WHO MUST PAY CORPORATE INCOME TAX?

Corporate income tax is a tax applied to the income that an enterprise or business organization earns from business activities, including profits from production, business, services, or other finance activities. So, who must pay corporate income tax?

1. Who must pay corporate income tax?

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. What income is subject to corporate income tax?

According to current regulations, income subject to corporate income tax includes:

a. Income from production and trading of goods and services;

b. Other income as prescribed by law:

– Income from capital transfer, including income from the transfer in part or in whole of the investment capital in an enterprise (including cases of enterprises transfer, securities transfer, capital contribution rights transfer and other forms of capital transfer as prescribed by law);

– Income from transfer of investment project, rights of participation in investment projects, income from transfer of rights to explore, exploit and process minerals; income from real estate transfer;

– Income from use rights, property ownership rights, including income from intellectual property rights, income from technology transfer;

– Income from transfer, lease, and liquidation of assets (except real estate), including other valuable papers;

– Income from deposit interest, loan interest, and foreign currency sales includes:

+ Interest on deposits at credit institutions, interest on loans in all forms as prescribed by laws, including late payment interest, installment interest, credit guarantee fees and other fees in the loan contract. loan;

+ Income from foreign currency sales;

+ Exchange rate differences due to reassessment of debts payable in foreign currency at the end of the fiscal year;

+ Exchange rate differences arising during the period (except exchange rate differences arising during the capital construction investment process to form fixed assets of newly established enterprises that have not yet been invested in). Production and business activities are carried out according to the guidance of the Ministry of Finance).

For receivables and loans originating in foreign currency arising during the period, the exchange rate difference of these receivables and loans is the difference between the exchange rate at the time of debt collection at the exchange rate at the time the receivable or initial loan is recorded;

– Amounts deducted in advance as expenses but not used or not fully used according to the appropriation term but the enterprise does not account for cost reduction adjustments;

– Non-performing loan that have been written off which has been recovered;

– Debts payable with unknown creditors;

– Omitted business income from previous years discovered;

– The difference between the collection of fines and compensation due to violation of economic contracts or bonuses due to good performance of contractual commitments (excluding fines and compensation recorded as a decrease in the value of the project during the investment phase) minus (-) the amount of fines and compensation due to breach of contract according to the provisions of law;

– Donations in cash or in kind received;

– Differences due to reassessment of assets according to the provisions of law for capital contribution, transfer when dividing, separating, merging, consolidating, converting the type of enterprise, except in the case of equitization, arrangement, innovation Enterprises with 100% charter capital held by the state.

>> DEDUCTIBLE EXPENDITURES IN CORPORATE TAXABLE INCOME https://linconlaw.vn/deductible-expenditures-in-corporate-taxable-income/

>> WHEN MUST VALUE ADDED TAX BE DECLARED? https://linconlaw.vn/when-should-value-added-tax-be-declared/

3. How to determine 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.