;
- Establishments
providing services, including consultancy services through employees or an
organization or individual;
- Agents for foreign
enterprises;
- Representatives in Vietnam in the case of authorized representatives to sign contracts in the name of foreign
enterprises or non- authorized representatives to sign contracts in the name of
foreign enterprises but regularly delivering goods or providing services in Vietnam.
Where the agreement
on avoidance of double taxation which the Socialist Republic of Vietnam has
signed has different provisions on the permanent establishment, the provisions
of that Agreement shall apply
e) Other
organizations other than the organizations referred to at Points a, b, c and d,
Clause 1 of this Article have the activities of business and production of
goods and services with taxable income.
2. The foreign
organizations manufacturing and carrying on business in Vietnam not under the
Investment Law, Enterprise Law or having income arising in Vietnam and paying
enterprise income tax under the separate guidance of the Ministry of Finance.
These organizations if having activities of capital alienation, they shall pay
enterprise income tax as guided in Article 14, Chapter IV of this Circular.
Chapter II
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Article 3. Method of tax calculation
1. The tax amount the
enterprise must pay in the tax period by chargeable income multiplied by the
tax rate.
The payable
enterprise income tax is determined by the following formula:
Payable enterprise income tax amount
=
Chargeable income
x
Tax rate of enterprise income tax
Where enterprise
deducts the fund for scientific and technological development, the payable
enterprise income tax shall be determined as follows:
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=
(
Chargeable income
-
Deduction of science and technology fund
)
x
Tax rate of enterprise income tax
Where the enterprise
has paid the enterprise income tax or tax similar to the enterprise income tax
outside Vietnam, this enterprise shall be deducted from the amount of tax the
enterprise has been paid but not exceeding the maximum amount of payable
enterprise income under the provisions of the Law on Enterprise Income Tax.
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3. Where the tax period
of the first year of newly established enterprise since being granted the
certificate of enterprise registration or certificate of business registration
or Permit of establishment or Certificate of investment and the tax period of
the last year for enterprise transforming the type of enterprise, form of
ownership, consolidation, merger, division, separation, dissolution, bankruptcy
is shorter than 03 months, it shall be added to the tax period of year next
(for newly established enterprises) or tax period the previous year (for
enterprises transforming type of enterprise, form of ownership conversion,
consolidation, merger, separation, dissolution and bankruptcy) to form a tax
period of enterprise income. The tax period of enterprise income of the first
year or the tax period of enterprise income of the last year shall not exceed
15 months.
4. Where enterprises convert
their tax period of enterprise income (including the conversion of tax period
from calendar year to fiscal year or vice versa), the tax period of the
converting year must not exceed 12 months. If an enterprise enjoying enterprise
income tax incentives converts its tax period, it may choose: enjoying
incentives in the year of tax period conversion, or paying tax at the common
rate in the year of tax period conversion and enjoy tax incentives in the
succeeding year.
Example 1: For
enterprise A, the tax period in 2011 is the calendar year. At the beginning of
2012, it converts to the fiscal year from April 01 this year to March 31 of
the following year, the tax period of the year of conversion ( 2012) from the
January 01, 2012 by the end of March 31, 2012 (3 months). The tax period of the
following year shall start from April 01, 2012 by the end of March 31, 2013..
Example 2: In the
same case, but enterprise A enjoys the preferential enterprise income tax (2
years tax exemption of , 50% reduction of enterprise income tax in the next 3
years), and the tax exemption starts in 2009, then enterprise A shall enjoy the
preferential tax as follows: tax exemption in 2009, 2010; 50% reduction in tax
in 2011, 2012 and 2013.
If the enterprise
chooses 50% reduction in enterprise income tax in the tax period of the year of
conversion 2012, it shall continue the enjoy 50% reduction in enterprise income
tax of the year of conversion and the subsequent tax year (fiscal year 2012
from April 01, 2012 to March 31, 2013).
If the enterprise
does not choose 50% reduction in enterprise income tax in the tax period of the
year of conversion 2012 (the tax is declared and paid at the common rate in the
year of conversion 2012), the enterprise shall enjoy 50% reduction in
enterprise income tax in the fiscal year 2012 (from April 01 to March 31, 2013)
and the fiscal year 2013 (from April 01, 2013 to March 31, 2014).
5. Non-business units
which have the activities of goods and services business subject to enterprise
income tax but these units can account the revenue but can not account and
determine the cost and income of the business operation shall declare and pay
enterprise income tax by the rate% on the revenue of sales of goods and
services, as follows:
+ For services: 5%
+ For goods business:
1%
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Example 3:
Non-business unit A has the activity of house letting, the revenue from the
house letting in one (01) year is 100 million VND, the unit does not account
and determine the cost and income from the above house letting because the unit
has chosen to declare and pay enterprise income tax at the rate% on the revenue
of sales of goods and services as follows:
Payable enterprise
income tax amount = 100,000,000 VND x 5% = 5,000,000 VND
6. Enterprises which
have the revenues, expenses, taxable income and chargeable income in foreign
currency must convert the foreign currency into VND at the average exchange
rate on the inter-bank foreign exchange market announced by the State Bank of
Vietnam the country at the time of the arising of turnover, expenses, taxable
income and chargeable income in foreign currency, unless otherwise provided by
law. For the foreign currency without currency exchange rate with Vietnam VND
must be converted via a foreign currency with the exchange rate with VND.
Article
4. Determination of chargeable income
1. The chargeable income
in tax period is determined by the taxable income minus tax exemption income
and the losses carried forward from previous years as prescribed.
Chargeable income is
determined by the following formula:
Chargeable income
=
Taxable income
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tax exemption income
+
Losses carried forward as prescribed
2. Taxable income
Taxable income in tax
period includes income from activities of production and business of goods and
services and other incomes
Taxable income in tax
period is determined as follows:
Taxable income
=
Revenue
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Deductible expenses
+
Other incomes
Income from
activities of production and business of goods and services with the revenue of
activities of production and business of goods and services minus deductible
expenses of those activities of production and business of goods and services. Enterprise has a lot of activities of production and business and applies different tax
rate, it has to separately calculate the income of each activity multiplied by
the corresponding tax rate.
The incomes from real
estate transfer, project transfer (not attached to the transfer of the right to
use or to rent land); incomes from the transfer of the right to execute the
project, the right to carry out mineral resources exploration, extraction and
processing as prescribed by law, must be separately recorded to declare and pay
enterprise income tax at the rate of 25%, and are not eligible for enterprise
income tax incentives, and must not be offset against the income or losses of
other business and production.. When an enterprise engages in real estate
transfer, project transfer (not attached to the transfer of the right to use or
to rent land); incomes from the transfer of the right to execute the project,
the right to carry out mineral resources exploration, extraction and processing
as prescribed by law, it may offset their profits against their losses to
declare and pay enterprise income tax.
Article
5. Revenue
1. Revenue to calculate
taxable income is determined as follows:
The revenue to calculate
taxable income is the total proceeds from the sale of goods, processing amount,
and services supply amount, including price subsidies, surcharges or extra that
enterprises are entitled to enjoy regardless of collection or non-collection of
money.
a) For enterprises
making payment of value-added tax by the method of tax deduction is the revenue
excluding value added tax.
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Selling price: 100,000 VND
VAT (10%): 10,000 VND
Price paid: 110,000 VND
The revenue to
calculate the taxable income is 100,000 VND
b) For enterprises
making payment of value-added tax by direct method on a value added is the
revenue including value added tax.
Example 5: Enterprise B is the tax payer of value added tax by the direct method on value added. The
sales invoice only indicates the selling price is 110,000 VND (price including
VAT).
The revenue to
calculate the taxable income is 110,000 VND
2. The time for revenue
determination to calculate taxable income is determined as follows:
a) For the sale of
goods is the time of transfer of ownership or right to use goods to the buyer.
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In case the time of
invoicing service supply occurs before the time of services completion, the
time for determining the taxable revenue shall be calculated according to the
time of invoicing service supply.
c) Other cases
as prescribed by the law
3. The revenue to
calculate the taxable income in a number of cases determined as follows :
a) For goods and
services sold under the installment and deferment method is the proceeds of
goods and services paid once, excluding the interest on installment payment of
installment and interest on deferred payment.
b) For goods and
services used for exchange; donations and offer and internal consumption
(excluding goods and services used to continue the process of production and
business of the enterprise) shall be defined by the selling price of products,
goods and services of the same or similar kind on the market at the time of
exchange; donations and offer and internal consumption.
c) For goods processing
activities as proceeds from processing activities including wages, cost of
fuel, power, auxiliary materials and other costs for the processing of goods.
d) For goods of the
units delivering to the agents, consigning and receiving agent consigning under
the agency contract, consigning for sale at the right price to enjoy commission
shall be determined as follows:
- The enterprises
deliver goods to the agents (including multi-level sales agents), and consign
goods is the total amount of goods sales.
- Enterprises act as
agents, consignees for goods sales at the fixed price of the enterprise
delivering and consigning to the agents is the commission to be enjoyed under
the contract of agency and consignment of goods.
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The enterprises that
shall base on the conditions of implementation of accounting regime, actual
invoices and documents and the determination of cost, can select one of two
methods of determining the revenue for calculating taxable income as follows:
- The annual rental
equal (=) the amount paid in advance divided by (:)number of years of advance
payment.
- The entire retal of
the number of years of advance payment
Where enterprises
that are enjoying their enterprise income tax incentives have chosen the method
of determining the revenue for calculating taxable income which is the total
rental the lessee has paid in advance for many years, the determination of the
income tax which the enterprises are exempted from and reduced shall be based
on the total enterprise income tax of the number of years prepaid divided by
(:) the number of years prepaid by the lessee.
g) For credit
activities, finance leasing activity is the loan interest and revenue on
receivable finance leasing arising in the tax period.
h) For transport activities
is the total revenue of passenger, cargo and luggage transportation arising in
the tax period.
i) For activity of
power supply, water supply is the amount of electricity, clean water recorded
on VAT invoice. The time to determine the revenue for calculating taxable
income is the date of certification of electricity meter indicator recorded on
the electricity and clean water bill.
Example 6: The meter
indicator on electricity bill recorded from day December 05 to January 01. The
revenue of this bill is calculated in January.
k) For golf course
business is the proceeds from the sale of membership cards and golf playing
tickets and other revenues in the tax period determined as follows:
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- For the form of
ticket and membership card sales of the prepaid cards for several years, the
revenues as a basis for determining the chargeable income each year is the
actual proceeds from card selling divided by the number of years of card using.
l) For the area of
insurance business, the revenue for calculating taxable income is the total
proceeds from the provision of insurance services and goods and other services,
including surcharges and extra fees that the insurance enterprises are entitled
to enjoy without value added tax, including:
- Revenue from
activities of insurance business:
For activities of insurance
business and reinsurance is the amount of original insurance premiums to be
collected; collection of reinsurance premium, commission of reinsurance
retrocession; single management fee of insurance, fee on agency services
including damage assessment, consideration for compensation, requiring the
third party for compensation and handling 100% of the compensated goods
(excluding permitted inspection among enterprise members that account
internally in the same insurer with independent accounting) after deduction of
payables to reduce revenue such as refunding of insurance premium, reduction in
premium; refunding of reinsurance premium; reduction in reinsurance premium;
refunding of commission of reinsurance retrocession; reduction in commission of
reinsurance retrocession.
Where the insurance
enterprises participating in co- insurance, the revenue to calculate the
taxable income of each party is the proceeds of original premium allocated in
proportion to co- insurance for each party excluding value added tax.
For insurance
contracts with agreement of payment by each period, the revenue for calculating
taxable income is the amount receivable arising in each period.
Where implementation
of collection operations between affiliated enterprises or between enterprises
with dependent accounting office of the insurer, the turnover for calculating
taxable income excluding revenue of permitted collection.
- Revenue from
insurance brokerage activities: Proceeds from insurance brokerage commissions
after deducting the insurance brokerage commissions, reduction and refunding of
insurance brokerage commissions.
m) For construction
and installation activities is the value of constructions, constructions items
or the value of volume of constructions, installation and acceptance.
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- In case of construction
and installation without contracting supply of raw materials, machinery and
equipment is the amount from construction and installation activity excluding
the value of materials, machinery and equipment.
n) For business
activities in the form of business cooperation contracts:
- Where the parties
involving in business cooperation contract divide business results by the
revenue of the sales of goods and services, the revenue for calculating tax is
the revenue of each party divided under the contract.
- Where the parties
involving in business cooperation contract divide business results by product,
the revenue for calculating tax is the revenue of the product divided to each
party under the contract.
