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TON DUC THANG UNIVERSITY

THE FACULTY OF FINANCE AND BANKING KEY TERMS
INVESTMENT DEPARTMENT
Luật thi hành
1 Liquidation Thanh toán nợ, thanh lý
Tax return Tờ khai thuế, khai thuế
Margin Tỷ suất lợi nhuận
Book value Giá trị sổ sách
CHAPTER 5 One-stop-shop Một cửa
3
CORPORATE INCOME TAX (CIT) To file (v) Để nộp
4 Mechanism N: cơ chế
Prepared by: INVESTMENT DEPARTMENT Cash discount Giảm giá tiền mặt
To generate (v): để tạo ra
3
Consuming norm Định mức
Prepaid expense Chi phí trả trước
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KEY TERMS KEY TERMS

Luật thi hành Luật thi hành
1 Accelerated rate tỷ lệ khấu hao nhanh 1
discount for early chiết khấu thanh toán
To withhold Giữ lại (thu nhập giữ lại)
Adjusted declining điều chỉnh giảm
Deductible Khấu trừ
Doubtful debt nợ phải thu khó đòi
preferential Ưu đãi
Balance method Phương pháp số dư
3 3 unit of production Đơn vị sản xuất
Amortization giá trị hao mòn
provisions Quy định, điều khoản
Exempt income Thu nhập miễn thuế
4 4 useful life Tuổi đời hiệu quả
self-assessment tự đánh giá
Quarterly tax return Khai thuế hàng qúy
Annual tax return kê khai thuế hàng năm
3 3 Depreciation charge Trích khấu hao
Ex-warehousing cost chi phí xuất kho
Bad debt Nợ xấu
Taxable income Thu nhập chịu thuế
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INTRODUCE INTRODUCE

• There were two main rates- 25% applicable to

• The corporate income tax was first introduced in
Vietnam in 1991 under the ordinance of profit tax.
In 1997, the Assembly of Vietnam enacted the
Act of corporate income tax ( or it may be called
law on corporate income tax) that became
effective as from 1 January 1999 to replace the
above ordinance as one step towards the 2nd
phase of the tax system reform.
foreign corporations and 32% applicable to
domestic taxpayers.
• A new law of corporate income tax came into
being in 2003. This law was to substitute the
1997 law and was put into effect since 2 January
2004.
• The most important change was to end
discrimination between domestic and foreign
taxpayers by applying the standard rate of 28%
to all taxpayers.

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INTRODUCE INTRODUCE

• In June 2008, the Assembly of Vietnam passed a • The rules have been simplified by mainly
new law taking effect as from 1 January 2009 to eliminating considerable exemptions and
replace the 2003 Act of corporate income tax. reductions.
The main changes are as follows: • The following sections will introduce the major
- The standard has been reduced from 28% to contents of this law called the Act of Corporate
25%; income tax 2008 or law on Corporate income tax
- Individuals and households have been excluded 2008.
from the list of corporate income taxpayers, which • Act 31/2013 /QH13 and 32/2013/QH13
means that they are no longer taxed by corporate amendments and supplements law 2008.
income tax, but taxed by the Act of personal
income tax which was enacted in December 2007
and became effective as from 1 January 2009;
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Income Tax

INTRODUCE 5.1 CONCEPTS

LuậtAND
thi CHARACTERISTICS
hành
• In 2015, there are two basic rates: 5.1.11 Concept :
- The tax rate of 20% shall be applied to - Income tax includes corporate income tax (CIT) and
enterprises with the turnover of the previous year personal income tax (PIT)
not exceeding VND 20 billion * Personal income tax is imposed on income of
- The tax rate of 22% shall be applied to the individuals,
3 including salaries, wages, business income
enterprises with the turnover of the previous year and other incomes received by each individual,
more than VND 20 billion * Corporate
4 income tax is imposed on incomes
• From January 1, 2016, according to Circular received by legal entities such as limited companies,
78/2014 /TT-BTC, the corporate income tax rate join-stock corporations, and other economic entities.
3
is 20%, regardless of the turnover of the
enterprise.
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Income Tax

5.1 CONCEPTS
LuậtAND
thi CHARACTERISTICS
hành 5.1 CONCEPTS
LuậtAND
thi CHARACTERISTICS
hành
5.1.11 Concept : 5.1.2. Characteristics:
- Corporate income tax is a tax which the base is Firstly, income tax is a direct tax
incomes of corporations and economic entities. Secondly, despite being a direct tax, corporate income
- The core part of the base is the profit from business tax is less sensitive than personal income tax.
activities
3 of a company. The others are the incomes that Thirdly, corporate income tax is dependent on the profit
an enterprise or an economic entities received in of the taxpayers’ business.
relation
4 to their business such as incomes from asset Fourthly, in certain cases, income tax is regarded as
liquidation, gifts, or donations, etc. withholding of personal income tax.
3 3

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5.2 BASIC CONTENTS OF CORPORATE 5.2.1 TAXPAYER

