Tax Base and Foreign Income
A profit-seeking enterprise with its head office in Vietnam is subject to income tax on its worldwide income. This is true even if the profit-seeking enterprise is a joint venture or a wholly-owned subsidiary of a foreign company. Enterprises with a tax base in Vietnam can claim foreign tax credit for taxes paid abroad on income derived outside Vietnam by branches or agents of a Vietnam-based enterprise. The credit may only be used to offset foreign tax paid in Vietnam and may not exceed the incremental tax liability that would result if the foreign-source income were added to the Vietnam taxable income and taxed at the applicable domestic rate. Profit-seeking enterprises with head offices outside Vietnam, such as branches of foreign companies, are considered non-resident for tax purposes. Such enterprises are subject to income tax only on their Vietnam-source income.
Income Tax Rate
The common corporate tax rate for Vietnam companies is 20%. However, for the companies that meet the conditions for the corporate income tax incentives, the applied tax rate can be less than 20% (depend on the specific cases). The lowest tax rate relates to tax incentives can be 10%.
Corporate income tax incentives in Vietnam includes:
The new investment projects will be applied the tax incentives if they meet the conditions mentioned in the current tax regulations. For example:
Tax exemption for 2 years and a 50% reduction of payable tax amounts for 4 subsequent years are applicable to incomes from the execution of new projects of investment in industrial parks
If satisfying one of the three conditions prescribed at this Point, enterprises having investment projects that develop the operating investment projects such as expansion of production scale, increase of capacity and renewal of production technology (commonly referred to as projects expansion investment) in the fields or geographical areas eligible for EIT incentives under Vietnam’s tax regulation. are optional to enjoy EIT incentives for their operating projects for the remaining duration (including tax rate and tax exemption or tax reduction duration (if any)) or apply tax exemption or tax reduction duration for additional incomes brought about by the expansion investment (not eligible for preferential tax rates) equalling to the tax exemption or tax reduction duration applicable to projects of new investment in the same geographical area or field eligible for EIT incentives. If the enterprises choose to enjoy EIT incentives for their operating projects for the remaining duration, projects of expansion investment must belong the fields or geographical areas eligible for EIT incentives under the tax regulation.
Annual offshore remittance of profits
Enterprises that suffer a loss after making tax finalization may carry forward continuously the whole loss to subsequent years’ taxable incomes (taxable incomes exclusive of tax-exempt incomes). The maximum duration for loss carry-forward is 5 consecutive years, counting from the year following the year the losses arise.Enterprises may temporarily clear their losses of a year against taxable incomes of the quarters of the following year upon making quarterly declarations for temporary tax payment and officially carry forward these losses in the following year after making annual tax finalization declarations.
Enterprises that have a loss arising in a certain quarter of a fiscal year may carry forward such loss from this quarter to the following quarters of that fiscal year. When making enterprise income tax finalization, enterprises shall determine the loss of the whole year and continuously clear the whole loss against their taxable incomes of the years following the year when the loss arises in accordance with the above regulations.
Enterprises shall determine by themselves losses to be cleared against taxable incomes on the above principle. In the loss carry-forward duration, newly arising losses (excluding losses carried forward from the previous period) may be fully carried forward for not more than 5 consecutive years, counting from the year following the year the losses arise.
When the tax authority examines and inspects enterprise income tax finalization detects a loss amount which an enterprise is allowed to carry forward is different from the loss amount determined by the enterprise itself, the loss amount allowed to be carried forward shall be determined based on the competent agency’s conclusion, and fully carried forward for not more than 5 consecutive years, counting from the year following the year the losses arise.
Past the 5-year time limit, arising losses not yet fully carried forward are not allowed to be cleared against the following years’ incomes.
Filing of Tax Returns
According to business result, the taxpayers shall make the temporary payment of CIT not later than 30th day of the quarter following the quarter in which tax is incurred; they shall not submit the provisional CIT declaration quarterly. Year – end corporate income tax payment is due to the 90th day of the first quarter of the following year. This is the due date of yearly corporate income tax declaration.
Summary of Income Tax for Company
|Entity Type||Almost companies and branches||Enterprises of petroleum prospecting, exploration and exploitation||The prospecting, exploration and extraction of precious and rare natural resources|
|Income Tax Rate||20%||32% - 50%. Depend on the decision of the Ministry of Finance||40% - 50% Depend on the area|
: Unit 706, 7/F, South Seas Centre Tower 2, No.75 Mody Road, Tsim Sha Tsui East, Hong Kong / Tel:(852)3913-9500 / Fax:(852)2170-1919
: 3 Shenton Way #16-08 Shenton House Singapore 068805 / Tel: (65)6542-2309 / Fax : (65)6221-4376
: 13F, Charmvit Tower, 117 Tran Duy Hung Street, Cau Giay District, Hanoi, Vietnam / Tel:(84)34-8218-444
: 15th Floor R.1508, Vincom Center Tower, 72 Le Thanh Ton Street, Ben Nghe Ward District 1, Ho Chi Minh city
: 100, Cheonggyecheon-ro, Jung-gu, Seoul, Republic of Korea / Tel : (82)70-7436-5844 / Fax : (82)2-713-0056
: 18F-2, No.163, Sec. 1, Keelung Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C) / Tel : (886)988-057-215