- Where the parties
involving in business cooperation contract divide business results by the
pre-tax profit of enterprise income tax, the revenue to determine the pre-tax
income is the proceeds from the sales of goods or services under the contract.
The parties involving in business cooperation contracts must appoint a party as
a representative to produce invoices, record revenues, costs, and determine the
pre-tax profit of enterprise income tax divided by the parties involving in
business cooperation contracts. Each party involving in business cooperation
contracts shall carry out its obligations of enterprise income tax under
current regulations.
- Where the parties
involving in business cooperation contract divide business results by post-tax
profit of enterprise income tax, the revenue to determine the taxable income is
the proceeds of sales of goods and services under the contract. The parties
involving in business cooperation contracts must appoint a party as a
representative to produce invoices, record revenues and costs and make
declaration and payment of enterprise income tax on behalf of the remaining
parties involving in business cooperation contract.
o) For activities of
bonus games business (casino, electronic games with bonus, and entertainment
business with bet) are the proceeds from these activities including special
excise duty minus the amount paid to customer for bonus.
p) For securities
trading activities are the proceeds from brokerage services, securities
dealing, securities underwriting, portfolio management, financial advisory and
securities investment, investment fund management, issue of fund certificate,
market organization services and other securities services under regulations of
the law.
q) For derivative
financial services are the proceeds from the provision of derivative financial
services performed in the tax period.
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1. Except for
expenditures stated in clause 2 of this Article, enterprises shall be deducted
all expenditures if satisfying the following conditions:
a) The actual
expenditures arising related to production and business activities of the
enterprises;
b)
The
expenditures with adequate legal invoices and documents under regulations of
the law.
2.
The nondeductible expenditures upon determination of taxable income include:
2.1. The expenditures do
not fully meet the conditions specified in Clause 1 of this Article.
Where the enterprises
have expenditures related to the value of loss caused by natural disaster,
epidemic, fire and other unforeseen circumstances without any compensation,
these expenditures are charged to expenses deducted in determining income
taxable income, specifically as follows:
The enterprises must
determine the total value of loss caused by natural disaster, epidemic, fire
and other unforeseen circumstances under regulations of the law.
The value of losses
caused by natural disaster, epidemic, fire and other unforeseen circumstances
without any compensation shall be determined by the total value of loss minus
the compensation to be paid the organizations and individuals under regulations
of the law.
a) Dossier for assets
and goods lost due to natural disaster, epidemic, and fire are included in
deductible expenditures as follows:
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- Record
of inventory of assets value of assets and goods lost shall be made by the
enterprise.
Record of
inventory of assets value, loss of goods must clearly identify the value of
assets and goods lost, cause of loss, responsibilities of organizations and
individuals for losses; type, quantity and recoverable value of assets and
goods (if any), the stock movement summary of the lost goods certified by the
signature of the legal representative who shall take responsibility before law.
- Written
certification of the People's Committees of commune, ward, the management Board
of industrial parks and export processing zones, economic zones where the
disaster, epidemic, fire occur there are natural is that during occurrence of
natural disasters, epidemics, fires during that time.
- Dossier
of compensation for loss accepted by the insurance agency (if any)
- Dossier
stipulating responsibilities of organizations and individuals that must make
compensation (if any).
b) Goods damaged due
to expiry and changes in natural biochemical process without compensation shall
be included in deductible expenses when determining the taxable income.
Dossier for goods
damaged due to expiry and changes in natural biochemical process without
compensation shall be included in deductible expenses is as follows:
-Documents
of enterprises sent to the tax agency under direct management to explain the
goods damaged due to expiry and changes in natural biochemical process without
compensation shall be included in deductible expenses.
- Record
of inventory of goods value damaged shall be made by the enterprises.
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- Dossier
of compensation for loss accepted by the insurance agency (if any)
- Dossier
stipulating responsibilities of organizations and individuals that must make
compensation (if any).
c) The
enterprises shall send the tax agencies under direct management a written
explanation of assets and goods lost due to natural disaster, epidemic, fire,
goods damaged due to expiry, damaged due to change of natural biochemical
process without any compensation when submitting dossier to declare the
settlement of enterprise income tax as prescribed of the year of the occurrence
of the lost and damaged goods. Other dossiers (including the Record of
inventory of assets value of assets and goods lost and damaged; the written
certification of the People's Committees of commune, ward, the management Board
of industrial parks and export processing zones and economic zones; Dossier of
compensation for loss accepted by the insurance agency (if any); Dossier
stipulating responsibilities of organizations and individuals that must make
compensation (if any) and other documents) are kept at the enterprises and
produced to the tax agencies as required.
2.2. Depreciation expense
of fixed assets in one of the following cases:
a) Depreciation
expense of fixed assets not used for activities of production and business of
goods and services.
For fixed assets in
service for employees working at enterprise such as mid-shift recreation area
and canteen, locker room, toilet, infirmary, and vocational and training
facility and equipment, furniture qualified as fixed assets installed in the
mid-shift recreation area and canteen, locker room, toilet, infirmary, and
vocational and training facility, clean water tanks, garages, commuter car,
housing for workers built by the enterprise shall be depreciated and included
in expense deducted in determining taxable income.
b) Depreciation
expense of fixed assets without any papers of ownership of the enterprise
(except for fixed assets from finance leasing).
c) Depreciation
expense of fixed assets without management, monitoring and in accounting book
of the enterprise under the current management regime of fixed asset and
accounting record.
d) The depreciation
exceeding the rate of current regulations of the Ministry of Finance on the
regime of management, use and depreciation of fixed assets.
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Enterprises operating
efficiently and economically shall be entitled to apply accelerated
depreciation but not more than 2 times of the rate of depreciation determined
under the straight-line method for rapid technological innovation. Upon
conducting accelerated depreciation, enterprises must ensure the profitability.
Fixed assets
contributed as capital, fixed assets transferred upon division, merger,
consolidation, merger, transformation of type with reevaluation as prescribed,
the enterprise receiving these assets are depreciated on costs and deducted at
cost of reevaluation. For other assets not qualified as fixed assets
contributed as capital, transferred upon division, merger, consolidation,
merger, transformation of type
and these assets are
revaluated as prescribed, the enterprises upon receiving these assets shall be
included in deductible expenses by reevaluation.
For fixed assets made
by themselves, the initial cost of the fixed asset depreciated shall be included
in deductible expense that is the total of production cost to form those
assets.
For assets as tools,
instruments, circulating packaging, ... do not meet the conditions identified
as fixed assets as prescribed, the expenses used to purchase the above assets
are amortized to the cost of production & business in the period but not exceeding
2 years.
e) The depreciation
corresponding to the original cost in excess of 1.6 billion / car for passenger
cars of 9 seats or less with new use registration and accounting of
depreciation of fixed assets from January 01, 2009 onwards (except automobiles
specializing in passenger transport, traveling and hotel); the depreciation of
fixed assets as civil airplanes and yachts not used for purposes of business of
transportation of goods, passengers and tourists.
Passenger cars of 9
seats or less specialized in business of passenger transport, traveling and the
hotel are the cars registered the in the enterprises’ names and these
enterprises in the certificate of enterprise registration or certificate of
business registration have registered one the business lines: passenger
transport, traveling, hotel business and have been licensed the business as
prescribed in legal documents on transport business, passengers, traveling and
hotel.
Civil airplanes and
yachts not used for not used for purposes of business of transportation of
goods, passengers and tourists are the civil airplanes and yachts of the
enterprises registering and accounting the depreciation of fixed assets but in
certificate of business registration or certificate of enterprise registration
of the enterprises which do not register the business line of passenger and
goods transport and traveling.
g) Depreciation of
fixed assets that have been depreciated in value.
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Where constructions
on land as office buildings, workshops and business stores in service for the
production and business activities are built on leased land, land borrowed from
organizations, individuals and households (not direct lease of state land or in
industrial parks), the enterprises are entitled to depreciate to be included in
the deductible expenses at the proper rate of depreciation of fixed assets in
accordance with current regulations of the Ministry of Finance for the these constructions
if it meeting the conditions as follows::
- There are contracts
of land lease and land borrowing between enterprises and land-owning units and
the enterprises’ representatives must take responsibilities before law for the
accuracy of the contracts.
- The invoice of
payment of construction volume handed over together with construction contract,
contract liquidation and settlement of construction construction value bearing
the name, address and tax identification number of the enterprise..
- Constructions on
land shall be managed and monitored and accounted in accordance with the
current regulations on management of fixed assets.
i) Where the fixed
assets belonging to the ownership of the enterprises are used for the
production and business but have to temporarily stop due to seasonal production
with the period of less than 09 months, temporarily stopped for repair or
relocation, periodic maintenance, with the period of less than 12 months, then
the fixed assets continue to be put into service for production and business
activities. During that temporary suspension, the enterprises are depreciated
and the depreciation expenses of fixed assets in the time of temporary
suspension is included in deductible expenses when determining taxable income.
Enterprises
must keep and provide complete dossiers and the reason of the temporary
suspension of fixed assets upon requirements of the tax agency.
k)
Long-term land use rights are not depreciated and allocated to the deductible
expenses in determining taxable income; the term land use right if there are
sufficient invoices and documents and proper compliance with the procedures
prescribed by law, participation in business and production activities shall be
amortized to deductible expenses by the time limit stated in the certificate of
land use right.
When an enterprise
purchases tangible fixed assets being houses or constructions attached to the
long-term land tenancy, the value of land tenancy must be separately calculated
and recorded as intangible fixed assets. The input value of tangible fixed
assets being houses and constructions is the actual purchase price plus (+) the
expenses on putting the tangible fixed assets into use.. The land tenancy
value shall be determined according to the contractual purchase price of the
assets in accordance with the market price but not be lower than the price of
land set by the People's Committees of central-run provinces and cities at the
time of asset purchase. Where enterprises purchase the tangible fixed assets as
buildings and structures associated with long-term land use rights but the
value of land use right cannot be separately divided, then the value of use
right shall be determined by the price regulated by the People's Committees of
central-run provinces and cities at the time of assets purchase.
2.3. Expenses for raw
materials, supplies, fuel, energy and goods in excess of reasonable
consumption.
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Particularly the main
norm of the principal products of the enterprises, they shall inform the tax
authorities under direct management within the first 03 months of the year or
03 months after the start of production and business (for newly established
enterprises or where the enterprises supplement the production of new products
but these products are subject to notification of the norms but not being
announced yet). The list of major norms of the principal products of enterprises
shall be decided by the enterprises.
In case
the enterprises during the time of production and business make adjustment and
supplement the consumption norms of the raw materials and have informed the tax
agencies, they must also notify the tax agency under direct management. The
deadline for reporting to tax authorities to adjust and supplement the consumption
rate is the time limit for submission of the finalization declaration of
enterprise income tax in accordance with regulations of the settlement year. In
case some raw materials, supplies, fuel and goods the State has issued the
consumption rate shall comply with the norms issued by the State. In case the
enterprises fail to notify the tax agency within the time limit prescribed, the
tax agency during the inspection and checking shall have the right to determine
the cost of raw materials, supplies and goods. The determination of the cost of
raw materials, supplies and goods shall be based on the law on tax
administration.
2.4. The expenses of the
enterprise to purchase goods and services without invoices are permitted to
make a list of purchasing goods and services purchased (Form No. 01/TNDN
enclosed with this Circular) but do not make lists attached to the payment
vouchers for vendors, providing services in the cases of purchase of goods as
agricultural products, forest products and aqua products of the producers and
fish catchers directly selling, buying handicrafts made of jute , rush,
bamboo, leaves, rattan, straw, coconut husk, coconut shell or raw materials
from agricultural products of handicraft producers selling without carrying on
business, buying land, rocks, sand and gravel of people who extract and make
direct sales; buying waste materials of people who directly collect; buying the
furniture and property of the households and individuals that have used and
directly sell and a number of purchasing services by individuals who do not
carry on business.
List of purchasing
goods or services that the legal representatives or authorized persons of
enterprises shall sign and take responsibility before law for the accuracy and
truthfulness. If the purchase price of goods and services on the list is higher
than the market price at the time of goods purchase, the tax agencies shall
base on market price at the time of purchase, or services of the same or
similar type on the market to determine the rate of price to re-calculate the
deductible expenses when determining taxable income.
2.5. Payment of salaries,
wages and bonuses to employees in one of the following cases:
a) Payment of
salaries, wages and other amounts payable to employees that the enterprises
have accounted in business expenses in the period but have not made payment or
without payment vouchers as prescribed by law.
b) The
bonus, premium of life insurance for employees are not specified the conditions
for entitlement and rate of entitlement in one of the following dossiers: Labor
Contract; collective labor agreement; Regulation on finance of company,
corporation, group; reward regulations regulated by the Chairman of the Board
of Directors, General Director and Director under the financial regulation of
the company and corporation.
