How is corporate income taxable income determined? Where to pay corporate income tax?

How is corporate income taxable income determined?

According to Article 7 of the Law on Corporate Income Tax 2008 (amended and supplemented by Clause 4, Article 1 of the Law on Corporate Income Tax amended in 2013), regulations on determining taxable income are as follows:

“1. Taxable income in a tax period is determined by taxable income minus tax-exempt income and losses carried forward from previous years.

2. Taxable income is equal to revenue minus deductible expenses of production and business activities plus other income, including income received outside Vietnam.

3. Income from real estate transfer activities, investment project transfer, transfer of rights to participate in investment projects, transfer of rights to explore, exploit, and process minerals must be determined separately for tax declaration and payment. Income from transfer of investment projects (except mineral exploration and exploitation projects), income from transfer of rights to participate in investment projects (except transfer of rights to participate in mineral exploration and exploitation projects), income from real estate transfer If there is a loss, this loss is offset against profits from production and business activities in the tax period.

The Government shall detail and guide the implementation of this Article.”

Thus, corporate income tax is determined by taxable income minus tax-exempt income and losses carried forward from previous years.

Where to pay corporate income tax?

Pursuant to Article 12 of Decree 218/2013/ND-CP stipulating the place to pay corporate income tax as follows:

(1) Enterprises pay taxes in the locality where their head office is located. In case an enterprise has a dependent accounting production facility in a province or centrally run city other than the locality where its head office is located, the tax amount will be calculated and paid in the place where the head office is located and where the production facility is located.

The amount of corporate income tax calculated to be paid in the province or centrally run city where the dependent accounting production facility is located is determined by the amount of corporate income tax payable in the period of the enterprise multiplied by (x) the ratio between the costs incurred at the dependent accounting production facility and the total costs of the enterprise.

The tax payment specified in this Clause does not apply to works, work items or dependent accounting construction establishments.

The decentralization, management, and use of corporate income tax revenue is carried out in accordance with the provisions of the State Budget Law.

(2) Dependent accounting units of industry-wide accounting enterprises that have income outside of main business activities shall pay tax in the province or centrally run city where that business activity is located.

(3) The Ministry of Finance provides guidance on where to pay taxes specified in this Article.

What is the corporate income tax rate?

In Article 10 of the Law on Corporate Income Tax 2008 (amended and supplemented by Clause 6, Article 1 of the Law on Corporate Income Tax amended in 2013), the tax rate is stipulated as follows:

“1. The corporate income tax rate is 22%, except for the cases specified in Clauses 2 and 3 of this Article and subjects eligible for preferential tax rates specified in Article 13 of this Law.

The cases subject to the 22% tax rate specified in this Clause will switch to the 20% tax rate from January 1, 2016.

2. Enterprises with total annual revenue no more than twenty billion VND applies the tax rate of 20%.

The revenue used to determine the enterprise subject to the 20% tax rate in this clause is the revenue of the immediately preceding year.

3. The corporate income tax rate for activities of searching, exploring, and exploiting oil, gas and other rare resources in Vietnam is from 32% to 50% in accordance with the regulations. each project, each business establishment.

The Government details and guides the implementation of this Article.”

Thus, corporate income tax is determined by taxable income minus tax-exempt income and losses carried forward from previous years.

Enterprises pay corporate income tax in the locality where their head office is located. In case an enterprise has a dependent accounting production facility in a province or centrally run city other than the locality where its head office is located, the tax amount will be calculated and paid in the place where the head office is located and where the production facility is located.

In addition, you can refer to the legal provisions on corporate income tax rates mentioned above.