CORPORATE INCOME TAX RATE

Corporate income tax is applied on income arising from business activities. Depending on each specific case, the corporate income tax rate is different. So, what are the current regulations on corporate income tax rate?

1. Corporate income tax payers

According to current regulations, corporate income tax payers include organizations that produce and trade goods and services with taxable income according to regulations (collectively referred to as “enterprises”) including:

– Enterprises established under the laws of Vietnam;

– Enterprises established under foreign laws (below referred to as foreign enterprises) with or without Vietnam-based permanent establishments;

– Organizations established under the Law on Cooperatives;

– Non-business units established under the laws of Vietnam;

– Other organizations engaged in income-generating production and business activities.

2. Method of calculating corporate income tax

The amount of corporate income tax payable in the tax period is calculated as taxable income multiplied by the corporate income tax rate, except for some cases specifically prescribed by the Government.

Note, in case an enterprise has paid income tax outside Vietnam, the amount of income tax paid will be deducted but must not exceed the amount of payable income tax according to regulations.

a. Taxed income

Taxed income is determined as follow:

– Taxed income in a tax period is the taxable income minus tax-exempt incomes and losses carried forward from previous years.

– Taxable income is turnover minus deductible expenses for production and business activities plus other incomes, including income received outside Vietnam.

–  Incomes from transfers of real estate, project of investment, the right to participate in projects of investments, the right to explore, extract, and process minerals must be separated. The loss on transfers of projects of investment (except for mineral exploration and mineral extraction projects), incomes from transfers of the right to participate in projects of investment (except for the mineral exploration and mineral extraction projects), incomes from transfer of real estate shall be offset against the profit in the tax period.

b. Corporate income tax rate

The corporate income tax rate is 22%, except for the following cases:

– Any enterprise of which the total revenue does not exceed 20 billion VND per year are eligible for the tax rate of 20%. Therein, the revenue used as the basis for identifying enterprises eligible for the tax rate of 20% in this Clause is the revenue of the previous year.

– The rates of enterprise income tax on the exploration and extraction of oil and other rare resources in Vietnam range between 32% and 50% depending on each project and each business establishment.

>> WHO IS EXEMPT FROM CORPORATE INCOME TAX? https://linconlaw.vn/who-is-exempt-from-corporate-income-tax/

>> CHANGE OF LEGAL REPRESENTATIVE OF SINGLE-MEMBER LIMITED COMPANY https://linconlaw.vn/change-of-legal-representative-of-single-member-limited-company/

3. Corporate income tax period

An enterprise income tax period is the calendar year or fiscal year.

However, the tax period will be determined according to each time income is generated for the following cases where the taxpayer is a foreign enterprise:

– Having a permanent establishment in Vietnam pays tax on taxable income arising in Vietnam that is not related to the operations of the permanent establishment;

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