- Where
the labor contract of between the enterprise and a foreign laborer specifies
that the tuition fee for that foreigner’s children studying the compulsory
education program in Vietnam is paid by the enterprise and included in the
salary or wage, such tuition fee shall be included in deductible expenses when
calculating taxable income, provided this expenditure comes with adequate
invoices, proof of payment, and does not contravene regulations of the law on salaries
and wages.
- Where
the labor contract of the enterprise signed with the laborers have been
recorded the expenses of house rent paid by enterprises to employees, this
payment has the nature of salaries and wages, not contrary to the provisions of
law on salaries, wages with adequate invoices and vouchers, shall be included
in deductible expenses when determining taxable income.
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The
performance salary fund is the total salary actually paid of that settlement
year to the last deadline to submit dossier of settlement as prescribed
(excluding the amounts set aside for salary provision fund of the previous year
spent in tax settlement year).
The salary
provision must ensure after setting up, the enterprises shall not suffer losses
if the enterprises suffer losses, they are not permitted for fully deduction of
17%.
Where the
previous year the enterprises set aside salary provision fund, but by December
31 of the following year, the enterprises have not used or not used up the
salary provision fund, the enterprise must write off the cost of the following
year.
Example 7: When
submitting the 2011 tax settlement dossier, enterprise has set aside salary
provision fund of 10 billion VND. By December 31, 2012, enterprise A spends the
amount from the salary provision fund of the year 2011 including 7 billion VND.
enterprise A must record reduction in salary expense of the next year (2012)
including 3 billion VND (10 billion minus 3 billion). When preparing the
settlement dossier of the year 2012, if enterprise A has a need of deduction,
it shall continue to set aside deduction of salary provision fund as
prescribed.
d) Salaries and wages
of owners of private enterprises, limited liability company with a member
(employed by an individual) remuneration paid to the founding members, members
of the Board of members, Board of Directors who are not directly involved in
directing the production and business.
2.6. The expenses of
outfits in kind to the laborers without any invoices and vouchers; the expense
of outfits in cash, in kind to the laborers exceed 05 (five) million VND / person
/ year.
Where enterprises
have expenses of outfits both in cash and in kind to the laborers, the maximum
expenditure level for calculating the deductible expenses when determining
taxable income not exceeding 05 (five) million / person / year
For business lines
with particular characteristics, this expense is done in conformity with
specific regulations of the Ministry of Finance.
2.7. Expenses for bonus
of initiatives and renovation but the enterprises do not have specific
regulations on bonus of initiatives and renovation without the acceptance
Council of the initiatives and improvements.
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Traveling expenses
and accommodation for laborers to go on business if there are adequate legal
invoices and vouchers as prescribed shall be included in deductible expenses
when determining taxable income. Where enterprises have expenses of traveling
and accommodation for the laborers, these expenses shall be included in
deductible expenses of the expense of traveling and accommodation in accordance
with regulations of the Ministry of Finance for civil servants, State
employees.
Where enterprises
have purchased air tickets through e-commerce website for the laborers to go on
business for service of production and business activities of enterprises, the
documents as the basis for calculating the deductible expenses as electronic
airfare, boarding pass and documents of payment of enterprises having
individual participating in transport journey.
2.9. The following
expenditures are not in accordance with subjects, purposes or exceed the
specified level of expenditures.
The additional
expenditures for female laborers are included in deductible expenses including:
- Expenses for
vocational re-training for female laborers in case the old jobs are no longer
suitable and must switch to other jobs in the development planning of
enterprises.
This expenditure
includes: tuition fees (if any) plus the difference in salary grades (
guarantee of 100% salary to the trainees).
- Expenses of
salaries and allowances (if any) for teachers in kindergarten nursery school
organized and managed by the enterprises.
- Expenses of health
examination in the year as professional, chronic or gynecological diseases for
female laborers.
- Expenditure of
bonus for female laborers after the first or second time birth.
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b) The additional
expenses for ethnic minorities shall be included in deductible expenses
including school fees (if any) plus the difference in salary grades ( guarantee
of 100% salary to the trainees), allowance of housing, social insurance, health
insurance for ethnic minorities in the case having not been supported by State
regulations.
2.10. The deduction for
payment of compulsory insurance funds for laborers exceeds the prescribed
level; the deduction for payment of trade union for laborers exceeds the
prescribed level.
2.11. The deduction for
provision fund of unemployment allowance (except for the case enterprises not
subject to mandatory participation of unemployment insurance as prescribed by
law are ,allowed to set aside a provision fund of unemployment allowance), the
expenses of unemployment allowance paid to the laborers are not in compliance
with current regulations.
2.12. Expenditure for
contribution to form the source of management expense for superior.
Expenditure
for contribution to the funds of the Association (these Associations are
established under the provisions of law) is in excess of limits set by the
Association.
2.13. Expense of
electricity, water for water and electricity contracts by the owner leasing the
production and business location directly sign with units providing electricity
and water without adequate documents in one of the following cases :
a) Where enterprises
leasing the production and business location directly make payment of
electricity, water to the power and water supplier without any list (Form No.
02/TNDN issued with this Circular) together with the bills of electricity and
water and the lease contract of production and business location.
b) Where enterprises
leasing the production and business location make payment of electricity and
water to the owner leasing the production and business location without any
list (Form No. 02/TNDN issued with this Circular) enclosed with the bills of
electricity and water paid to the lessor consistent with the amount of
electricity and water consumption and the and lease contract of production and
business location.
2.14. The expense of fixed
assets leasing in excess of the rate allocated by the number of years that the
lessee pays in advance.
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For expense of repair
of the leased fixed assets, in the assets lease contract has defined that the
lessee is responsible for the repair of the assets during the leasing period,
the expenses of repair of the leased fixed assets shall be permitted to account
in expense or amortize to the expense but the maximum time shall not exceed 03
years.
Where enterprises
have expenses for assets other than those fixed assets: expenditure on the
purchase and use of technical material, patents, technology transfer licenses,
trademarks, business advantage ... such expenses shall be amortized into
business expenses but not more than 03 years.
2.15. The expense of loan
interest payment for production and business of the objects that are not credit
institutions or economic organizations in excess of 150% of basic interest rate
announced by the State Bank of Vietnam at the time of borrowing.
2.16. The payment of loan
interest for capital contribution or payment of loan interest corresponding to
the deficit of registered charter capital under the capital contribution
progress stated in the charter of the enterprise even where the enterprises
have come into operation and business.
2.17. Setting aside and
use of provisions for decline in inventory, provision for losses in financial
investment, provision for receivable bad debts and provision for warranty of
products, goods, installation works not in accordance with the guidelines of
the Ministry of Finance on the provision.
2.18. Periodic accrued
expenses that are not used or completely used at the end of the period.
The accrued expenses
include: accrued expenses on the periodic major repairs of fixed assets,
accrued expenses on the activities of which the revenue has been recorded, but
the contractual obligation is not completely fulfilled (even the enterprise
leases its assets for many years and collect money in advance, and record it in
the revenue of the collecting year) and other accrued expenses.
If the income for
calculating enterprise income tax is recorded but the expenses do not
completely arise, the enterprise may accure the expenses on deductible expenses
corresponding to the recorded revenue when calculating taxable income. When the
contract expires, the enterprise must calculate the exact actual expenses based
on the valid invoices to increase (if the actual amount is bigger than the
accrued expense) or decrease (if the actual amount is smaller than the accrued
expense) the expense in the tax period when the contract expires.
The enterprise may
accrue on the expense on periodic repair of fixed assets according to the
estimate to annual expense.. If the actual expense is bigger than the accrued
amount under the estimate, the enterprise may add the difference to deductible
expenses.
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The expenses of
advertising, marketing, promotion, brokerage commissions are controlled as
above mentioned excluding:
- Commissions of
insurance brokerage in accordance with regulations of the law on insurance
business; commissions paid to agents selling goods and services at proper
price.
- Commissions paid to
distributors of multi-level sales company. For organizations receiving the
commission shall declare to include in the taxable income, for individuals
receiving commissions must be deducted from personal income tax before paying
incomes.
- Expenses incurred
in the country or abroad (if any) such as expenses of market research:
exploration, survey, interviews, collection, analysis and evaluation of
information; expenses of development and support of market research, expenses
of hiring consultants to conduct the research, development and market research
support; expenses of display and introduction of products and organization of
fairs, commercial exhibition: expense of opening room or booth, introduction of
products, expenses for space lease for display and introduction of products,
expenses of materials and support tools for the display and introduction of
products, expenses of transportation of products for display and introduction.
- Expenses of
donation and offer of newspaper to persons who have contributed to the
revolution, war invalids, sick soldiers and soldiers in the islands and remote
areas and special difficulty-stricken areas.
Limits of deductible
expenses shall not exceed 15% in the first 3 years not applicable to
newly-established enterprises by the consolidation, division, merger, merger,
transformation of form of enterprise and change of ownership.
2.20. Loss due to exchange
rate differences due to revaluation of monetary items denominated in foreign
currencies at the end of tax period (except for loss due to exchange rate
differences due to revaluation of liabilities with foreign currency origin at
the end of tax period).
Foreign
exchange differences arising during the process of
investment in capital construction to form the fixed assets implemented
under the guidance in Circular of the Ministry of Finance on handling the
differences in foreign exchange rates of enterprises.
2.21. Expenses for
education funding not in accordance with subjects specified in Item a of this
Point or there is no record to identify the funding mentioned in Item b below:
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b) Dossier for
determination of the education financing includes: Record of financing
certification signed by the representatives of the business establishments as
sponsors, the representative of legal educational establishments as financed
units, pupils and students, students (or agencies and organizations with
function of fund raising) recipient (Form No. 03/TNDN issued with this
Circular), together with invoices and vouchers of goods purchase (if in-kind
funding) or spending documents (if financed with money).
2.22. Expenses for health
funding not in accordance with subjects specified in Item a of this Point or
there is no record to identify the funding mentioned in Item b below:
a) Funding for health
care including funding for health facilities established under the laws of
health but this funding is not for capital contribution, purchase of shares in
those hospitals, health centers; funding for medical equipment, medical
instruments and medicines; funding for regular activities of hospitals, health
centers; financing in cash to person suffering from diseases through an agency,
organization with function of fund raising as prescribed by law.
b) Dossier to
identify health funding includes: Record of financing certification signed by
the representatives of the business establishments as sponsors, the
representative of financed units (or agencies and organizations with function
of fund raising) under Form No. 04/TNDN issued with this Circular together with
invoices and vouchers of goods purchase (if in-kind funding) or spending
documents (if financed with money).
2.23. Expenses of funding
for remedy of natural disasters not in accordance with subjects specified in
Item a of this Point or there is no record to identify the funding mentioned in
Item b below:
a) Funding for
natural disaster remedy includes funding in cash or in kind to overcome
consequences of natural disasters directly to organizations established and operating
under the provisions of the law and individuals affected by natural disasters
through an agency or organization having function of fund raising as prescribed
by law.
b) Dossier to
identify the funding for natural disaster remedy includes: Record of financing
certification signed by the representatives of the business establishments as
sponsors, the representative of financed units (or agencies and organizations
with function of fund raising) under Form No. 05/TNDN issued with this Circular
together with invoices and vouchers of goods purchase (if in-kind funding) or
spending documents (if financed with money).
2.24. Expense of financing
for building houses of gratitude for the poor not in accordance with subjects
specified in Item a of this Point or there is no record to identify the funding
mentioned in Item b below:
a) Objects receiving
financing are poor households as prescribed by the Prime Minister. Form of
financing: financed with cash or in kind to build houses of gratitude for the
poor households directly or through an agency or organization having function
of fund raising as prescribed by law.
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2.25. The expenses of
business management allocated by company abroad to permanent establishments in
Vietnam in excess of the expenses calculated by the following formula:
Expenses of business management allocated by foreign
company to permanent establishment in Vietnam in tax period
=
Taxable revenue of permanent establishment in Vietnam
X
Total expenses of business management of foreign
company in tax period
Total revenue of foreign company including revenues of
permanent establishments in other countries in tax period
The expenses of
business management of the foreign company allocated to permanent establishment
in Vietnam are only calculated since the permanent establishment in Vietnam is established.
The ground to
determine expenses and revenue of the foreign company is the financial
statement of the company audited by an independent auditing firm in which
clearly reflecting the company's revenue abroad, the management expenses of the
foreign company, the management expenses of the foreign company allocated to
the permanent establishment in Vietnam.
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2.26. The expenses are
offset by other funding sources; the expenses are paid from the funds for scientific
and technological development of enterprises.
