Regulations on corporate income tax according to Vietnamese law

What is corporate income tax? How is corporate income tax calculated?

1. What is corporate income tax?

Pursuant to Article 3 of the Law on Corporate Income Tax 2008 (amended by Clause 1, Article 1 of the Law Amending Tax Laws 2014) stipulates taxable income as follows

– Taxable income includes income from production and trading of goods and services and other income specified in Clause 2 This.

– Other income includes: income from capital transfer, transfer of capital contribution rights; income from real estate transfer, investment project transfer, transfer of rights to participate in investment projects, transfer of rights to explore, exploit and process minerals; income from property use rights, property ownership rights, including income from intellectual property rights according to the provisions of law; income from transfer, lease, and liquidation of assets, including valuable papers; income from interest on deposits, loans, foreign currency sales; Revenues from bad debts that were written off are now recoverable; proceeds from liabilities whose owner cannot be identified; omitted business income from previous years and other income.

If a Vietnamese enterprise investing abroad transfers its income after paying corporate income tax in a foreign country to Vietnam, for countries with which Vietnam has signed an Agreement to avoid double taxation, it shall comply with the provisions of the Agreement; For countries where Vietnam has not signed a Double Taxation Avoidance Agreement, in case the corporate income tax in the country where the enterprise is relocating has a lower corporate income tax rate, the difference will be collected compared to the corporate income tax amount calculated according to Vietnam’s Corporate Income Tax Law.

Thus, corporate income tax is a type of tax that the state directly collects into the state budget based on the taxable income of enterprises (organizations). Organizing production and trading activities of goods and services).

2. Who must pay corporate income tax?

Pursuant to Article 2 of the Law on Corporate Income Tax 2008 stipulates taxpayers as follows:

– Corporate income tax payers are organizations engaged in production and trading of goods and services with taxable income according to the provisions of this Law (hereinafter referred to as enterprises), including:

+ Established enterprises according to the provisions of Vietnamese law;

+ Enterprises established under the provisions of foreign laws (hereinafter referred to as foreign enterprises) with or without permanent establishments in Vietnam;

+ Organizations established under the Law on Cooperatives;

+ Public service units established under the provisions of Vietnamese law Male;

+ Other organizations with production and business activities that generate income.

– Enterprises with taxable income specified in Article 3 of this Law must pay corporate income tax as follows:

+ Enterprises established under the provisions of Vietnamese law pay tax on taxable income arising in Vietnam and taxable income arising outside Vietnam Nam;

+ Foreign enterprises with permanent establishments in Vietnam pay tax on taxable income arising in Vietnam and taxable income arising outside Vietnam related to the operations of that permanent establishment;

+ Foreign enterprises with permanent establishments in Vietnam pay tax on taxable income arising in Vietnam that is not related to the operations of the permanent establishment resident;

+ Foreign enterprises that do not have a permanent establishment in Vietnam pay tax on taxable income arising in Vietnam.

– A permanent establishment of a foreign enterprise is a production and business establishment through which a foreign enterprise conducts part or all of its production and business activities in Vietnam, including:

+ Expenses branches, executive offices, factories, workshops, means of transport, oil fields, gas fields, mines or other natural resource exploitation sites in Vietnam;

+ Construction sites, construction works, installation, assembly;

+ Service provision establishments, including consulting services through employees or organizations or individuals other;

+ Agent for foreign businesses;

+ Representative in Vietnam in the case of a representative with authority to sign contracts in the name of a foreign enterprise or a representative without authority to sign contracts in the name of a foreign enterprise but who regularly delivers goods or provides services in Vietnam.” (amended and supplemented by Clause 1, Article 1 of the revised Law on Corporate Income Tax 2013)

Thus, assuming your company is established according to the provisions of Vietnamese law, your company is subject to corporate income tax.