INCOME TAX IN VIETNAM

5.2.1 TAXPAYERS (i) An enterprise organized under Vietnam law

- Corporate income taxpayers are those enterprises
and economic organizations that have taxable
income as prescribed by the law on Corporate
income tax of Vietnam.
- For corporate income tax purposes, the term
“enterprises and economic organizations”
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including limited liability company, a joint venture
company, a join stock corporation or a partnership
(ii) A company established overseas under other
countries’ law having or not having permanent
resident establishments in Vietnam;
(iii)public service unit established under the
provisions of Vietnamese law;
(iv)An organization founded under the Act of co-
operation;
(v) Other organizations that do business and get
income from the business.
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5.2.1 TAXPAYER 5.2.2. TAX BASE AND TAX CALCULATION

Enterprises organized under Vietnam law are CIT

(Base income- Income
subject to CIT on their worldwide incomes. Foreign transferred to scientific
amount = x CIT rate
research and technology
companies having resident establishments in payable
fund)
Vietnam are also subject to CIT on their worldwide
incomes while foreign companies not having Losses
Base Taxable Exempt
resident establishments in Vietnam are only subject income
=
income
-
incomes
- carried
to CIT on incomes generated in Vietnam. forward

Other
Taxable Base Deductible
= - + taxable
income turnover expenses
incomes

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5.2.2.1. Base turnover

Thus, in order to define the base income, five factors - The base turnover is the total revenue from the sales
including: of commodities and services, surcharges, and price
- Base turnover,
subsidies earned by business establishments.
- Deductible expenses (or sometimes called
deductions), - The base turnover is in Vietnam dongs. Whereas the
- Other taxable incomes, turnover is in foreign currencies, it will be converted into
- Exempt incomes, Vietnam dong based on the inter-bank transaction
- Losses carried. exchange rate announced by the Commercial bank of
The following sections will look at the main Vietnam at the time of earning.
regulations related to those factors.

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5.2.2.1. Base turnover
- Quantity discount, goods returns and price reduction
due to poor quality are excluded from the base
turnover. Beside, cash discount and discount for early
payment are not subtracted from the base turnover.
- The time for the turnover to be booked for tax
purpose is the time of sale, regardless the time of the
payment made by the buyer.
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EXAMPLE 5.1:
SOLUTION
The subsidy is added to the base turnover. The quantity discount
is excluded while the discount for early payment is not.
Therefore, the base turnover for the tax year is:
(2,000 – 100 + 50) milion = 1.950 milion dongs
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The base turnover in some specific
cases is calculated as follows
- For goods sold on installment payment: the base
turnover is instant price, excluding interest on deferred
payment.
- For goods or services used for barter, donation or
internal consumption: the base turnover is determined
based on the selling price of goods or services of the
same or similar categories at the time of barter,
donation or internal consumption.
- For goods processing activities: the base turnover is
the revenue of the processing, including remuneration,
costs of fuels, power, extra materials and other costs
for goods processing.
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EXAMPLE 5.1:
The financial report of the Van Linh Co.Ltd for the tax
year N shows that the gross turnover of the company is
2 billion dongs, of which:
- 1,300 million dongs come from exported goods.;
- The quantity discount is 100 million dongs:
- Discount for early payment is 200 million dongs.
Besides, in the tax year this company received a
subsidy of 50 million dongs from the government for the
goods sold to the poor.
Required: define the base turnover for corporate
income tax for the tax year N.
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5.2.2.1. Base turnover
- For business establishments that pay value added
tax ( VAT) under credit method, their base turnover is
the turnover exclusive of VAT.
- For business establishments that pay VAT under
direct method, their base turnover is the turnover
inclusive of VAT.
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The base turnover in some specific
cases is specified as follows
-For property leasing activities: the base turnover is the
rent paid by the lessee for each term under the leasing
contract.
If the lessee pays rent in advance for several years, the
taxpayer can choose one of the following two ways to
record base turnover for CIT purpose:
(i) The base turnover is the advance-paid rent divided
by the number of years for which the rent has been paid
in advance;
(ii) The base turnover is advance payment meaning all
the advance payment recorded for the year of payment.
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Tax
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5.2.2.2. Deductible expenses
A) Expenses are deductible if these are not in the list of
non-deductible expenses stipulated by regulation
and meet the following three criteria at the same
time:
(i) Being actual expenses used for generating income
or for the purpose of business:
(ii) Be proved by legitimate invoices. Vouchers and
documents stipulated by legislation.
(iii) Must have documents payment through the bank for
the invoices with value from over 20 million.
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5.2.2.2. Non-Deductible expenses
C) Non-deductible expenses
1. Expenses that do not match with base turnover
under matching principle
2. Tax penalties and legal fines: these fines include
fines for violations of traffic law, violations of the Law on
business registration, violations of the Law on
accounting, violations of tax laws, and other fines for
administrative violations.
3.Expenses are covered by other sources. These
expenses include payment made by social insurance
fund for health expenses of employees, covered by the
government for public services etc.
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EXAMPLE 5.2:
John Group, a Malaysian company, has a resident establishment in
Vietnam called Vietnam John Co. Ltd. In the tax year, the overhead
expense of the Group is 50 million dollars. The turnover of all
companies and branches belonging to John group is 10 billion
dollars. Turnover in Vietnam is 1 billion
Required: Define the allocated overhead expense to Vietnam John
Co. Ltd.
SOLUTION:
50 million x = 5 million dollars
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5.2.2.2. Deductible expenses
B) Legitimate invoices and vouchers
In principle, there are two types of legitimate invoices.
They are:
(i) invoices published by the tax offices;
(ii) invoices made and issued by business
establishments which are registered with the tax offices.
The use of the invoices must be compliant with the
Act of accounting and other regulations on
invoices stipulated by the Ministry of Finance.
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5.2.2.2. Non-Deductible expenses
C) Non-deductible expenses
4. Overhead expenses are allocated by an overseas
headquarter company to a Vietnamese establishment
depends on the ratio between the turnover of the
Vietnamese establishment and the turnover of the
headquarter company.
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5.2.2.2. Non-Deductible expenses
C) Non-deductible expenses:
5. Provisions exceed the level allowed by legislation
Provisions include Provision for devaluation of
inventories, Provision for bad receivables, provision
for unemployment allowances, provision for financial
investment, and provision for construction guarantee.
The level of provision is stipulated by the Ministry of
Finance of Vietnam and can be adjusted from time,
depending on the socio- economic situation.
.
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EXAMPLE 5.3: 5.2.2.2. Non-Deductible expenses