2.27. Expenses not corresponding to taxable
revenue.
Where enterprises
have actual expense for the activities of HIV / AIDS prevention and fighting at
the workplace under the guidance of the Ministry of Health including: Expenses
of training official on HIV / AIDS prevention and fighting of the enterprise,
expenses of the media organization on in HIV / AIDS prevention and fighting for
the enterprise’s laborers, expenses of consulting, examination and testing for
HIV, expenses of supporting people with HIV infected who are enterprise’s
laborers. These expenses shall be included in the deductible expenses in
determining the taxable income.
2.28. The expenses of the
activities of insurance business, lottery business, securities business and a
number of specific business activities are not complied with guidelines of the
Ministry of Finance.
2.29. Penalties due to
administrative violations include: traffic violations, violations of
regulations on business registration, violations of regulations on accounting
and statistics, violations of the tax law and penalties for other administrative
violations as prescribed by law.
2.30. Expenses for investment in capital construction in the investment
phase to form the fixed assets; expenses in support of local authority, unions,
social organizations, charity except for expense of funding on education,
health, remedy of natural disaster and building houses of gratitude for the
poor mentioned at point 2.21, 2:22, 2:23, 2:24 clause 2 of this article, the
expenses of buying golf membership cards and golf playing.
Upon starting the
business and production activities, the enterprise has not generated revenue
but expenses regularly incurred to maintain the enterprise’s business
activities (other than the expenditures for construction to form the fixed
assets). If such expenses meet the conditions as prescribed, they shall be
included in the deductible expenses in determining taxable income.
2.31. Input value added
tax has been deducted or refunded, the input value added of fixed assets are
car with 9 seats or less in excess of the deductible rate specified in the
legal documents on value added tax, enterprise income tax and personal income
tax.
- Personal income tax
not included in deductible expenses when determining taxable income is the
amount of tax deducted by enterprises on the income of the taxpayers to pay
into the state budget. Where enterprises sign the labor contracts stipulating
the salary or wages paid to laborers does not include the personal income tax,
the personal income tax the enterprises pay on behalf of is the expense of
salary included in deductible expenses upon determining taxable income.
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Article
7. Other income
Other income is
taxable income in the tax period but this income is not under the lines and
sectors of business stated in business registration of enterprises. Other
income includes the following income:
1. Income from
alienation of capital and securities under the guidance in Chapter IV of this
Circular.
2. Income from
alienation of immovable property under the guidance in Chapter V of this
Circular.
3. Incomes from project
transfer (not attached to the transfer of the right to use or to rent land);
incomes from the transfer of the right to execute the project, the right to
carry out mineral resources exploration, extraction and processing as
prescribed by law.
4. Income from ownership
or use of assets, including proceeds from the copyright in any form of payment
to the ownership, right to use property; intellectual property right, income
from transfer of technology as prescribed by law. Property leasing in any form.
Income from intellectual
property right, technology transfer determined by the total amount obtained
minus (-) the prime cost or the cost to create the intellectual property rights
and technology transferred, minus (-) the cost of maintaining, upgrading and
developing intellectual property rights, technology transfer and other
deductible expenses.
Income from property
lease is determined by the revenue from leasing activities minus (-) expenses:
depreciation, maintenance, repair and maintenance of assets, the expense of property
lease for re-lease (if any) and other deductible expenses related to property
leasing.
5. Income from transfer
of assets and liquidation of assets (excluding immovable property), and other
valuable papers. This income is determined by (=) revenue generated by the
transfer of assets and liquidation of assets minus (-) the remaining value of
the asset transferred or liquidated recorded on accounting books at the time
transfer or liquidation and deductible expenses related to the transfer or
liquidation of assets.
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- In case
the income from interest on deposit and loan incurred higher than loan interest
payments as prescribed, after offset, the remaining difference shall be
included in other income when determining the taxable income.
- For
incomes from interest on deposits and loans incurred lower than the loan
interest payments as prescribed, after offset, the remaining difference shall
be deducted from income of production and business when determining the taxable
income.
7. Income from
activities from the sale of foreign currency: the sum of the proceeds from the
sale of foreign currency minus (-) total purchase price of the amount of
foreign currency sold.
8. Income from exchange
rate difference shall be defined as follows:
In tax
year, the enterprise has exchange rate difference arising in the period and
exchange rate differences from revaluation of payable liabilities denominated
in foreign currencies at the end of the fiscal year, then:
- The
exchange rate difference arising in the period directly related to revenue and
expense of the main production and business activities of enterprises shall be
included in the expenses or income of the main production and business
activities of enterprises. The exchange rate differences arising in the period
are not directly related to the revenue and expense of the main production and
business activities of enterprises. If losses arise, the exchange rate difference
shall be included in expense of the main production and business activities. If
interest arising, the exchange rate difference shall be included in other
income.
- Interest
on exchange rate difference from revaluation of liabilities payable in foreign
currencies at the end of the fiscal year are offset such losses on exchange
rate differences due to revaluation of liabilities payable in foreign
currencies at the end of the fiscal year. After offset, if there is interest on
exchange rate difference, it shall be included in other income, if there is
loss on exchange rate difference, it shall be included in expense of the main
production and business activities when determining the taxable income.
The
exchange rate differences above mentioned do not include the exchange rate
differences from revaluation of the year-end balance as cash, deposits, and
cash in transit, debts receivable denominated in foreign currencies.
9. Reversal of
reserves (excluding reversal of provision for devaluation of stocks, provision
for losses in financial investment, provision for bad debts, reversal of
provision for warranty of products and goods set aside but the time for setting
aside is over without use or not using up.
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11. Payables debt of unknown creditor.
12. Income from omitted
business and production activities of previous years now discovered
13. Where the
enterprises with revenues from fines and compensation from the breach of
contract of partners incurred higher than the expenses of fines and
compensation due to breach of contract (these fines are not under the fines on
administrative violations in accordance with the law on handling of
administrative violations), after clearing, the remaining difference shall be
included in other income.
Where the enterprises
with revenues from fines and compensation from the breach of contract of
partners incurred lower than the expenses of fines and compensation due to
breach of contract (these fines are not under the fines on administrative
violations in accordance with the law on handling of administrative
violations), after clearing, the remaining difference shall be included in
other income. Where the unit does not generate other income, it shall be
deducted to the income of production and business activities.
14. Increase difference
from revaluation of assets as prescribed by law for capital contribution,
transfer of assets upon division, separation, consolidation, merger,
transformation of type of enterprises shall be defined as follows:
Increase difference
from revaluation of assets (excluding land use right) is the difference between
the value of re-evaluation with the residual value of assets recorded on
accounting books and shall be included in other income once in the tax period
when determining the enterprise income tax at the enterprise with assets to be
revaluated.
Increase difference
from revaluation of land use right value for transfer upon division,
separation, consolidation, merger, transformation of type of enterprises, for contribute
capital to investment projects in construction of house and infrastructure to
sell and include once in the other income in the tax period when determining
enterprise income tax at the enterprise having the right to use land
re-evaluated.
For increase
differences from revaluation of land use right value to contribute capital to
enterprises to carry out the production and business shall be gradually
included into other income of enterprises having the right to use land
re-evaluated in a maximum time than 10 years, starting from the year the land
use right value is contributed as capital. The enterprise has to announce the
number of years it has allocated to other income when submitting dossier of tax
settlement declaration of enterprise income of the year starting the declaration
of this income (year to re-evaluate the land use right value contributed
capital). In case if the party contributing capital carries out the transfer of
contributed capital prior to the 10 year period, the income from the activity
of contributed capital transfer is equal to the land use right value to be
included in the income of real estate business in the period.
Difference from
revaluation of land use right value include: For long-term land use rights is
the difference between value of revaluation and value of land use right
recorded on the accounting books. For the term land use right is the difference
between value of revaluation and unallocated remaining value of the land use
rights.
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15. Gifts, gifts in cash
and in kind income received in cash or in kind from marketing assistance, cost
assistance, payment discount, promotional bonus and other allowances.
16. The compensation for
fixed assets on the land and relocation assistance money after deducting the
related expenses such as relocation expenses (transportation and installation
expenses), the residual value of fixed assets and other costs (if any). For
compensation of fixed assets on the land and relocation assistance money of
enterprise relocating as planned by the competent State authorities but the
value of assistance and compensation after deducting related expenses (if any),
the rest shall be used by the enterprise in accordance with relevant law..
17. The earnings related
to the consumption of goods and services not included in revenue as quickly
ship free bonus, bonus food service industry, hotel, after subtracting the
costs to generate such income.
18. Income from
consumption of waste materials and waste products after deducting the expenses
of recovery and consumption shall be defined as follows:
- Where the
enterprise has generated income arising from the sale of waste material and
product formed during the production process of the products entitled to enjoy enterprise
income tax incentives then this income shall enjoy the enterprise income tax
incentives.
- Where the
enterprise has generated income arising from the sale of waste material and
product formed during the production process of the products entitled to enjoy enterprise
income tax incentives then this income shall be included in the other income
and not applied the enterprise income tax incentives.
19. Import and export tax
refund of goods actually exported and imported arising in the settlement year
of enterprise income tax shall be deducted. In case the import and export tax
refund of goods actually exported and imported has arisen in previous
settlement years of enterprise income tax, it shall be included in other income
of the settlement year. If this income is directly related to the business and
production sector entitled to enjoy the enterprise income tax incentives, then
it shall be entitled to enjoy the enterprise income tax incentives. If this
income is not directly related to the business and production sector entitled
to enjoy the enterprise income tax incentives, then it shall not be applied the
enterprise income tax incentives.
20. Incomes from capital
contribution for joint stock, local economic joint venture and association divided
from income before payment of corporate income tax.
21. Income earned from
activities of production and business of goods and services abroad.
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The tax agency is
entitled to determine taxable income from production and business activities
abroad of Vietnamese enterprises investing abroad for cases of violations of
regulations on declaration and payment of tax.
- Where the income
from investment project abroad incurred enterprise income tax (or a tax similar
in nature to enterprise income tax) abroad, upon calculation of the enterprise
income tax, it must be paid in Vietnam, Vietnam enterprises investing abroad
shall be deducted the tax paid abroad or paid on their behalf by their partners
of the country receiving investment have been partners receive payment in lieu
of investment (including tax on dividends), but the tax deducted shall not
exceed the income tax calculated under the provisions of the Law on Enterprise
Income tax of Vietnam. The income tax Vietnamese enterprises invest abroad
exempted or reduced for the profit earned from investment projects abroad under
the laws of the country investment enterprises shall also be deducted when
determining the income tax the enterprise must pay in Vietnam.
Dossier attached upon
declaration and payment of tax of Vietnamese enterprises investing abroad for
the income from investment projects abroad including:
+ Document of
business on the distribution of profits of investment projects abroad.
+ Financial
statements of the enterprises certified by independent audit organizations
+ Declaration of
enterprise income tax under investment projects abroad (copy certified by the
authorized representative of the investment projects abroad);
+ Record of tax
settlement of enterprise (if any);
+ Confirmation of tax
paid abroad or documents evidencing the tax paid abroad.
- In case the
investment projects abroad have not yet generated taxable income (or losses
arising), upon declaring the annual settlement of enterprise income tax,
Vietnamese enterprises investing abroad only pay the financial statements
certified by independent auditing agency or competent authorities of the
country where the enterprises are investing and the Declaration of income tax
of the investment projects (copy certified by the authorized representative of
the investment projects abroad and enterprise’s seal); The loss generated from
investment projects abroad are not deducted from the income generated of
domestic enterprises upon calculating enterprise income tax.
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For income from
business and production activities of the investment projects in countries
which have signed agreements on avoidance of double taxation with Vietnam, the Vietnamese enterprises investing abroad shall declare and pay tax under the
provisions of the Agreement.
22. Incomes received in
cash or in kind from funding sources other than the funding mentioned in Clause
7 of Article 8.
23. Other income as
prescribed by the law.
Article
8. Incomes eligible for tax exemption
1. Incomes from
farming, breeding, raising aquatic products of organizations established under
the Law on Cooperatives.
2. Incomes from
technical services provided for agriculture including: incomes from services of
irrigation, plowing, raking soil, dredging canals, services of extermination of
pest for plants and animals, services of harvesting.
3. Incomes from the
performance of scientific research and technology development contracts;
incomes from the sale of trial-manufactured products, incomes from the sale of
products using technologies newly applied in Vietnam, including incomes from
the transfer of Certified Emissions Reductions (CERs).
