Are corporate income tax and contributions to the state budget subject to accounting in Vietnam?

Are corporate income tax and contributions to the state budget subject to accounting in Vietnam?

Pursuant to Article 8 of the Accounting Law 2015, the subjects of accounting are regulated as follows:

Accounting Subjects

1. Accounting subjects in the activities of collection and expenditure of the state budget, administration, public service, and activities of units and organizations using the state budget include:

a) Money, materials, and fixed assets;

b) Funding sources, funds;

c) Payments within and outside the accounting unit;

d) Collection, expenditure, and handling of revenue and expenditure discrepancies;

đ) Collection, expenditure, and the state budget surplus;

e) State financial investment, credit;

g) Public debt and public debt handling;

h) Public assets;

i) Assets, receivables, and other payables related to the accounting unit.

2. Accounting subjects in the activities of units and organizations that do not use the state budget include assets and sources forming assets as regulated at points a, b, c, d, and i of paragraph 1 of this Article.

3. Accounting subjects in business activities, excluding activities specified in paragraph 4 of this Article, include:

a) Assets;

b) Payables and owner's equity;

c) Revenue, business expenses, income, and other expenses;

d) Taxes and contributions to the state budget;

đ) Results and distribution of business operation results;

e) Assets, receivables, and other payables related to the accounting unit.

4. Accounting subjects in banking, credit, insurance, securities, and financial investment activities include:

a) The subjects specified in paragraph 3 of this Article;

b) Financial investments, credits;

c) Payments within and outside the accounting unit;

d) Commitments, guarantees, financial instruments.

Thus, according to the regulation above, corporate income tax and taxes in general and contributions to the state budget must be accounting subjects.

Are corporate income tax and contributions to the state budget subject to accounting in Vietnam? (Image from the Internet)

How to determine the income for calculating corporate income tax in Vietnam?

The taxable income for corporate income tax is stipulated in Article 7 of the Corporate Income Tax Law 2008, where it is determined as follows:

- Taxable income during the tax period is determined by taxable income minus tax-exempt income and losses carried forward from previous years.

- Taxable income is revenue minus deductible expenses of production, business activities, plus other income, including income generated outside Vietnam.

What are 2 corporate income tax incentive policies for new investment projects in disadvantaged areas in Vietnam?

According to paragraph 4 of Article 19 of Circular 78/2014/TT-BTC, the incentives are regulated as follows:

Preferential Tax Rate

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4. A preferential tax rate of 20% for ten years (10 years) applies to:

a) Income from new investment projects in areas with difficult socio-economic conditions as specified in the Appendix issued with Decree No. 218/2013/ND-CP of the Government of Vietnam.

b) Income from new investment projects: producing high-grade steel; energy-saving products; machinery, equipment for agricultural, forestry, fishery, salt production; irrigation equipment; production, refining of animal feed, poultry feed, aquatic feed; development of traditional industries (including constructing and developing traditional industries in producing handicrafts, processing agricultural and food products, cultural products).

Enterprises implementing new investment projects in the fields, regions of tax incentives specified in this paragraph from January 01, 2016, will apply a tax rate of 17%.

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Simultaneously, according to paragraph 3 of Article 20 of Circular 78/2014/TT-BTC as amended by Article 6 of Circular 151/2014/TT-BTC, the regulation is as follows:

Tax Exemption and Reduction Incentives

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3. Exemption from tax for 2 years and a 50% reduction in tax payable for the next 4 years for income from implementing new investment projects as stipulated in Paragraph 4, Article 19 of Circular No. 78/2014/TT-BTC dated June 18, 2014, of the Ministry of Finance and income from enterprises implementing new investment projects in industrial zones (excluding industrial zones located in areas with favorable socio-economic conditions).

The areas with favorable socio-economic conditions specified in this paragraph are inner districts of special-grade urban areas, grade-I urban areas under central authority, and grade-I urban areas under provincial authority, excluding districts of special-grade urban areas, grade-I urban areas under central authority, and grade-I urban areas under provincial authority established from rural districts since January 01, 2009; where industrial zones are located on both favorable and unfavorable areas, tax incentives for industrial zones are determined based on the actual location of the investment project on the real terrain.

The determination of special-grade urban areas, grade I as specified in this paragraph is performed according to the regulations in Decree 42/2009/ND-CP dated May 07, 2009, of the Government of Vietnam on categorizing urban areas and documents amending this Decree (if any).

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The corporate income tax incentives for new investment projects in disadvantaged areas include:

[1] New investment projects in disadvantaged areas will enjoy a preferential tax rate of 20% for ten years (10 years).

[2] New investment projects in disadvantaged areas will be exempt from tax for 2 years and will have a 50% reduction in the tax payable for the next 4 years.