Vietnam Amends Corporate Income Tax

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HCMC – Last month, Vietnam released Circular 96/2015/TT-BTC, the new Circular lays out the updated regulations relating to the country’s corporate income tax (CIT). The revised rules will become effective on August 6th and will be applied to the 2015 tax year of assessment and the subsequent years following.

Circular 96 amends and supplements Circular 78/2014, which focused on the changes introduced in Law 712 on CIT provisions. The new Circular aims to streamline administrative procedures, thus creating a more conducive business environment for enterprises and taxpayers.

CIT is a direct tax levied on the profits earned by companies or organizations. In general, profits are considered gross revenue minus expenses. Taxpayers include business entities in all economic sectors, professional organizations, and foreign corporations with production and trading activities in Vietnam. Individuals and families conducting business are also subject to Personal Income Tax (PIT). CIT declaration and payment is required every three months and is compulsory at the end of the fiscal year.

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Key takeaways from the new Circular include the following:

  • Amending the time of revenue recognition for CIT purposes:
    • Service revenue is now recognized upon its full or progressive completion
  • A 22 percent standard CIT rate on foreign sourced dividend income or gains realized on disposition of foreign investments by a Vietnamese taxpayer
  • The abolishment of the 15 percent cap on advertising and promotion expenses for CIT calculation purposes
  • The application of income tax incentives is now location specific (tax rates will vary based on location)
  • Removes the requirement for enterprises to prepare and manage material consumption rates
  • Removes the monthly limit of VND 1 million/person for life insurance and other social security-type funds
  • The income generated from overseas investment of enterprises located in Vietnam will now be declared once it is transferred to Vietnam

The current standard CIT rate is 22 percent for both domestic and foreign invested enterprises. However, this rate is scheduled to be reduced to 20 percent on January 1, 2016. An enterprise that conducts various business activities subject to different tax rates should calculate the income for each activity separately, multiplying income from each activity by the corresponding tax rate.

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Certain incomes are exempt from CIT, such as those earned from scientific research and technological development contracts during the trial production period, and from technical service contracts directly serving agricultural production.

To learn more about Vietnam’s corporate income tax, and the tax incentives available for your company, please contact the tax and accounting experts at Dezan Shira & Associates.


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Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email vietnam@dezshira.com or visit www.dezshira.com.

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