The maximum tax exemption period is one (01) year as from the commencement date
of the scientific research and technology development contracts, the
commencement date of the trial-manufacture, the commencement date of the
application of new technology in Vietnam to manufacture; the issuance date of
the CERs.
a) Incomes from the
performance of scientific research and technology development contracts are
eligible for tax exemption if the following conditions are specified:
- Having scientific
research registration certificates;
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b) Incomes from the
sale of products using technologies newly applied to Vietnam are eligible for
tax exemption when the new technologies are certified by competent agencies in
charge of State management of science.
c) Incomes from the
transfer of CERs are eligible for tax exemption if the CERs being sold or
transferred are certified by competent agencies in charge of environment.
4. Incomes from the
production and business of enterprises that employ disabled, detoxified people,
HIV sufferers, that make up at least 30% of the average number of workers in a
year of the enterprise.
The incomes eligible
for tax exemption specified in this Clause do not include other incomes
specified in Article 7 of this Circular.
Enterprises eligible
for tax exemption as prescribed in this Clause are enterprises of which the
average number of workers in a year is 20 people or more, excluding enterprises
engaged in financial or real estate business.
Enterprises earning
incomes eligible for tax exemption as prescribed in this Clause must satisfy
the following conditions:
a) The enterprises
employing disabled people (including war invalids) must obtain the
certification from competent Health agencies on the number of disabled
employees.
b) The enterprises
employing detoxified people must obtain the detoxification certificates from
detoxification centers, or certification from relevant competent agencies.
c) The enterprises
employing HIV sufferers must obtain the certification from competent Health
agencies on the number of HIV-positive employees.
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The incomes eligible
for tax exemption as prescribed in this Clause must satisfy the following
conditions:
- The vocational
training facility is established and operated under the legal documents on
vocational training.
- Having the list of
students being ethnic people, the disabled, impoverished children, offenders,
detoxifying people, detoxified people, and HIV/AIDS sufferers.
6. The incomes from the
contribution, share purchase, joint venture and economic cooperation with
domestic enterprises after the contributed party, the share issuer, or one the
joint venture party has paid the enterprise income tax as prescribed in the Law
on Enterprise income tax, including the case when the contributed party, the
share issuer, or the joint venture party is eligible for tax exemption and tax
reduction.
Example 9: Enterprise B is contributed by enterprise A. The pre-tax incomes corresponding to the
contribution from enterprise A to enterprise B is 100 million VND.
- In case enterprise
B is not eligible for enterprise income tax incentives, and enterprise B has
completely paid the enterprise income tax, including the incomes earned by
enterprise A, then the incomes earned by enterprise A from the contribution is
75 million VND [(100 million – (100 million x 25%)]. Enterprise A is eligible
for enterprise income tax exemption on this 75 million VND.
- In case enterprise
B is eligible for 50% reduction in enterprise income tax amount payable, and
enterprise B has completely paid the enterprise income tax, including the
incomes earned by enterprise A according to the reduced income tax amount, then
the incomes earned by enterprise A from the contribution is 87.5 million VND
[(100 million – (100 million x 25% x 50%)]. Enterprise A is eligible for enterprise
income tax exemption on this 87.5 million VND.
- In case enterprise
B is eligible for enterprise income tax exemption, then the incomes earned by
enterprise A from the contribution is 100 million VND. Enterprise A is eligible
for enterprise income tax exemption on this 75 million VND.
7. The sponsorship
received to be used for educational, scientific, cultural, artistic,
charitable, humanitarian activities, and other social activities in Vietnam.
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The sponsorship
receiver prescribed in this Clause must be established and operated in
compliance with laws, comply with law provisions on accounting and statistics.
Article
9. Loss determination and transfer.
1.
The
loss arising in a tax period is the negative difference of taxable income.
2. The enterprise that
suffers losses after the tax settlement must continuously transfer all the
losses to the taxable income of the succeeding years. The continuous loss
transfer period must not exceed 5 years as from the year succeeding the
loss-making year.
The
enterprise shall temporarily transfer the loss to the taxable income of the
quarters after making the tentative tax declaration and officially transfer the
loss to the succeeding year after making the annual tax settlement declaration.
Example
10: In 2011, the enterprise A makes a loss of 10 billion VND. In 2012,
enterprise A earns a taxable income being 12 billion VND. All the loss of 10
billion in 2011 must be transferred to the taxable income in 2012.
Example
11: In 2011, the enterprise B make a loss of 20 billion VND. In 2012,
enterprise B earns a taxable income being 15 billion VND, then:
+
Enterprise B must transfer all the loss of 15 billion VND to the taxable income
in 2012;
+ The
remaining loss of 5 billion, enterprise B must monitor and continuously
transfer it to the succeeding years within 5 years as from the year succeeding
the loss-making year.
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- The enterprises
shall independently calculate the loss deducted from taxable incomes according
the above principle. In case other losses keep arising while the previous loss
is being transferred, the newly arising losses (excluding the loss transferred
from the previous period) shall be completely transferred within 5 consecutive
succeeding years.
In case the competent
agency discover that the loss transferred by the enterprise is different from
the loss determined by the enterprise while carrying out enterprise income tax
inspection, the loss shall be transferred under the conclusion from the
inspection agencies, ensuring that the loss is completely and continuously
transferred within 5 years as from the year succeeding the loss-making year as
prescribed.
After 5 years as from
the loss-making year, the loss not yet transferred shall not be transferred to
the incomes in the succeeding years.
3. Enterprises
converting the enterprise forms, ownership forms (including handing over or
selling enterprises to the State), or divide, split, merge, consolidate, or
dissolve their enterprises must carry out tax settlement with tax authorities
when obtaining the decisions on converting the enterprise forms, ownership
forms, declaring bankruptcy, dividing, separating, consolidating, or dissolving
their enterprises from competent agencies. The loss of an enterprise
arising before converting, merging, or consolidating must be closely monitored
in the loss-making year, and shall be offset against the taxable income in the
same year after converting, merging, or consolidating, or shall continue to be
transferred to the taxable incomes of the succeeding years after converting,
merging, or consolidating in order to ensure that the loss is not transferred
for more than 5 consecutive years as from the year succeeding the loss-making
year.
Article
10. Establishing scientific and technological development funds of enterprises
1. Enterprises
established and operated under Vietnam’s laws are allowed to extract up to 10%
of the annual chargeable income before calculating enterprise income tax to
establish the Scientific and technological development fund of the enterprise.
Enterprises shall determine the amount of the Scientific and technological
development fund as prescribed before calculating enterprise income tax
Enterprises that establish scientific and technological development funds must
make the Report on the establishment and use of scientific and technological development
funds, and declare the rate of extraction in the enterprise income tax
settlement declaration. The report on the use of scientific and technological
development funds must be submitted together with the enterprise income tax
settlement declaration.
2. Within 5 years after
extracting, if the scientific and technological development fund is not used or
improperly used, or less than 70% thereof is used, the enterprise must pay the
enterprise income tax on the income used to establish the fund that is not used
of improperly used, and the on profit generated from such enterprise income tax
amount.
The money improperly
used must not be included in the total amount used for scientific and
technological development.
- The enterprise
income tax rate for calculating the tax amount reclaimed is the tax rate
applicable to the enterprise during the establishment of the fund.
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3. The scientific and
technological development funds of enterprises are only used for investment in
scientific research and technology development of enterprises in Vietnam. The expenses from the scientific and technological development fund must have
valid invoices and receipts as prescribed by law.
4. Enterprises must not
include the expenses from Scientific and technological development fund of the
enterprise in the production and business code when calculating taxable income
in the tax period. The scientific and technological development funds of
enterprises are only used for investment in scientific research and technology
development of enterprises in Vietnam.
5. If an enterprise
converts its form of ownership, or merges, consolidates, the enterprise newly
established from such conversion, merger, or consolidation shall inherit and
bear responsibility for the management and use of their scientific and technological
development fund before converting, merging, or consolidating.
If the scientific and
technological development fund of the merged or consolidated enterprise has not
been incompletely use, the enterprise newly established from such merger or
consolidation shall inherit and bear responsibility for the management and use
of their scientific and technological development fund before merging, or
consolidating. The distribution of scientific and technological development
funds are decided by enterprises and registered at the tax authorities.
Article
11. Enterprise income tax rates
1. The enterprise
income tax rate is 25%, except for the case prescribed in Clause 2 of this
Article and other cases to which the preferential tax rates apply.
2. The enterprise income
tax rates on petroleum exploration and extraction in Vietnam is from 32% - 50%.
Depending on the extraction positions, conditions and the petroleum reserves,
the enterprises planning to carry out petroleum exploration and extraction
shall send the investment project dossier to the Ministry of Finance for
submitting to the Prime Minister for decisions on the specific tax rate on each
project and each enterprise.
The enterprise income
tax rate on the exploration and extraction of rare and valuable resources
(except for petroleum) is 50%; In case 70% or more of the rare and valuable
resources mine lies in localities with extreme socio-economic difficulties on
the list of localities enjoying enterprise income tax incentives promulgated
together with the Government's Decree No. 124/2008/ND-CP on December 11, 2008,
the tax rate of 40% shall apply.
The rare and valuable
resources prescribed in this Clause include: platinum, gold, silver, tin,
wolfram, antimony, rare earth.
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TAX PAYMENT PLACES
Article
12. The determination principle
Enterprises shall pay
tax in the locality where their head offices are situated. In case an
enterprise has dependent cost-accounting production facilities (including
processing and assembling facilities) operating in other central-affiliated
cities and provinces than that where the head office is situated, then the tax
shall be paid in the locality where the head office and the production
facilities are situated.
The distribution of
the tax amount payable prescribed in this Clause is not applicable to the
enterprises that have dependent cost-accounting constructions, construction
items or construction facilities.
Article
13. Calculating the tax amount payable
The enterprise income
tax amount payable in central-affiliated cities and provinces where the
dependent cost-accounting production facilities are situated equals (=) the
enterprise income tax amount payable in the period multiplied by (x) the
quotient of the total cost of the dependent cost-accounting production facility
divided by the total cost of the enterprise.
The cost ratio is
calculated by the total cost of the dependent cost-accounting production
facility divided by the total cost of the enterprise. The cost ratio is
calculated as follows:
The cost ratio of the dependent cost-accounting
production facility
=
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The total cost of the enterprise
The cost ratio is
calculated based on the enterprise income tax settlement data of the year that
precedes the tax-calculating year, determined by the enterprise themselves as
the basis for calculating the tax payable, and may be used to declare and pay
enterprise income tax in the succeeding years.
In case an enterprise
has dependent cost-accounting production facilities in various localities, the
data for calculating the cost ratio of the head office and the dependent
cost-accounting production facilities are determined by the enterprise
themselves based on the enterprise income tax settlement data in 2008, and this
ratio shall be used from 2009 and later.
Newly-established
enterprises, or operating enterprises establishing more or reducing the
dependent cost-accounting production facilities in other localities must
calculate the cost ratio of the first tax period themselves. The cost ratios of
the succeeding tax periods shall be calculated using the formula above.
The dependent
cost-accounting units of overall sector accounting enterprises earning incomes
from activities outside their business lines shall pay tax at
central-affiliated cities and provinces where such activities are done.
Chapter
IV
INCOME FROM CAPITAL AND SECURITIES
TRANSFER
Article 14. Income from capital transfer
1.
Scope
of application:
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The enterprise
transferring capital and receiving assets or other financial interests (shares,
fund certificates…) in stead of cash, and earning income, is subject to
enterprise income tax. The value of assets, shares, fund certificates… is
calculated based on their market prices at the receiving time.
2. Basis for tax
calculation:
a) The chargeable
income from capital transfer is calculated as follows:
Chargeable income
=
Transfer price
-
Purchase price of the capital transferred
-
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Including:
- The transfer price
is the total actual value collected by the transferring party under the
transfer contract.
In case the capital
transfer contract requires payment in installments or deferred payment, the
revenue of the transfer contract shall not include the installment interest or
deferred payment interest according to the contractual period.
If the transfer
contract does not specify the transfer price, or the tax authorities have
grounds to conclude that the price is not conformable with the market price,
the tax authorities are entitled to inspect and fix the transfer price. When an
enterprises transfers part of the contributed capital of which the transfer
price is not conformable with the market price, tax authorities are entitled to
set the entire value of the enterprise at the transferring time to recalculate
the transfer price proportionally to the contributed capital transferred.
The transfer price is
fix based on the investigation documents of tax authorities, or on the capital
transfer prices in other cases at the same time, of the same economic
organization, or on the similar transfer contracts at the transferring time. If
the transfer price fixed by the tax authorities is not conformable, is shall be
calculated based on the valuation of competent professional valuation
organizations at the transferring time as prescribed.