We have the information on TNT Co. Ltd on 31 December SOLUTION

200N as follows: The balance of the inventories provision - Sep 1: Define the provision demand by totaling all of the
account is VND40 million. The price of three items in differences between the estimated net book value and the
inventories ( all of which have legitimate vouchers) are in market price of all items: 1,000 x ( 50,000 – 40,000) + 2,000 x (
following table: 40,000 – 35,000) + 2,000 x ( 100,000 – 80,000) = VND60 million.
Items Quantity Estimated net book Market price
- Sep 2: compare the provision account: VND60 million> VND40
value (VND) per unit (VND) per unit million. This means the provision demand is greater than the
A 1,000 50,000 40,000 balance of the inventories provision account and the difference is
VND60 million – VND40 million = VND20 million.
B 2,000 40,000 35,000

C 2,000 100,000 80,0000 Conclusion: the provision for the price decrease of inventories of
TNT Co. Ltd. For the tax year 200N is VND20 million.
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5.2.2.2. Non-Deductible expenses 5.2.2.2. Non-Deductible expenses

C) Non-deductible expenses:
6. Some expenses relating to materials and
commodities are:
- Materials and commodities expenses that exceed the
consumed norms that have been determined and
noticed to the tax office by the business establishment.
- The cost of damaged or ruined materials is caused by
natural disasters and fires which have not been
supported by proper documents as prescribed by
legislation.
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7. Fixed asset depreciation that does not meet the
terms as stipulated by legislation on depreciation
In order to be deductible as depreciation expense, a
fixed asset of a business establishment has to meet the
following criteria:
(i) it must have legitimate vouchers;
(ii) it is used for generating incomes
(iii) the depreciation has to comply with the stipulations
by law.
There are three depreciation methods accepted
including straight-line, adjusted balance and units of
production
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5.2.2.2. Non-Deductible expenses 5.2.2.2. Non-Deductible expenses

EXAMPLE 5.4

The cost of a machine (the total purchase) price is VND

Methol 1: Straight- line depreciation 100,000,000. Estimated service life is 5 year. The
maximum service life of this machine stipulated by the
ministry of finance is 5 year .
Annual depreciation charge = Required: define the annual depreciation charge of this
machine, using straight-line method.
SOLUTION
The annual depreciation charge is:

= VND20,000,000 per year

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5.2.2.2. Non-Deductible expenses 5.2.2.2. Non-Deductible expenses

Methol 2: Adjusted declining-balance method Y Book value Accelera Depreciatio Book value at
ea at Beginning ted rate n charge for End of year
EXAMPLE 5.5:
With the date provided in example 5.4 , use the rs of Year year

adjusted decline- balance depreciation method.

SOLUTION 1 100,000,000 40% 40,000,000 60,000,000

As the service life of the asset is 5 year, the accelerated 2 60,000,000 40% 24,000,000 36,000,000
rate is doubled. Thus, over a period of 5 years of 3 36,000,000 40% 14,400,000 21,600,000
estimated service life, the depreciation rate is 20
percent. 4 21,600,000 Adjusted 10,800,000 10,800,000

The accelerated rate is 20 percent x 2 = 40 percent 5 10,800,000 Adjusted 10,800,000 0

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5.2.2.2. Non-Deductible expenses 5.2.2.2. Non-Deductible expenses

Methol 3: Units of production method Methol 3: Units of production method

EXAMPLE 5.6:
Step 1:
The cost of a machine ( total purchase price) is
VND100,000,000. The estimated number of units
Depreciation per unit =
produced during the machine’s lifetime are 500,000.
First year production is 200,000 units. Second year
production is 300,000 units.
Step 2:
Required: Define the depreciation charge of this
Units produced x Depreciation per unit =
machine for the first and second year, using units of
Annual depreciation expense
production method.
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5.2.2.2. Non-Deductible expenses 5.2.2.2. Non-Deductible expenses

Methol 3: Units of production method 8) An enterprise guarantees or lends to another

EXAMPLE 5.6: enterprise a loan of any kind provided that the loan
amount is at least 25% of the contributed capital of
SOLUTION
the owner of the borrowing enterprise and attain more
The depreciation per unit is:
than 50% of the total value of medium and long-term
debts of the borrowing enterprise;
= VND200 depreciation per unit Decree No. 132/2020/ND-CP of the Government
The depreciation expense for the first and second year
would be calculation.

