Currently, there are many legal provisions on tax rates and corporate income tax incentives. This article Pham Consult will provide all information about corporate income tax in 2023.

WHAT IS CORPORATE INCOME TAX?

Corporate income tax is a tax that the state directly collects into the state budget on the taxable income of enterprises (organizations engaged in the production and trading of goods and services). 

PAYERS OF CORPORATE INCOME TAX

Corporate income taxpayers are organizations engaged in the production and trading of goods and services with taxable income, including:

• The enterprise is established and operates under the provisions of the Enterprise Law, the Law on State-owned Enterprises, the Law on Foreign Investment in Vietnam, the Law on Investment, the Law on Credit Institutions, the Law on Insurance Business, and the Law on Securities. securities, Petroleum Law, Commercial Law, and other legal documents in the form of joint stock companies; limited liability companies; partnerships; private enterprises; Government companies; the parties to the business cooperation contract; the parties to the oil and gas production sharing contract, the oil and gas joint venture enterprise, the joint operating company;
• Enterprises established by foreign laws (hereinafter referred to as foreign enterprises) with a permanent establishment or without a permanent establishment in Vietnam;
• Public and non-public non-business units producing and trading goods and services with taxable income;
• Organizations established and operating under the Law on Cooperatives;
• Other organizations that have production and business activities and have taxable income.

TAX INCOMES

According to Article 7 of Circular 78/2014/TT-BTC as amended and supplemented according to Article 5 of Circular 96/2015/TT-BTC stipulating: The specific corporate income taxable incomes are as follows:

• Taxable income includes income from the production and trading of goods, provision of services, and other incomes.
• Other income includes:

1. Income from the capital transfer, securities transfer;
2. Income from real estate transfer; 
3. Income from transfer of investment projects; 
4. Income from ownership, right to use property; 
5. Income from property rental in any form; 
6. Income from a property transfer, property liquidation; 
7. Income from deposit interest, loan interest; 
8. Income from foreign currency sales; 
9. Income from exchange rate difference;
10. Bad debts that have been written off are now recovered;
11. Debts payable for which the creditor cannot be identified;
12. Income from production and business activities of previous years was omitted to be discovered;
13. In case the enterprise has a collection of fines or compensation due to the partner’s breach of the contract;
14. Difference due to revaluation of assets as prescribed by law for capital contribution, for asset transfer upon division, separation, consolidation, merger, or transformation of enterprises;
15. Gifts and gifts in cash or kind; income received in cash or kind from funding sources; income received from marketing support, expense support, payment discount, promotion bonus, and other support;
16. Other money, property, and benefits;
17. Deductions for pre-expenses but not used or not used up according to the set-up period but the enterprise does not account for adjustment of expenses; the refund of the provision for construction warranty;
18. Incomes related to the consumption of goods and provision of services are not included in the turnover;
19. Income from consumption of scrap and discarded products after deducting recovery costs and consumption expenses;
20. Import and export tax refunds;
21. Refundable incomes from capital contribution to shares, joint ventures, and associates;
22. Incomes received from production and business activities of goods and services abroad;
23. Other incomes as prescribed.

CORPORATE INCOME TAX RATE OF 2023

Corporate income tax rate 20%

The corporate income tax rate is 20%, except for the cases where the enterprise is subject to the tax rate of 32% – 50% and the subject of tax incentives.

Note: Enterprises established and operating under the provisions of Vietnamese law, including cooperatives and non-business units engaged in the production and trading of goods and services with a total annual turnover of not more than 20 billion VND subject to the tax rate of 20%.

The total annual revenue used as a basis for determining the enterprise eligible to apply the tax rate of 20% is the enterprise’s total revenue from selling goods and providing services in the preceding year.

The corporate income tax rate is from 32% – 50%

• The corporate income tax rate for the prospecting, exploration, and exploitation of oil and gas and other rare and precious resources in Vietnam ranges from 32% to 50%.
• For oil and gas prospecting, exploration, and exploitation activities, based on the location, exploitation conditions, and reserves, the Prime Minister shall decide the specific tax rate suitable to each project and each facility. business offices at the proposal of the Minister of Finance.
• For mines of platinum, gold, silver, tin, tungsten, antimony, precious stones, and rare earth, the tax rate is 50%.
• For mines of platinum, gold, silver, tin, tungsten, antimony, precious stones, and rare earth resources with 70% of the allocated area or more located in areas with extremely difficult socio-economic conditions, it is on the list of business income tax incentives are applied at the corporate income tax rate of 40%.

Subjects of corporate income tax incentives

Applying a tax rate of 10% for 15 years

• Incomes of enterprises from implementing new investment projects in areas with extremely difficult socio-economic conditions, economic zones, and high-tech zones;
• Incomes of enterprises from the implementation of new investment projects, including:

❖ Scientific research and technological development;

❖ High-tech applications on the list of high technologies prioritized for development investment by the Law on High Technology;

❖ High-tech incubation, high-tech enterprise incubation;

❖ Venture investment for a high-tech development on the list of high-tech prioritized for development investment by the Law on High Technology;

❖ Investment in construction – the business of high-tech incubators, high-tech enterprise incubation;

❖ Investing in the development of especially important infrastructure of the State according to the provisions of law;

❖ Producing software products;

❖ Producing composite materials, light building materials, and rare materials;

❖ Production of renewable energy, clean energy, and energy from waste destruction;

❖ Development of biotechnology;

❖ Environmental protection;

• Incomes of hi-tech enterprises and hi-tech agricultural enterprises according to the provisions of the Law on High Technology;
• Income of an enterprise from the implementation of a new investment project in the manufacturing sector (except for a project to produce goods subject to excise tax and a mining project) that meets either of the following two criteria:

❖ Projects with minimum investment capital of six thousand billion dongs, disbursed within three years from the date of issuance of the investment certificate and with a total turnover of at least ten thousand billion VND/year. after three years from the year of revenue;

❖ The project has a minimum investment capital of six thousand billion VND, disbursed within three years from the date of issuance of the Investment Certificate, and employs more than three thousand employees.