- The purchase price
of the capital transferred is calculated in each particular case as follows:
+ If the contributed
capital is transferred to establish new enterprises, the purchase price is the
value of the contributed capital based on the accounting documents at the
transferring time, and certified by the contributing parties or cooperation
parties, or based on the audit results from an independent audit company regarding
100%-capitalized enterprises.
+ If the capital is
repurchased, the purchase price is the capital value at the purchasing time.
The purchase price is calculated based on the contributed capital purchase
contract and the payment receipts.
For enterprises
practicing accounting in foreign currency (approved by the Ministry of Finance)
that transfer the contributed capital in foreign currency, the transfer price
and the purchase price of the capital transferred is calculated in foreign
currency; for enterprises practicing accounting in VND that transfer the
contributed capital in foreign currency, the transfer price must be calculated
in VND according to the average exchange rates of the inter-bank foreign
currency market announced by the State bank of Vietnam at the transferring
time.
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The transfer cost
includes: the expense on the legal procedures necessary for the transfer, the
fees and charges payable when implementing the transfer procedures; the
expenses on the transaction, negotiation and conclusion of the transfer
contract, and other expenses proved in writing.
Example 12. Enterprise A contributes 400 billion VND, including 320 billion VND of the workshop value,
and 80 billion VND in cash to establish a joint venture enterprise that
produces toilet-paper. Then enterprise A transfers such contributed capital to
enterprise B for 550 billion VND. The contributed capital of enterprise A at
the transferring time in the accounting book is 400 billion, the expenses on
the capital transfer is 70 billion VND. The chargeable income from the capital
transfer in this case is 80 billion VND (550 - 400 - 70).
b) The income from
capital transfer is consider other income and shall be included in the taxable
income when calculating enterprise income tax.
c) The tax applicable
to foreign organizations doing business in Vietnam, or earning income in
Vietnam, not operating under the Law on investment, the Law on Enterprise
(hereinafter referred to as foreign contractors) that transfer capital, shall
be declared and paid as follows:
The
organizations and individuals receiving the capital transfer are responsible
for calculating, declaring, deducting and pay the enterprise income tax amount
payable on behalf of the foreign organizations. If the capital transfer
receiver is also a foreign organization not operating under the Law on
investment, the Law on Enterprise, the enterprise established under the
Vietnam’s law invested by such foreign organizations are responsible for
declaring and paying the enterprise income tax amount payable on their behalf.
The tax declaration
and payment are done as prescribed in the legal documents on tax
administration.
Article 15. Income from securities transfer
1. Scope of
application:
Income
from securities transfer of enterprises is the income from the transfer of
shares, bonds, fund certificates and other kinds of securities as prescribed.
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If a joint-stock
company earns income by swapping their shares while dividing, separating,
merging and consolidating, such income is subject to enterprise income tax.
The enterprise
transferring securities and receiving assets or other financial interests
(shares, fund certificates…) in stead of cash, and earning income, is subject
to enterprise income tax. The value of assets, shares, fund certificates… is
calculated based on their sale prices at the receiving time.
2. Basis for tax
calculation:
Chargeable income
from securities transfer in the period is equals (=) the securities sale price
minus (-) the purchase price of the securities transferred, minus (-) the
expenses on the transfer.
- The securities sale
price is calculated as follows:
+ For listed
securities and unlisted securities of public companies registered for trading
at Securities trading centers, the securities sale price is the actual securities
sale price (order matching price of agreed price) according to the announcement
of the Stock Exchange or Securities trading center.
+ For securities of
the companies outside the cases above, the securities sale price is the
transfer price in the transfer contract.
- The securities
purchase price is calculated as follows:
+ For listed
securities and unlisted securities of public companies registered for trading
at Securities trading centers, the securities purchase price is the actual
securities purchase price (order matching price of agreed price) according to
the announcement of the Stock Exchange or Securities trading center.
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+ For securities
outside the cases above, the securities purchase price is the transfer price in
the transfer contract.
- The transfer cost
is the actual expenses on the transfer with valid receipts and invoices.
The transfer cost
includes: the expense on the legal procedures necessary for the transfer, the
fees and charges payable when implementing the transfer procedures; the
expenses on securities depository as prescribed by the State Securities
Commission and the receipts of the securities company; the expenses on the
securities entrusting based on the receipts of the entrusted unit. the expenses
on transaction, negotiation and conclusion of the transfer contract, and other expenses
proved in writing.
The income from
securities transfer is considered other income and shall be included in the
taxable income when calculating enterprise income tax.
Chapter
V
INCOME FROM REAL ESTATE TRANSFER
Article
16. Taxable objects
1. Enterprises subject
to tax on income from real estate transfer include: enterprises from all
economic sectors and business lines earning income from real estate transfer,
real estate companies earning income from land lease.
2. Income from real
estate transfer includes: income from the transfer of the right to use or to
rent land (including the transfer of the project attached to the transfer of
the right to use, rent land as prescribed by law); income from the lease of
land granted by real estate companies as prescribed by law provisions on land,
regardless of the existence of the infrastructures or constructions attached to
the land; income from the transfer of houses and constructions attached to the
land, including the property attached to such houses or constructions if the
value of the property is not separated when transferring, whether or not the
right to use or to rent land is transferred; the income from the transfer of
property attached to land, income from the transfer of the house tenancy or
ownership.
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Article
17. Basis for tax calculation
Basis for calculating
the tax on income from real estate transfer is the chargeable income and the
tax rate
The chargeable income
equals (=) the taxable income minus (-) the loss during the real estate
transfer in the previous years (if any).
1. Taxable income.
The taxable income
from real estate transfer is calculated by the revenue from the real estate
transfer minus the cost price of the real estate and the deductible expenses on
the real estate transfer.
a) Revenue from real
estate transfer.
a.1. The
revenue from real estate transfer is calculated based on the actual prices of
real estate transfer under the real estate sale or transfer contract in
accordance with law (including the surcharges, if any).
If the
price of transferring the right to use land under the real estate sale or
transfer contract is lower than the land price set by People’s Committees of
central-affiliated cities and provinces (hereinafter referred to as provincial
People’s Committees) at the contract-signing time, the land price set by
provincial People’s Committees at the contract-signing time shall apply.
- The time
for calculating the tax-calculation revenue is the time when the seller hands
over the real estate to the buyer, whether or not the buyer has registered
their property ownership, land tenancy at competent State agencies.
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+ If the
enterprise takes deposits from their customers and can calculate the cost
corresponding to the recorded revenue (including the predictive value of the
unfinished construction item estimate proportional to the recorded income), the
enterprise shall declare and pay tentative enterprise income tax according to
the income without cost.
+ If the
enterprise takes deposits from their customers and can calculate the cost
corresponding to the revenue, the enterprise shall declare and pay enterprise
income tax at 1% on the income collected, and such income must not be included
in the income for calculating enterprise income tax in the year.
+ The enterprise
shall recalculate the enterprise income tax amount payable when handing over
the real estate. If the paid tentative enterprise income tax is lower than the
enterprise income tax amount payable, the enterprise must pay the tax arrears
to the State budget. If the paid tentative enterprise income tax is higher than
the enterprise income tax amount payable, the enterprise may deduct the
excessive tax amount from the enterprise income tax amount payable of the
succeeding period, or get back the excessive tax amount.
a.2. The revenue for
calculating taxable income in the following cases is calculated as follows:
- The taxable income
of an enterprise that leases out land is the rent paid by the lessee by
installments according to the lease contract. If the lessee pays in advance for
many years, the revenue for calculating taxable income shall be distributed to
the number of years being paid in advance, or calculated according to the
revenue from lump-sum payment. The selection of revenue from lump-sum payment
is only determined after the enterprise has fulfilled every financial
responsibility with the State, ensuring the duties with the lessee until the
land lease period expires.
If an enterprise
enjoying enterprise income tax incentives selects the method for determining
revenue for calculating taxable income being the total rent paid in advance for
many years by the lessee, the enterprise income tax amount eligible for tax
exemption or tax reduction shall be determined based on the total enterprise
income tax amount of the years being paid in advance divided by (:) the number
of years being paid in advance by the lessee.
If before 2012, an
enterprise leases out land (paid in advance for many years) and has determined
the revenue for tax calculation by distributed to the number of years being
paid in advance, and the land lease period is still unexpired in 2012, such
enterprise may determine the revenue for tax calculation distributed annually
or the revenue from lump-sum payment for the remaining years in the land lease
period.
- When a credit
institutions receives the tenancy value put up as collateral for assuring the
duty fulfillment, if the land tenancy put up as collateral is transferred, the
revenue for calculating taxable income is the transfer price of the land
tenancy agreed by the parties.
- When the land
tenancy being property distrained for judgment enforcement is transferred, the
revenue for calculating taxable income is the transfer price of the land
tenancy agreed by the litigants, or determined by the Valuation council.
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b) Expenses on real
estate transfer
b.1. Principles of
expense calculation:
- The expenses
deducted for calculating the taxable income from real estate transfer in a tax
period must be proportional to the revenue for calculating taxable income.
- If an investment
project is completed and transferred in stages, the general expenses on the
entire project, the expense of each completed stage distributed by the area (m2)
of land transferred to calculate the taxable income from the land transferred,
including: the expenses on internal traffic; tree area, investment in water
supply and drainage; transformer station; compensation for property on land;
compensation, support, and resettlement, expenses on the organization of land
clearance and compensation approved by competent authorities not being deducted
from the land levy and land rent according to the policy on the collection of
land levy and land rent payable to the State budget, and other investment in
land related to the transfer of the right to use or to rent land.
The distribution of
the expenses above is calculated as follows:
The expense distributed to the land transferred
=
The total cost of infrastructure
x
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The total amount of land allocated to the project
(excluding the public land area as prescribed by law provisions on land)
If part of the
project area not being transferred is used for other business activities, the
general expenses above are also distributed to such area for monitoring,
accounting, declaring and paying enterprise income tax on other business
activities.
In case an enterprise
invests in infrastructural construction for many years and only calculate the
value of the infrastructure after all the constructions is done, when
calculating the expenses on real estate transfer regarding the land area
transferred, the enterprise may temporarily distribute the expenses on
investment in infrastructure arising proportionally to the land area
transferred using the formula above, and extract the expenses on infrastructure
corresponding to the recorded revenue when calculating taxable income. After
completing the construction investment, the enterprise shall calculate and
adjust the expenses on infrastructure temporarily distributed and extracted for
the area transferred consistently with the total value of infrastructure. If
the paid tax is higher than the income tax on real estate transfer payable, the
enterprise may deduct the excessive tax amount from the tax amount payable of
the succeeding period, or get back the excessive tax amount; if the tax is not
completely paid, the enterprise must pay the tax arrears as prescribed.
b.2. The deductible
expenses on real estate transfer include:
- The cost price of
the land transferred conformable to the land tenancy origin. In particular:
+ For the land
allocated by the State subject to land levy and land rent, the cost price is
the land levy or land rent paid to the State budget;
+ For the
land tenancy transferred from other organizations and individuals, the cost
price is based on the contract and valid payment receipts when receiving the
right to use or to rent land; If the contract or valid payment receipts are not
available, the cost price shall be calculated based on the price set by
provincial People’s Committees at the time of receiving real estate transfer.
+ For land from
capital contribution, the cost price is the value of the right to use or to
rent land according to the property valuation record when contributing;
+ When an enterprise
swaps the construction for the State-owned land, the cost price is calculated
based on the value of the construction swapped, except otherwise prescribed by
competent State agencies.
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+ When the land of an
enterprise is inherited under civil laws, or given, donated, of which the cost
price is not able to be calculated, is shall be determined based on the prices
of the kinds of land set by provincial People’s Committees based on the Price
bracket table of kinds of land made by the Government at the time of
inheriting, giving, or donating.
+ When the land of an
enterprise is inherited, given, or donated before 1994, the cost price shall be
determined based on the prices of the kinds of land set by provincial People’s
Committees in 1994 based on the Price bracket table of kinds of land in the
Government's Decree No. 87/CP on August 17, 1994.
+ For land put up as
collateral, land being distrained property for judgment enforcement, the cost
price of land is calculated depending on each specific case as guided above.
- The compensation
for damage to land.
- The compensation
for damage to crops.
- The compensation,
support and resettlement and expenses on the organization of compensation,
support and resettlement as prescribed by law.
If the expenses on
compensation, support, resettlement, and the expenses on the organization of
compensation, support, resettlement stated above have no invoice, then make a
List specifying: the names, addresses of the receivers, the compensation and
support amount, their signatures. The list must be certified by the local
authorities where the land is given compensation and support in accordance with
law provisions on compensation, support, and resettlement when the State
withdrawing land.
- The fees and
charges as prescribed by law provisions related to land tenancy grant.