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5.2.2.2. Non-Deductible expenses
9) Salaries and/or wages or salary nature expenses in
the following cases:
- Salaries and/or wages of the owner of the private
enterprises;
Salaries and/or wages of the owner of the one-member
limited company owned by an individual;
- Remuneration paid to the founding member of the
administrative board of a corporation who does not
directly take part in the administration of goods
production and trading or service provision;
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5.2.2.2. Non-Deductible expenses
10) Any expenses without invoices or vouchers or with
invalid vouchers
11) The following taxes:
- Credited or refunded inputs of value added tax;
- Value added tax paid under credit method;
- Corporate income tax
- Personal income tax on gross salary;
- Foreign contractor taxes on gross price.
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5.2.2.2. Non-Deductible expenses
13) Donations
In general, donations are not deductible except
donations for education, health care, natural disaster
recovery and building houses for the poor as stipulated
by legislation.
14) Losses for the revaluation of items in foreign
currencies in cash, bank deposits, money in transfer
and receivables at the end of financial year.
15) Innovative prizes without a regulation of the
innovation and/or a board of innovative examination.
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5.2.2.2. Non-Deductible expenses
9) Salaries and/or wages or salary nature expenses in
the following cases:
- Bonuses or life insurance fees for which the
conditions and the levels are not specified in one of the
following documents: labor contracts or labor collective
agreements or financial regulations, bonus regulations.
- Salaries and remuneration payable written in book but
not actually paid or actually paid to employees but
having illegitimate vouchers;
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5.2.2.2. Non-Deductible expenses
12) Prepaid expenses that do not comply with
stipulations by law
These expenses include :
- Pre-recorded asset repair expense but not actually
paid;
- Prepaid rent but allocated incompliantly with the
legislation
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5.2.2.2. Non-Deductible expenses
16) Some expenses that do not comply with the specific
regulations by the Ministry of finance and other
competent government including:
- Extra allowances to women employees;
- Extra allowances to minorities employees;
17) Expenses for basic construction investment to form
fixed assets.
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5.2.2.2. Non-Deductible expenses 5.2.2.2. Non-Deductible expenses

18) Some other non-deductible expenses: 19) Costume costs: By kind for laborers without
invoices, vouchers or by money for laborers is excess
- Expenses of golf fees or golf member card; from VND 5,000,000 / person / year.

- Transportation tickets and accommodation expenses

not in compliance with the specific regulations by the
Ministry of finance etc.

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5.2.2.3 Other taxable incomes 5.2.2.3 Other taxable incomes

EXAMPLE 5.7:

- Income from capital transfer, securities transfer
and real estate transfer
- Incomes from property ownership.
- Income from the land's used right or rented
land or transfer of the land's used right:
- Gains from property transfer or liquidation
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We have date form Inc Co. Ltd. In 20xx as follows:
+ Total interest receivables for bank deposits:
VND1,400 million;
+ Total deductible interest expenses for borrowings:
VND1,200 million.
Required: Determine other taxable income in 20xx from
interest Inc.
SOLUTION:
+ Interest receivables are greater than deductible
interest expenses. The difference is: VND1,400 million
– VND 1,200 million =VND200 million
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5.2.2.3 Other taxable incomes 5.2.2.3 Other taxable incomes

EXAMPLE 5.8: EXAMPLE 5.8:

We have date from VAA Co in 20xx as follows: SOLUTION:

