11 types of income exempt from corporate income tax in 2024 in Vietnam

Which entities in Vietnam are subject to corporate income tax?

According to the provisions of Clause 1, Article 2 of the 2008 Corporate Income Tax Law, the entities liable for corporate income tax are organizations engaged in the production and business of goods and services with taxable income as prescribed by this Law (hereinafter referred to as enterprises), including:

- Enterprises established under Vietnamese law;

- Enterprises established under foreign laws (hereinafter referred to as foreign enterprises) with permanent establishments or without permanent establishments in Vietnam;

- Organizations established under the Cooperative Law;

- Public service units established under Vietnamese law;

- Other organizations engaged in production and business activities that generate income.

11 types of income exempt from corporate income tax in 2024 in Vietnam​ (Image from the Internet)

What types of income are subject to corporate income tax in Vietnam?

According to the provisions of Article 3 of the 2008 Corporate Income Tax Law (amended by Clause 1, Article 1 of the 2014 Amended Tax Law No 71/2014/QH13), taxable income includes income from production, business activities of goods and services, and other income.

In particular, other income includes:

- Income from the transfer of capital, transfer of capital contribution rights;

- Income from real estate transfer, transfer of investment projects, transfer of the right to participate in investment projects, transfer of the right to explore, exploit, and process minerals;

- Income from the right to use assets, the right to own assets, including income from intellectual property rights as prescribed by law;

- Income from the transfer, lease, liquidation of assets, including valuable papers;

- Income from deposit interest, loan interest, foreign currency sales; recovered amounts from bad debts that were previously written off;

- Recovered amounts from unidentified payable debts;

- Income from business activities of previous years that were skipped and other income.

* Vietnamese enterprises investing abroad returning the post-corporate income tax income to Vietnam shall follow the provisions of the Double Taxation Avoidance Agreement if Vietnam has signed such an agreement with the concerned country; in case Vietnam has not signed such an agreement, if the corporate income tax rate in the countries where the enterprise returns the income is lower, then the difference compared to the corporate income tax rate as per Vietnamese corporate income tax law will be collected.

What are the 11 types of income currently exempt from corporate income tax in Vietnam?

According to the provisions of Article 4 of the 2008 Corporate Income Tax Law (amended and supplemented by Clause 3, Article 1 of the 2013 Amended Corporate Income Tax Law, amended by Clause 2, Article 1 of the 2014 Amended Tax Law No 71/2014/QH13 on amended tax law 2014), the types of income exempt from corporate income tax include:

- Income from cultivation, husbandry, aquaculture, processing of agricultural products, seafood, and salt production by cooperatives; income of cooperatives operating in agriculture, forestry, fisheries, and salt production in areas with difficult socio-economic conditions or special difficult socio-economic conditions; income of enterprises from cultivation, husbandry, aquaculture, processing of agricultural products, seafood in areas with special difficult socio-economic conditions; income from fishing activities.

- Income from providing technical services directly serving agriculture.

- Income from carrying out research and development contracts, products in the trial production phase, products made from new technology first applied in Vietnam.

- Income from the production and business activities of enterprises with an average of 30% or more of employees with disabilities, post-rehabilitation individuals, or HIV-infected individuals out of an average workforce of twenty or more, excluding enterprises operating in the financial and real estate business sectors.

- Income from vocational training specifically for ethnic minorities, disabled people, children with special difficult circumstances, and individuals subjected to social evils.

- Distributed income from domestic capital contributions, joint ventures, and affiliations after corporate income tax has been paid as prescribed by this Law.

- Funding received for educational, scientific research, cultural, artistic, charitable, humanitarian, and other social activities in Vietnam.

- Income from the transfer of emission reduction certificates (CERs) by enterprises granted such certificates.

- Income from tasks assigned by the State to the Vietnam Development Bank in investment credit activities, export credit; income from credit activities for the poor and other policy targets of the Social Policy Bank; income of state financial funds and other non-profit state funds as prescribed by law; income of organizations wholly owned by the Government of Vietnam established to handle bad debts of Vietnamese credit institutions.

- Undistributed income of socialized establishments in the fields of education and training, health, and other socialized fields to be reinvested in such establishments as per specialized laws on education and training, health, and other socialized fields; undistributed income forming non-divisible assets of cooperatives established and operating under the Cooperative Law.

- Income from technology transfers belonging to prioritized areas transferred to organizations and individuals in areas with special difficult socio-economic conditions.