- The expenses on
land renovation and leveling
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- The value of
infrastructure and constructions on the land.
- Other expenses
related to the real estate transferred.
If an enterprise
carries on various business lines, the expenses must be separately calculated.
If the expenses cannot be separately calculated, the general expense shall be
distributed based on the ratio of revenue from real estate transfer to the
total revenue of the enterprise.
The expenses paid by
the State or other capital sources must not be included in the expenses on real
estate transfer.
2. The enterprise income
tax rate on real estate transfer is 25%.
3. Calculating the
enterprise income tax amount payable:
The enterprise income
tax in the tax period on the real estate transfer equals the chargeable income
from real estate transfer multiplied by (x) 25%.
The income from real
estate transfer must be separately determined to declare and pay tax. The preferential
tax rate, the tax exemption or reduction period as prescribed in Chapter VI of
this Circular do not apply to the income from real estate transfer.
If the real estate
transfer makes a loss, such loss must not be offset against the income from
other production and business activities, but shall be transferred to the
taxable income from the real estate transfer in the succeeding years (if any).
The loss transfer period must not be longer than 5 consecutive years as from
the year succeeding the loss-making year.
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4. When a credit
institution receives the real estate value being collateral for assuring the
duty fulfillment, the credit institution must declare and pay tax on the income
from real estate transfer to the State budget when it is allowed to transfer
real estate as prescribed by law. If real estate being collateral is up for
auction, the money collected must be paid as prescribed by the Government’s
provision on collateral of credit institutions, then declare and pay tax as
prescribed. After the amount above are paid, the remaining money shall be
refunded to the organizations that put up their real estate as collateral.
When a credit
institution is allowed to transfer real estate put up as collateral as
prescribed by law to recover their capital, if the cost price of the real
estate is not determined, it shall equal (=) the loan payable under the real
estate collateral contract plus (+) the outstanding loan interest up to the time
of real estate collateral liquidation under the credit contract plus (+) the
expenses arising during the real estate transfer with valid receipts and
invoices.
5. If real estate being
collateral is up for auction by the judgment enforcement agency, the money
collected must comply with the Government’s Decree on distraining and putting
up land tenancy for auction for judgment enforcement. The organization
authorized to hold real estate auctions must declare and deduct the tax on
income from real estate transfer paid to the State budget. Specify the tax declaration and payment for the
collateral sale for judgment enforcement.
When the judgment
enforcement agency transfers the real estate being judgment enforcement
property, if its cost price is not determined, the cost price shall equal (=)
the debt payable under the Court’s judgment plus (+) the expenses arising
during the real estate transfer with valid receipts and invoices.
Chapter
VI
ENTERPRISE INCOME TAX INCENTIVES
Article
18. Conditions and principles for applying enterprise income tax incentives
1. The conditions for
applying enterprise income tax incentives: enterprise income tax incentives are
only applicable to the enterprises following the policies on accounting and
invoices as prescribed, and have registered and paid enterprise income tax as
declared.
2. The principles for
applying enterprise income tax incentives
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During the tax
period, if an enterprise does not separately calculate the income from the
production and business activities eligible for tax incentives and the income
from production and business activities ineligible for tax incentives, the
income from the production and business activities eligible for tax incentive
equals (=) the total chargeable income (excluding other incomes) multiplied by
(x) the ratio (%) of the revenue or deductible expenses of the production and
business activities eligible for tax incentives to the total revenue or the
total deductible expenses of the enterprise in the tax period.
b) Enterprises newly
established from the investment projects eligible for enterprise income tax
incentives are enterprises that apply for business registration for the first
time, excluding the following cases:
b.1. Enterprises
established from the division, separation, merger and consolidation as
prescribed by law.
b.2. Enterprises
established from the enterprise form conversion, ownership conversion
(including the newly-established enterprises that inherit the property, places,
business line… of the old enterprises to carry on the production and business
activities).
b.3.
Newly-established limited liability companies, private enterprises of which the
owners are the former owners of the individual business households and the
business lines are not changed.
b.4. Private
enterprises, partnership companies, limited liability companies, joint-stock
company or cooperatives newly established of which the legal representatives
are the biggest contributors that have participated in the business activities
as legal representatives, partners, or biggest contributors of the enterprises that
have been dissolved within less than 12 months ago as from the time of
dissolving the old enterprises until the new enterprises are established.
c) Investment
projects are the collections of long-term and mid-term capital provision
proposals to carry out the investments as prescribed by law provisions on
investment.
For enterprises newly
established from domestic investment projects of which the capital is under
fifteen (15) billion VND and not in the List of conditional investment
industries, the investment project dossiers are the enterprise registration
certificates.
For enterprises newly
established from domestic investment projects of which the capital is from
fifteen (15) to under three hundred (300) billion VND and not in the List of
conditional investment industries, the investors shall implement the investment
registration procedures using the form of the provincial investment management
agencies.
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4. When an enterprise
newly established from an investment project in the locality enjoying
investment incentives, it is eligible for enterprise income tax incentives
within the investment incentive locality. If its incomes are earned from
production and business activities in both the investment incentive locality
and a non-incentive locality, it must separately calculate the income earned
within the investment incentive locality to enjoy enterprise income tax
incentives.
5. In the same tax
period, if an income is eligible for various preferential enterprise income tax
rates, and various tax exemption or reduction periods, the enterprise may
select the most beneficial enterprise income tax incentive.
6. During the enterprise
income tax incentive period, if an enterprise fails to satisfy one of the
conditions for tax incentives in a tax-calculation year specified in this
Circular, it is not eligible for tax incentives in that tax-calculation year
and must pay enterprise income tax at the rate of 25%.
7. In case in the same
tax period, an enterprise engages in business activities eligible for tax
incentives that make losses, business activities ineligible for tax incentives,
or earns other incomes from business activities (excluding the incomes from
real estate transfer, project transfer (not attached to the transfer of the
right to use or to rent land); incomes from the transfer of the right to
execute the project, the right to carry out mineral resources exploration,
extraction and processing as prescribed by law), the enterprise shall offset
them against the taxable income from the profitable activities selected by the
enterprise.
If an enterprise is
making losses in previous tax period (during the loss transfer period), it must
transfer the loss proportionally to the profitable activities. If an enterprise
fails to separate the loss of each activities, it shall first transfer the loss
to the income from the activities eligible for enterprise income tax
incentives, then transfer the remaining loss (if any) to the income from
activities ineligible for enterprise income tax incentives (excluding the
incomes from real estate transfer, project transfer (not attached to the
transfer of the right to use or to rent land); incomes from the transfer of the
right to execute the project, the right to carry out mineral resources
exploration, extraction and processing as prescribed by law). After
transferring the loss on the above principles, if various business activities
still generate profits or make losses (excluding the incomes from real estate
transfer, project transfer (not attached to the transfer of the right to use or
to rent land); incomes from the transfer of the right to execute the project,
the right to carry out mineral resources exploration, extraction and processing
as prescribed by law), the enterprise may offset them against the taxable
income from the profitable activities. The remaining income after offsetting
shall be subject to the enterprise income tax rate based on the tax rate on the
profitable activities.
Example 13. In the tax period in 2012, enterprise A has made:
- A loss
of 1 billion VND on the production of software eligible for tax incentives.
- A profit
of 1 billion VND on the trading of computers ineligible for tax incentives.
- A profit
of 2 billion VND on the securities transfer (other incomes from business
activities).
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In
particular: offset the loss of 1 billion VND on software production against the
profit of 1 billion VND on computer trading or on securities transfer.
→ The
remaining income of the enterprise is 2 billion and subject to the enterprise
income tax rate at 25% (2 billion VND x 25%).
Example
14. In the tax period in 2012, enterprise B has made:
- A profit
of 2 billion VND on the production of software eligible for tax incentives
(this activity is subject to the enterprise income tax rate at 10%).
- A profit
of 2 billion VND on the trading of computers ineligible for tax incentives.
- A loss
of 1 billion VND on the securities trading (other incomes from business
activities).
In the tax
period 2011, the enterprise B made a loss of 1 billion VND on the trading of
computers, the enterprise B must transfer the loss when calculating the taxable
income in 2012 as follows:
-
Offsetting profits and losses made in 2012: the enterprise may choose to offset
the loss on securities trading against the income from computer trading. The
remaining profit on computer trading is: 2 billion VND – 1 billion VND = 1
billion VND.
-
Transferring the loss on computer trading in 2011 to offset against the profit
on computer trading in 2012: 1 billion VND – 1 billion VND = 0 billion VND
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2 billion
VND x 10% = 200 million VND
→ The
enterprise income tax amount payable: 200 million VND
Example
15. In the tax period in 2012, enterprise C has made:
- A profit
of 2 billion VND on the production of software eligible for tax incentives
(this activity is subject to the enterprise income tax rate at 10%).
- A profit
of 2 billion VND on the trading of computers ineligible for tax incentives.
- A loss
of 1 billion VND on the securities trading (other incomes from business
activities).
In the tax
period 2011, the enterprise C made a loss of 2 billion VND but it fails to
determine the activity that made such loss. Enterprise C must offset the loss
against the income from the preferential activity (software production).
In
particular: Offsetting profits and losses made in 2012: the enterprise may
choose to offset the loss on securities trading against the income from
computer trading. The remaining profit on computer trading is: 2 billion VND –
1 billion VND = 1 billion VND
-
Transferring the loss made in 2011 to offset against the profit on software
production in 2012: 2 billion VND – 2 billion VND = 0 billion VND
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8. Enterprise income
tax incentives are not applicable to:
a) Other incomes
prescribed in Article 7 of this Circular.
b) Incomes
from the exploration and extraction of petroleum and other rare and valuable natural
resources.
c) Incomes
from the business of prized games or gambling as prescribed by law.
d) Incomes
from mineral extraction.
e) Incomes
from the services provision subject to special excise duty as prescribed by the
Law on special excise duty.
9. Enterprises
established from the conversion of enterprises form, ownership, division,
separation, merger and consolidation are liable for the tax debt and fines
related to enterprise income tax of the converted, divided, merged, or
consolidated enterprises, and shall inherit enterprise income tax incentives
for the remaining period if the conditions for enterprise income tax incentives
are satisfied.
10. During the period of
enterprise income tax incentives as prescribed, if competent agencies discover
that:
- The enterprise
income tax eligible for tax incentives is increased compared to that declared
by the enterprise (even when the enterprise has not declared to enjoy tax
incentives), the enterprise shall enjoy enterprise income tax incentives
applicable to the enterprise income tax amount discovered during the inspection
(including the increased enterprise income tax amount and the enterprise income
tax amount eligible for tax incentives declared without determining the tax
incentives amount).
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- Depending on the
extent of violations, the competent agency shall impose the penalties for tax
law violations as prescribed.
Article
19. Preferential tax rates
1. The preferential tax
rate of 10% for fifteen (15) years is applicable to:
a) Enterprises newly
established from investment projects in localities with extreme socio-economic
difficulties in the Annex promulgated together with the Government's Decree No.
124/2008/ND-CP on December 12, 2008.
b) Enterprises newly
established from investment projects in economic zones, Hi-tech zones
established under the Prime Minister’s Decisions.
c) Enterprises newly
established from investment projects belonging to the following industries:
- Hi-tech as prescribed
by law; scientific research and technology development;
- Investment in water
plants, power plants, water supply and drainage system; bridges, roads,
railroads; airports, seaports, riverports, train station, and particularly
important infrastructure decided by the Prime Minister;
- Software
production.
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3. The preferential tax
rate of 10% during the entire operation is applicable to:
a) Part of the income
from the educational, vocational training, health, cultural, sports and
environmental activities (hereinafter referred to as socialization).
The specific list of
socialization activities is made by the Prime Minister.
b)
The income from the publishing activities as prescribed by the Law on
Publishing.
The publishing
activities include: publishing, printing and issuing the publications as
prescribed by the Law on Publishing.
The publications must
comply with Article 4 of the Law on Publishing and Article 2 of the
Government's Decree No. 111/2005/ND-CP on August 26, 2005. In case the
provisions of the Law on Publishing or the Decree No. 111/2005/ND-CP and the
legal documents related to publishing are changed, the new provisions shall
apply.
4. The preferential tax
rate of 20% for ten (10) years is applicable to enterprises newly established
from investment projects in localities with socio-economic difficulties
specified in the Annex promulgated together with the Government's Decree No.
124/2008/ND-CP on December 12, 2008.
5. The preferential tax
rate of 20% during the entire operation is applicable to Agricultural services
cooperatives, People’s credit funds, and Micro financial institutions.