+ Base turnover: VND40,000 million;
+ Total deductible expenses apart from interest
expenses for borrowings: VND36,000 million;
+ Total deductible interest expenses for
borrowings:VND2,200 million:
+ Total interest receivables for bank deposits: VND600
million;
Required: Determine base income in 200xx of VAA.
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+ Main income: VND40,000 million- VND 36,000 million
= VND4,000 million.
+Deductible interest expenses are greater than interest
receivables. The difference is: VND2,200 million-
VND600 million = VND1,600 million.
+ Base income: VND4,000 – VND1,600 million=
VND2,400 million.
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5.2.2.3 Other taxable incomes
-Income from fines for contractual violation is
treated as follows:
+ We first offset fine receivables greater than the
fine payables, the difference. In the case when
the amount of the rest of other incomes are not
enough for the subtraction the main income is
written down.
The following examples will illustrate clearly the
above regulation.
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EXAMPLE 5.9
. SOLUTION
+ Fine receivables are greater than fine
payables. The difference is : VND240 million –
VND160 million = VND80 million.
+ Net income form an asset liquidation: VND210
million.
+ Total other taxable incomes: VND80
million+VND210 million = VND 290 million.
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EXAMPLE 5.10
SOLUTION
+ Fine payables are greater than fine
receivables. The difference is: VND260 million –
VND210 million =VND50 million.
+ Net income from an asset liquidation VND210
million.
+ Total other taxable incomes: VND210 million –
VND 50 million = VND 160 million.
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EXAMPLE 5.9
We have data from ANV Co.in 20xx as follows :
+ Fine receivables for suppliers’ violation of contracts:
VND240 million;
+ Fine payables to buyers due to ANV’s violation of
contracts: VND160 million;
+ Net income from an asset liquidation: VND210
million.
Required: Determine other taxable income of ANV in
20xx.
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EXAMPLE 5.10
We have date from ABC Co.in 20xx as follows:
+ Fine receivables for suppliers’ violation of contracts:
VND210 million;
+ Fine payables to buyers due to ANV’s violation of
contracts: VND260 million
+ Net income from an asset liquidation: VND210
million.
Required: Determine Other taxable income of ABC in
20XX.
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5.2.2.3 Other taxable incomes
- Sales margin from foreign currencies or foreign
exchange rate difference.
- Year-end balance of provisions according to
regulations by law except for bad debt provision,
provision for decrease in value of inventories, provision
for risks in financial investments.
- Recovered bad debts that were written off from
accounting books.
- Debts payable to unidentifiable creditor.
- Incomes from goods production and trading or
service provision activities in previous years , which
had been missed for booking but later discovered.
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5.2.2.3 Other taxable incomes
- Incomes form goods production and trading or service
provision activities overseas is treated as follows:
+ If the incomes are generated in countries which
have signed double taxation avoidance agreement with
Vietnam, The way we record these incomes must be
compliant with the terms and conditions stated in the
agreement.
+ If the incomes are generated in countries which
have not signed double taxation avoidance agreement
with Vietnam, the amount of before- CIT income
overseas are added to other taxable incomes.
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EXAMPLE 5.11
SOLUTION
Before- CIT income from overseas: VND1,600 million
/(1-0,2)=VND2.000 million.
CIT amount payable = (VND30 billion- VND26 billion +
VND2 billion) x 20% = VND1.2 billion.
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EXAMPLE 5.12
SOLUTION
Before- CIT income from overseas: VND1,700 million/(
1-0,3 x 0,5) = VND2 billion
CIT amount payable: (VND 8 billion + VND 2 billion )x
20% - VND 2 billion x 30%x50% = VND1.700 million.
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EXAMPLE 5.11
We have date from AGV Co.in 20XX as follows:
- Base turnover: VND30 billion;
- Total deductible expenses: VND26 billion;
- Income received from an investment project in country
A after payment of CIT for country A at the rate of 20%
VND1,600 million. Country A has not signed the double
taxation avoidance agreement with Vietnam.
Required: Determine CIT amount payable in 20XX by
AGV
61 24/08/2022 B02033 – Chapter 5: Corporate Income Tax 62
EXAMPLE 5.12
We have date from AAC Co.in 20XX as follows:
- Base turnover: VND80 billion;
- Total deductible expenses: VND72 billion;
- Income received from an investment project in country
A after payment of CIT for country A at the rate of 30%
and being reduced by 50% of the CIT amount payable:
VND1,700 million. Country A has signed double
taxation avoidance agreement with Vietnam.
Required: Determine CIT amount payable in 20XX by
AAC.
63 24/08/2022 B02033 – Chapter 5: Corporate Income Tax 64
5.2.2.3 Other taxable incomes
-Incomes from the sale of goods or provision of
services, which are not added into the turnover,
after deducting expenses for the generation of
these income amounts under the Finance
Ministry’s regulations.
- Other incomes such as incomes from project
transfer, gain from capital transfer, real estate
transfer etc.
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5.2.2.4. Exempt incomes 5.2.2.4. Exempt incomes

4) Income from activities of production and trading of
1) Income from farming, animal husbandry and
goods and services of enterprises having the number of
aquaculture products of cooperatives and entities,
laborers being disabled, after drug detoxification, HIV
which are established under the Act of Cooperatives;
infected people in the year accounting for 30% or more
2) Income from the provision of technical service
of the total number of the average annual laborers of
directly related to agriculture production;
the enterprise
3) Income from contracts on scientific research and/or
5) Income from job training for ethnic minority people,
technological development for maximum period of time
disabled people, children in exceptionally difficult
of 3 year counting from the from the beginning of the
circumstances, and social evil victims;
revenue under the scientific research and/or
technological development contract;

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5.2.2.4. Exempt incomes 5.2.2.5. Losses carried forward

6) Income is divided from activities of contributing Losses can be carried forward for 5 subsequent years
capital, purchasing shares, joint venture and link since the year of loss. Losses are subtracted from the
business with domestic enterprises which has paid the base income of the following tax year.
corporate income tax
7) Donations received for education, scientific research,
cultural and art activities, charities and other social
activities in Vietnam.