❖ Incomes of enterprises from implementing new investment projects to produce products on the list of supporting industry products prioritized for development that meet one of the following criteria:

➢ Industrial products to support high technology according to the provisions of the Law on High Technology;

➢ Supporting industrial products for the production of products of the following industries: textile – garment; leather – shoes; electronics and information technology; automobile production and assembly; mechanical engineering that as of January 1, 2015, cannot be produced domestically or can be manufactured but must meet technical standards of the European Union (EU) or equivalent.

• Incomes of enterprises from the implementation of investment projects in the field of production, except projects for the production of goods subject to excise tax and mining projects, with an investment capital of at least twelve thousand billion, using technology must be appraised according to the provisions of the Law on High Technology, Law on Science and Technology, disbursing the total registered investment capital not more than 05 years from the date of being allowed to invest according to regulations. investment law.
• For investment projects specified in Clause 2, Article 20 of the Law on Investment, the Prime Minister shall decide to apply a preferential tax rate reduced by not more than 50% compared to the above preferential tax rate; the duration of application of the preferential tax rate shall not exceed 1.5 times the period of application of the above preferential tax rate and shall be extended for no more than 15 years and shall not exceed the duration of the investment project.

A 10% tax rate applies

• Incomes of enterprises from performing socialization activities in the fields of education – training, vocational training, healthcare, culture, sports, and environment;
• Incomes of enterprises from implementing investment projects – social housing business for sale, lease, lease purchase for the subjects specified in Article 53 of the Law on Housing;
• Incomes of press agencies from printing press activities, including advertisements on printed newspapers according to the provisions of the Press Law; incomes of publishing agencies from publishing activities by the Law on Publishing;
• Income of enterprises from planting, tending, and protecting forests; farming and processing agricultural and aquatic products in areas with difficult socio-economic conditions; cultivating forest products in areas with difficult socio-economic conditions; production, multiplication, and crossbreeding of plant and animal varieties; salt production, mining, and refining, except for salt production specified in Clause 1, Article 4 of the Law on Corporate Income Tax; investment in post-harvest preservation of agricultural products, preservation of agricultural products, aquatic products, and food;
• Incomes of cooperatives operating in the fields of agriculture, forestry, fishery, and salt production that are not located in areas with difficult socio-economic conditions or areas with extremely difficult socio-economic conditions. difficulties, except for the income of the cooperative specified in Clause 1, Article 4 of the Law on Corporate Income Tax.

Applying a tax rate of 17% for 10 years

• Incomes of enterprises from implementing new investment projects in areas with difficult socio-economic conditions;
• Income of enterprises from the implementation of new investment projects, including production of high-grade steel; produce energy-saving products; production of machinery and equipment for agriculture, forestry, fishery, and salt production; production of irrigation equipment; producing and refining animal, poultry and aquatic feed; traditional industry development.
• Income of people’s credit funds and microfinance institutions.

Apply a tax rate of 15%

• The tax rate of 15% shall be applied to the incomes of enterprises engaged in cultivation, husbandry, and processing in the field of agriculture and fishery that are not located in areas with difficult socio-economic conditions or areas with poor economic conditions. socio-economic difficulties are particularly difficult.

Extension of time to apply preferential tax rates:

• For projects that need to especially attract large-scale and high-tech investment, the time for applying the preferential tax rate may be extended, but the extension period shall not exceed 15 years;
• For projects specified at Point e, Clause 1, Article 13 of the Law on Corporate Income Tax meet one of the following criteria:

❖ Producing products and goods that are globally competitive, with a turnover of over twenty thousand billion VND/year at the latest after five years from the date of receipt of revenue from an investment project;

❖ Regular use of over six thousand employees;

❖ Investment projects in the field of economic and technical infrastructure, including investment in the development of water plants, power plants, water supply, and drainage systems, bridges, roads, railways, airports, seaports, river ports, airports, railway stations, new energy, clean energy, energy saving industry, petrochemical refinery project.

• The Prime Minister shall decide to extend the period of application of the preferential tax rate, but the extension shall not exceed 15 years.

The time to apply the prescribed preferential tax rate

The period of application of the preferential tax rate is calculated from the first year the enterprise’s new investment project has revenue; for hi-tech enterprises, hi-tech agricultural enterprises shall be counted from the date of being granted the certificate of hi-tech enterprises or hi-tech agricultural enterprises; for hi-tech application projects, counting from the date of being granted the certificate of the high-tech application project.

LEGAL BASIS

• Law on Corporate Income Tax 2008, amended and supplemented in 2013, 2014;
• Decree 218/2013/ND-CP guiding the implementation of the Law on corporate income tax;
• Circular No. 78/2014/TT-BTC guiding the implementation of the government’s Decree No. 218/2013/ND-CP of December 26, 2013, detailing and guiding the implementation of the Law on CIT;
• Circular No. 96/2015/TT-BTC guidelines for corporate income tax in the government’s decree No. 12/2015/NĐ-CP dated FEBRUARY 12, 2015 on guidelines for the Law on Amendments to Laws on Taxation and Amendments to Degrees on Taxation; Amendments to some articles of Circular No. 78/2014/TT-BTC dated June 18, 2014, Circular No. 119/2014/TT-BTC dated August 25, 2014, and Circular No. 151/2014/TT-BTC dated October 10, 2014, of the Ministry of Finance.

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