After the
expiry of the period of preferential tax rate of 10% as prescribed in Point 1
this Article applicable to the agricultural services cooperatives, People’s
credit funds, and Micro financial institutions newly established in localities
with extreme socio-economic difficulties specified in the Annex promulgated
together with the Government's Decree No. 124/2008/ND-CP on December 12, 2008,
the tax rate of 20% shall apply.
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6. The application
period of preferential tax rates specified in this Article starts from the
first year in which the enterprise starts to earn income from the activities
eligible for tax incentives.
7. After the application
period of the preferential tax rates specified in Clause 1, Clause 2, Clause 4
this Article expires, the tax rate of 25% shall apply.
Article
20. Preferential tax exemption and reduction period
1.
4 years
of tax exemption, 50% reduction in the tax amount payable for 9 succeeding
years for:
a) Enterprises newly
established from investment projects in localities with extreme socio-economic
difficulties in the Annex promulgated together with the Government's Decree No.
124/2008/ND-CP on December 12, 2008.
b) Enterprises newly
established from investment projects in economic zones, Hi-tech zones
established under the Prime Minister’s Decisions.
c) Enterprises newly
established from investment projects belonging to the following industries:
- Hi-tech as
prescribed by law; scientific research and technology development;
- Investment in water
plants, power plants, water supply and drainage system; bridges, roads,
railroads; airports, seaports, riverports, train station, and particularly
important infrastructure decided by the Prime Minister;
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- Software
production.
d) Newly-established
enterprises engaged in socialization in localities with socio-economic
difficulties or extreme socio-economic difficulties in the Annex promulgated
together with the Government's Decree No. 124/2008/ND-CP on December 12, 2008.
2. 4 years of tax
exemption, 50% reduction in the tax amount payable for 5 succeeding years for
enterprises newly established engaged in socialization in localities not in the
list of localities with socio-economic difficulties or with extreme
socio-economic difficulties in the Annex promulgated together with the
Government's Decree No. 124/2008/ND-CP on December 12, 2008.
3. 2 years of tax
exemption, 50% reduction in the tax amount payable for 4 succeeding years for
enterprises newly established from investment project localities with
socio-economic difficulties in the Annex promulgated together with the
Government's Decree No. 124/2008/ND-CP on December 12, 2008.
4. The period of tax
exemption and reduction specified in this Article starts from the first year in
which the enterprise earns taxable income from the investment project enjoying
tax incentives. If the enterprise does not earn taxable income in the first 3
years as from the first year in which it earns revenues, the period of tax
exemption and reduction starts from the fourth year.
Example 16: In 2009,
enterprise A newly established from a software production investment project. If
enterprise A earns taxable income from the software production project in 2009,
the tax exemption and reduction period shall starts from 2009. If enterprise A
has earned revenues from 2009 but does not earn any taxable income until 2012,
the tax exemption and reduction period shall start from 2012.
5. The tax exemption
and reduction year must be consistent with the tax period. In the beginning of
the tax exemption and reduction period as from the first tax period in which
the enterprise starts to earn taxable income (including the losses transferred
from the previous tax period). In case the enterprise earns taxable income in
the first tax period but the duration of the production or business is under 12
months, it may register at the tax authorities to commence the tax exemption
and reduction period right in that first tax period, or in the succeeding tax
period. If the enterprise registers to commence the tax exemption and reduction
period in the succeeding tax period, it must calculate and pay the tax amount
payable in the first tax period to the State budget as prescribed. The tax
exemption and reduction specified in this Clause is not applicable to the tax
period guided in Clause 3 Article 3.
Article
21. Other cases of tax reduction
1. Enterprises engaged
in production, construction, and transportation activities are eligible for a
reduction in the enterprise income tax amount payable proportional to the
actual expenses on female labor guided in Point 2.9.a Clause 2 Article 6 of
this Circular if such expenses can be separately calculated.
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2. Enterprises
employing ethnic people are eligible for a reduction in the enterprise income
tax amount payable proportional to the actual expenses on ethnic employees
guided in Point 2.9.b Clause 2 Article 6 of this Circular if such expenses can
be separately calculated.
Article
22. Procedures for enterprise income tax incentives
The enterprise shall
determine the conditions for tax incentives, the preferential tax rate, the tax
exemption and reduction period, the amount of loss deducted from the chargeable
income in order to declare and settle tax with tax authorities.
During the
inspection, tax authorities must inspect the conditions for tax incentives, the
amount of enterprise income tax eligible for tax exemption and reduction, the
amount of loss deducted from the taxable income, that the enterprise can
possibly satisfy. If the enterprise is not eligible for the preferential tax
rate and the tax exemption and reduction period, tax authorities shall collect
the tax arrears and impose penalties for administrative violations of tax as
prescribed.
Chapter
VII
ORGANIZING THE IMPLEMENTATION
Article
23. Effects
1. This Circular takes
effect on September 10, 2012 and applies to the enterprise income tax period in
2012 and later.
2. Enterprises enjoying
enterprise income tax incentives (including the preferential tax rate and the
tax exemption and reduction period) as prescribed in the previous legal
documents on enterprise income tax, or under the issued Investment license, or
Investment incentive certificate, shall continue enjoying such incentives for
the remaining time. If the level of enterprise income tax incentives, including
the preferential tax rate and tax exemption and reduction period, is lower than
the level of incentives specified in this Circular, tax incentives in this
Circular shall apply to the remaining time starting from the tax period 2009.
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The remaining time
for enjoying incentives equals the number of years in which the enterprise may
enjoys tax incentives (preferential tax rate, tax exemption and reduction
period) as guided in this Circular minus (-) the number of years in which the
enterprise had enjoyed tax incentives (preferential tax rate, tax exemption and
reduction period) as guided in previous legal documents on enterprise income
tax or in the issued Investment license, or Investment incentive certificate
after the end of 2008. The determination of the remaining time stated above
must ensure that:
- At the end of the
tax period 2008, when the period for enjoying tax incentives, under the
previous legal documents on enterprise income tax or under the issued
Investment license, or Investment incentive certificate, expires, then tax
incentives (the preferential tax rate and the tax exemption and reduction
period) shall not apply to the remaining time guided in this Circular.
- At the end of the
tax period 2008, an enterprise enjoying tax incentives (preferential tax rate
and the tax exemption and reduction period) under the previous legal documents
on enterprise income tax or under the issued Investment license, or Investment
incentive certificate, shall continues enjoying the years in which it is
eligible for enjoying the preferential tax rate and the tax exemption and
reduction period for the remaining time as guided in this Circular.
- At the end of the
tax period 2008, an enterprise is enjoying preferential tax rates, but the tax
exemption period under the previous legal documents on enterprise income tax or
under the issued Investment license, or Investment incentive certificate, has
just expired, then it shall be no longer eligible for the tax exemption period
and only enjoy the years in which the tax is exempted, and the years to which
the preferential tax rate apply as guided in this Circular.
- At the end of the
tax period 2008, an enterprise enjoying preferential tax rates and the tax
reduction period under the previous legal documents on enterprise income tax or
under the issued Investment license, or Investment incentive certificate, the
number of the remaining years for enjoying tax reduction equals the number of
years for enjoying tax reduction as guided in this Circular minus (-) the
number of years in which the enterprise has enjoyed tax reduction until the end
of 2008, and the enterprise shall continue enjoying the preferential tax rate
for the remaining years as guided in this Circular.
- At the end of the
tax period 2008, when the period for enjoying tax exemption and reduction,
under the previous legal documents on enterprise income tax or under the issued
Investment license, or Investment incentive certificate, expires, then the enterprise
is no longer eligible for tax incentives (including the preferential tax rate
and the tax exemption and reduction period) as guided in this Circular.
3. After the end of the
tax period 2008, if an enterprise eligible for tax exemption and reduction period
under the previous legal documents on enterprise income tax or under the issued
Investment license, or Investment incentive certificate:
a) does not earn
revenue, then the tax exemption and reduction period shall start from the first
year in which it earns taxable income; if it fails to earn taxable income
within the first 3 years as from the first year in which the revenue is earned,
the tax exemption and reduction period shall start from the forth year.
a) earns revenue
within less than 3 years as from the first revenue is earned, then the tax
exemption and reduction period shall start from the first year in which it
earns taxable income; if it fails to earn taxable income within the first 3
years as from the first year in which the revenue is earned, the tax exemption
and reduction period shall start from the forth year. In particular:
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c) It has earned
revenues for 3 years or more, then the tax exemption and reduction period shall
start from the tax-calculation year 2009. In particular:
If the first tax
period of the enterprise commences before 2007, and the enterprise has earned
revenue without any taxable income and the tax exemption and reduction period
has not begun, then the tax exemption and reduction period shall start from the
tax period 2009.
4. For enterprises
engaged in various lines earning income from educational, vocational training,
health, cultural, sports, and environmental activities (hereinafter referred to
as socialization), if the requirements in the List of forms, scale criteria,
and socialization standards prescribed by the Prime Minister are satisfied, the
enterprise income tax rate at 10% shall apply during the entire operation to
the income from the socialization activities from January 01, 2009.
Enterprises engaged
in socialization before January 01, 2009 and satisfy the requirements in the
List of forms, scale criteria, and socialization standards prescribed by the
Prime Minister applying the tax rate over 10% on the income from socialization
activities are entitled to apply the tax rate at 10% on the income from
socialization activities from January 01, 2009.
5. For enterprises
having been operated from 2009 that have projects of investment in the new
production line, expanding the scale, innovating the technology, improving the
ecology, enhancing the productivity, the income from such projects are not
eligible for enterprise income tax incentives. The investment project before
2009 enjoying enterprise income tax incentives (belonging to expansion
investment incentives) shall continue to enjoy such incentives for the
remaining time, and the additional income from the expansion investment
projects taxed at 28% shall be eligible for the tax rate of 25%.
Enterprises having
unfinished production expansion investment projects until December 31, 2008
that finish and come into operation in 2009 shall continue to enjoy the
enterprise income tax exemption and reduction period applicable to the
additional income from the expansion investment projects under the Circular No.
134/2007/TT-BTC on November 23, 2007 of the Ministry of Finance; the additional
income from such projects is taxed at 25%, and eligible for the enterprise
income tax exemption and reduction period applicable to the additional income
from 2009 when the projects come into operation. Enterprises must notify the
tax authorities of their unfinished production expansion projects when
submitting the enterprise income tax settlement declaration of the tax period
2008.
For
enterprises investing in production expansion projects before December 31,
2008, that are finished and come into operation from 2010, such enterprises are
not eligible for enterprise income tax incentives for the additional income
from the expansion investment project.
6. From January 01,
2009, agricultural services cooperatives earning income from agricultural
services, and People's credit funds are eligible for the tax rate of 20%,
including ones established before January 01, 2009 that have not enjoyed enterprise
income preferential tax rates, or the period for enjoying enterprise income
preferential tax rates has expired (except of the agricultural services
cooperatives and People's credit funds enjoying the tax rate of 10%).
7. Enterprise income tax
incentives are not applicable to the income from the mineral extraction of
enterprises established and licensed to engage in mineral extraction from
January 01, 2009. The mineral extraction enterprises that have operated before
January 01, 2009 and are enjoying enterprise income tax incentives as
prescribed in the previous legal documents on enterprise income tax, or the
issued Investment licenses, or Investment incentives certificates, shall
continue to enjoy such incentives for the remaining time.
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9. This Circular
supersedes the Circular No. 130/2008/TT-BTC on December 26, 2008, the Circular
No. 177/2009/TT-BTC on September 10, 2009, the Circular No. 40/2010/TT-BTC on
March 23, 2010, the Circular No. 18/2011/TT-BTC on February 10, 2011 of the
Ministry of Finance.
10. The contents guiding
the enterprise income tax promulgated by the Ministry of Finance and the
Departments at variance with the guidance in this Circular are annulled.
11. The tax arrears, tax
settlement, tax exemption, tax reduction and the handling of violations of law
provisions on enterprise income tax before the tax period 2012 must comply with
the corresponding provisions on enterprise income tax promulgated before 2012.
12. In case the
Socialist Republic of Vietnam is a signatory to International Agreements of
which the provisions on enterprise income tax payment are different from the
guidance in this Circular, the provisions of such International Agreements
shall apply.
Article
25. Implementation responsibility
1. The tax authorities
at all level responsible for disseminating and guiding enterprises to
implementation this Circular.
2. Enterprises being the
subject of application of this Circular must follow its guidance.
The
organizations and individuals are recommended to send feedbacks on the
difficulties arising during the course of implementation to the Ministry of
Finance for consideration and settlement./.
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FOR THE MINISTER
DEPUTY MINISTER
Do Hoang Anh Tuan
FILE ATTACHED TO DOCUMENT