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5.2.3. INCOME TRANSFERRED TO SCIENTIFIC

RESEARCH AND TECHNOLOGY 5.2.4. TAXRATES
DEVELOPMENT FUND

- A maximum amount of 10 percent of base income is transferred - The standard rate is 20%.
to scientific research and technology development fund (STDF)
- The rate of between 32% and 50% is applicable to
- Within 5 years since the year of transfer to the fund, if less than each project by business establishments conducting
70 percent of the STDF is used, the establishments have to pay exploration and exploitation of oil and gas or other
income tax on the non –used fund.
precious natural resources
- If the SDTF is used for other purposes than scientific research
and technology innovation, the establishments have to pay
income tax on the wrong-purpose-used part of the funds and at
the same time they have to pay lay penalty for that wrong –
purpose- used part of the funds.

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5.2.5. OTHER TAX INCENTIVES
Beside exempt incomes as mentioned above, there
some other incentives in the Law on CIT of Vietnam
including preferential rates, tax holiday and other forms
of tax incentives. These include the following:
5.2.5.1. Preferential rates
i) The rate of 10% for the lifetime of a taxpayer is
applicable to establishment engaged in education,
training, health care, culture, sport and environment.
B02033 – Chapter 5: Corporate Income
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Tax
5.2.5.1. Preferential rates
iii) The rate of 20 percent is applicable to cooperatives
and people’s credit funds.
iv) The rate of 20 percent for 10 year since the
commencement of business operation is applicable to
business establishments newly founded under
investment projects engaged in geographical areas
with difficult socio-economic conditions.
24/08/2022 B02033 – Chapter 5: Corporate Income Tax
5.2.5.3. Other exempts
- Business establishments that engaged in production,
construction or transport activities and recruit female
laborers can enjoy corporate income tax reduction
corresponding to the amount of extra expenses for the
female laborers. The extra expenses are salaries paid
to the female laborers for their work done during the
maternity leave, maternity allowance for the first and
second parturition, and extra training expenses.
- Corporate income tax reduction is applicable to
business establishments employing a large ratio of
minority corresponding to the amount of extra expenses
for minority employees.
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5.2.5.1. Preferential rates
ii) The rate of 10% for 15 year since the
commencement of business operation is applicable to
business engaged in:
- Geographical areas with exceptionally difficult socio-
economic conditions
- Economic or high technological zones
- Fields of high technology, scientific research and
technology development and software production.
73 24/08/2022 B02033 – Chapter 5: Corporate Income Tax 74
5.2.5.2. Tax holidays
- Tax exemption up to 4 years after the taxpayer’s incomes are
generated and a 50% reduction of the taxpayer’s payable tax
amounts up to 9 subsequent years is applicable to business
establishments newly founded under investment projects
engaged in:
- Geographical areas with exceptionally difficult socio-economic
conditions;
- Economic or high technological zones;
- Fields of high technology, scientific research and technology
development;
- Investment in specially important infrastructure of the
government, and
- Software production, education, training, health care, culture,
sport and environment.-
75 24/08/2022 B02033 – Chapter 5: Corporate Income Tax 76
EXAMPLE 5.13
We have date from Viet Co. Ltd. In a tax years as follows:
- Gross turnover exclusive of VAT: VND90,000,000,000
- Total declared expenses: VND 80,000,000,000 of which:
+ Salaries expenses with illegitimate vouchers: VND60,000,000
+ Donation with legitimate vouchers for scholarship to a
university VND200,000,000
+ Donation with legitimate vouchers to a church:
VND40,000,000
- Income from a technical service for agriculture:VND60,000,000
- Net income from liquidation : VND 100,000,000.
- Losses carried forward: VND200,000,000
Required: define the corporate income tax payable by the
company for the tax year.
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SOLUTION
- The base turnover: VND90,000,000,000
- The non-deductible expenses:
+ Salaries expenses of VND60,000,000 with illegitimate
vouchers
+ Donation of VND40,000,000 with legitimate vouchers to a
church –
-Therefore, the total amount of non- deductible expenses will be:
VND60,000,000 + VND40,000,000= VND100,000,000.
- Donation with legitimate vouchers for scholarship to university
is deductible.
- Total deductible expenses:
VND80,000,000,000– VND100,000,000 = VND79,900,000,000
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5.2.5.4. TAX DECLARATION AND PAYMENT
5.2.5.4.1. Tax declaration
- In general, a self- assessment system is applicable to
income tax declaration in Vietnam. The taxpayers
themselves calculate the tax amount payable, files the
tax return, and pays tax at the due time stated by law.
- Corporate income tax declaration includes annual
declaration, quarterly declaration, declaration for each
time of generation of income, and final declaration at
the termination of business operation or contracts,
transfer of corporate ownership or corporation
reorganization.
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Exercise 1
We have the data of the tax year N in Hanh Co. Ltd as follows:
The company’s gross sales exclusive of VAT are 10 billion dongs
o which
7 million dongs come from exported goods.
400 million dongs are the quantity discount.
200 million dongs are the value of goods returns.
300 million dongs are cash discount
In the tax year, this company received a subsidy of 250 million
dongs from the government for the goods sold to the poor.
Surcharges receivable are 50 million dongs.
Required: Determine the base turnover for corporate income tax
of this company for the tax year N.
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EXAMPLE 5.13
- Other taxable incomes:
+ Income from a technical service for agriculture:
VND60,000,000 – (exempt tax)
+ Income from liquidation: VND100,000,000
Therefore, the total amount of other taxable incomes is VND
100,000,000
+ Losses carried forward: VND200,000,000
Assessable income:
90,000,000,000 – 79,900,000,000 + 100,000,000=
10,200,000,000
. Base income
10,200,000,000 – 200,000,000 = VND10,000,000,000
CIT amount payable
10,000,000,000 x 20% = VND2,000,000,000
24/08/2022 B02033 – Chapter 5: Corporate Income Tax 80
5.2.5.4. TAX DECLARATION AND PAYMENT
5.2.5.4.2 Tax payment
In principle, the due date for tax payment is the filing
deadline of tax declaration. This means that for
quarterly temporary tax payment, the due date is on the
30th day of the subsequent quarter since the end of the
taxable quarter.
For tax paid on each time of generation of income, the
deadline for payment is on the 10th day since the date
of generating.
For official final payment of annual tax, the due date to
pay any balance of tax is on the 90th day of the
subsequent year since the end of the tax year.
24/08/2022 B02033 – Chapter 5: Corporate Income Tax 82
Exercise 2
We have the data of the tax year N in Moore Co. as
follows:
Turnover from exportation is 15 billion dongs.
Sales of domestic goods exclusive of VAT is 10 billion
dongs of which 7 billion dongs have been received; the
remainder has been accepted to be paid.
House rent received in advance for 5 years is 40 billion
dongs. The company chooses to book the expenses for
the renting houses for each year.
Surcharges receivable are 50 million dongs.
Required: Define the base turnover for CIT of this
company for the tax year N.
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Exercise 3
The cost of a machine ( total purchase price) is
VND500,000,000. Estimated service life is 6 years.
The maximum service life of this machine stipulated by
the minister of Finance is 5 years.
Required: Determine the depreciation charge on this
machine using straight- line and adjusted declining
balance methods.
24/08/2022 B02033 – Chapter 5: Corporate Income Tax 85
Exercise 5
We have the information on TNT Co. Ltd. On 31 December 200N
as follows:
The balance of the bad debt provision account: VND70 million.
There have been 10 notes receivable of which:
Six notes receivable are within the due date.
A note receivable of VND 30 million with no vouchers has been 6
months over the due date.
A borrower of a debt of VND50 million has been on bankruptcy
and cannot afford to pay. This debt has a valid vouchers have
been 5 months over the due date. The value of these notes is
VND80 million.
Required: Calculate the provision for doubtful debt expense of
this company
24/08/2022 B02033 – Chapter 5: Corporate Income Tax 87
Exercise 6
Donation for victims of a storm with valid vouchers:
VND100,000,000.
Remuneration with legitimate vouchers paid to the founding
members of companies who do not directly take part in the
administration of goods production: VND150,000,000
The rest expenses except for the above expenses are
deductible.
Marketing, advertising, reception and brokerage commission
expenses with legitimate vouchers: VND1,120,000,000
Required : determine the total deductible expenses of this
company. Given that, Bamboo Co. was founded in year N-4
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Exercise 4
The cost of a machine ( total purchase price) is
VND400,000,000. Total estimated units produced
during its lifetime are 1,000,000. First year production
is 80,000 units. Second year production is 100,000
units.
Required: calculate the depreciation charge on this
machine for the first and second year units of
production method.
24/08/2022 B02033 – Chapter 5: Corporate Income Tax 86
Exercise 6
According to the financial report of Bamboo Co, operating in
furniture production, data on expenses for the tax year N are as
follows:
Total expenses except for expenses of marketing, advertising,
reception and brokerage commission: VND10,000,000,000 of
Which:
Material expense with legitimate invoice: VND3,000,000,000.
This expense is compliant with the consumed norm defined by
the company.
The value of some invoices of material without the seller’s tax
identification number: VND50,000,000.
24/08/2022 B02033 – Chapter 5: Corporate Income Tax 88
Exercise 7
We have data on business activities of Mist Group as follows:
Gross turnover exclusive of VAT: VND20 billion of which, VND8
billion comes from exported goods; VND12 billion comes from
the domestic sale of an excise duty item with excise duty rate of
20 percent.
Total declared expenses apart from excise duty: VND 16 billion
of which:
Donation with legitimate vouchers for construction of a hospital:
VND200 million
Donation with legitimate vouchers to youth union of Hanoi:
VND100 million
Expenses with invalid vouchers are VND150 million
Provision for doubtful debt: VND140 million balance on bad debt
provision at the end of the tax year: VND100 million. There were
no debts with over due date during the tax year.
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Exercise 7 Exercise 8

Required: calculate the VAT and income tax payable by this
group. Given that, input VAT qualified: VND80 million VAT rate
applicable to this item is 10 percent. CIT standard rate is
applicable to this group.
Data of business of Lion Co. operating in air- conditioner
production in the tax year M, are as follows:
Turnover report
Air-conditioner with capacity of 12,000 BTU: 10,000 units were
sold at before- VAT price of VND 11,000,000 per unit.
Air-conditioner with capacity of 100,000 BTU: 1,000 units were
sold at before –VAT price of VND 44,000,000 per unit.
Expense report
Depreciation compliant strictly with the stipulations by law:
VND10,000,000,000

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Exercise 8 Exercise 8

Other relevant information

Interest expense: VND6,000,000,000 or which VAT rate applicable to this item is 10 percent.
VND2,000,000,000 is equivalent to the interest of the lack of Excise duty rate applicable to this item is 10 percent.
charter capital. Standard rate of corporate income tax is applicable to this
company
Input VAT qualified: VND9,000,000,000. Losses carried forward is VND2,000,000,000
Other deductible expenses apart form excise
duty:VND8,000,000,000 Required: Determine VAT, excise duty and corporate income tax
payable by this company for the tax year M.

24/08/2022 B02033 – Chapter 5: Corporate Income Tax 93 24/08/2022 B02033 – Chapter 5: Corporate Income Tax 94

Exercise 9 Exercise 9

Total declare expense: VND87,000,000,000 of which:

Company X, founded in year N-5 under an investment project
engaged in Laichau province, has the following date in tax year
N:
Turnover report (VND.Million)
Gross sales of goods exclusive of VAT:VND95,000, of which
VND5,000 is value of goods returns. These goods returns then
were sold at lower price and were paid VND4,000,
Expense report
Total declare expense: VND87,000 of which:
24/08/2022 B02033 – Chapter 5: Corporate Income Tax
Salaries and remuneration expense payable: VND15,000 of
which VND. Mill 500 with list of laborers hired to do irregular
work signed by the director of the company but without labor
contract; VND Mill 1,000 was not actually paid to employees.
Donation to student union with legitimate vouchers; VND100
Donation to disabled people with legitimate vouchers: VND200
Interest expense paid to a commercial bank with legitimate
vouchers: VND2,000
Interest expenses paid to employees of the company at the rate
of 25% per year with legitimate vouchers: VND1,000.
The rest expenses except for the above expenses are
deductible.
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Exercise 9
Other incomes:
-Income received after paying tax at source at the tax rate of 10
percent from an overseas investment is VND900
-Income received from a scientific contract is VND300
-Relevant information:
Laichau is a province in geographical areas with difficult socio-
economic conditions.
This company started to sell product in year N-4 and earned income
from production in year N-3
The country from where the company received income for investment
has not yet signed double taxation agreement with Vietnam.
The base interest rate announced by the state bank of Vietnam is 12%
per annum.
This company was given a scientific research activities license.
Required: calculate income tax payable by this company for the tax
year N.
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Exercise 10
Cost of damaged materials which has been compensated by an
insurance company: VND 300 million;
Uniform expenses: VND 900 million;
Deductible input VAT: VND 320 million;
Non deductible input VAT for late declaration: 180 million;
Employees’ training expense: VND 280 million;
Bad debt provision: VND 1,200 million.
The rest expenses not mentioned above are deductible under
the law on CIT of Vietnam.
Required: calculate the amount of CIT payable by the company
for the tax year 20XX.
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Exercise 11
A corporation engaging in production has the following data for
the tax year:
Base turnover: 200 billion dongs
Total expenses allocated for declared turnover: 170 billion dongs
of which:
House rent expenses paid in advance for 5 years: 1.5 billion
dongs;
Donation for scholarship to Haiphong University: 200 million
dongs;
Life insurance fees for employees ( the labor contracts silent
about this) paid to an insurance company: 400 million dongs;
PIT paid ( Under labor contract, employees get net salary); 150
million dongs;
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Exercise 10
A company engaging in furniture production has the following
date in tax year 20XX:
CIT amount payable declared by the company: VND 7 billion.
Among total deductible expenses declared by the company 25
billion, there are several items as follows:
Donation to Vietnam Students’ Union: VND 200 million;
PIT deduction at source ( Employees get net salary under labor
contracts): VND 600 million;
Depreciation of a 5-seaar car corresponding to the excess of the
historical cost of VND 1.6 billion: VND 200 million;
Donation to victims of a storm through Vietnam Frontiers : VND
160 million;
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Exercise 10
Given that;
All expenses are supported with legitimate invoices and voucher;
This company has 100 employees;
No losses carried forward;
The balance of bad debt provision account right before the time
of making bad debt provision is VND 800 million;
By the end of 2011 the bebt account is as follows:
2 debts over the due date of 10 months: VND 2.2 billion;
4 debts over the due date of 16 months: VND 1.4 billion.
1 debt over the due date of 26 months: VND 800 million.
CIT rate: 25%.
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Exercise 11
Uniform expenses: 700 million dongs:
The other expenses are deductible.
Required: Calculate the CIT amount payable by this corporation
for the tax year, given that:
All of the expenses have sufficient legitimate invoices or
vouchers;
This company has 100 employees;
Standard CIT rate is applicable to this corporation
There are no losses carried forward and no exemption applicable
to this corporation.;
The company is in its 5 the year of operation.
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