Are foreign enterprises with a permanent establishment in Vietnam pequired to pay corporate income tax?

Are foreign enterprises with a permanent establishment in Vietnam pequired to pay corporate income tax?

Pursuant to Clause 1, Article 2 of Decree 218/2013/ND-CP, which regulates the subjects of corporate income tax, as follows:

Taxpayers

Taxpayers are determined according to the provisions of Article 2 of the Law on Corporate Income Tax and Clause 1, Article 1 of the Law amending and supplementing several articles of the Law on Corporate Income Tax.

1. Taxpayers as stipulated in Clause 1, Article 2 of the Law on Corporate Income Tax include:

a) Enterprises established and operating in accordance with the Law on Enterprises, the Law on Investment, the Law on Credit Institutions, the Law on Insurance Business, the Law on Securities, the Law on Petroleum, the Law on Commerce, and other legal documents in the form of: Joint stock companies; limited liability companies; partnerships; private enterprises; parties in business cooperation contracts; parties in oil and gas product sharing contracts, oil and gas joint ventures, and joint operating companies;

b) Enterprises established under foreign law (hereinafter referred to as foreign enterprises) with or without a permanent establishment in Vietnam;

c) Public service providers, private entities producing and conducting business in goods and services with taxable income as prescribed in Article 3 of this Decree;

d) Organizations established and operating according to the Law on Cooperatives;

dd) Other organizations not specified in Points a, b, c, d of this Clause engaging in business activities with taxable income as prescribed in Article 3 of this Decree.

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Therefore, according to the above regulation, foreign enterprises with a permanent establishment in Vietnam must pay corporate income tax.

Are foreign enterprises with a permanent establishment in Vietnam pequired to pay corporate income tax? (Image from the Internet)

When is the deadline for corporate income tax payment?

According to Article 55 of the Law on Tax Administration 2019, the specific deadline for tax payment is regulated as follows:

Tax Payment Deadline

1. In the case where the taxpayer calculates the tax, the tax payment deadline is the last day of the tax return filing deadline. In case of a supplementary tax return, the payment deadline is the deadline for the tax return of the taxable period with the error or omission.

For corporate income tax, provisional payment is made on a quarterly basis, with the tax payment deadline being the 30th of the first month of the following quarter.

For crude oil, the deadline for natural resource tax and corporate income tax payment for each crude oil sale is 35 days from the sales date for crude oil sold domestically or from the customs clearance date for exported crude oil as per customs law.

For natural gas, the deadline for natural resource tax and corporate income tax payment is monthly.

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Provisional corporate income tax is paid quarterly, thus the deadline for provisional corporate income tax payment is no later than the 30th of the first month of the following quarter.

Which expenses are not deductible when determining taxable corporate income in Vietnam?

Pursuant to Clause 2, Article 9 of the Law on Corporate Income Tax 2008, as amended and supplemented by Clause 5, Article 1 of the Amended Law on Corporate Income Tax 2013, the specific regulations are as follows:

Expenses that are not deductible when determining taxable corporate income include:

- Expenses that do not meet the conditions specified in Clause 1, Article 9 of the Law on Corporate Income Tax 2008, except for loss in value due to natural disasters, epidemics, and other force majeure circumstances not compensated;

- Fines for administrative violations;

- Expenses covered by other funding sources;

- Business management expenses allocated by foreign enterprises to a permanent establishment in Vietnam exceeding the calculation method allocation as stipulated by Vietnamese law;

- Expenses exceeding the limits prescribed by law for provisioning;

- Interest expenses on loans for production and business from non-credit institutions or economic organizations exceeding 150% of the basic interest rate announced by the State Bank of Vietnam at the time of borrowing;

- Depreciation of fixed assets not conforming to legal regulations;

- Advance provisions for expenses not conforming to legal regulations;

- Salaries, wages of private business owners; remuneration to founding members not directly involved in managing production and business; wages, salaries, other accounting expenses for employees not actually paid or lacking invoices and documents as prescribed by law;

- Interest expenses corresponding to the portion of missing charter capital;

- Deductible input value-added tax, value-added tax paid by the deduction method, corporate income tax;

- Advertising, marketing, promotion, brokerage commissions, receptions, events, conferences, marketing support, and related production and business support expenses exceeding 15% of total deductible expenses. Total deductible expenses exclude the expenses stipulated in this point; for trading activities, total deductible expenses exclude the purchase value of goods sold;

- Sponsorships, except sponsorships for education, healthcare, scientific research, disaster recovery, building national unity homes, charity homes, housing for policy beneficiaries as prescribed by law, sponsorships under state programs for regions with special economic-social difficulties;

- Contributions to voluntary pension funds or social welfare funds, voluntary pension insurance purchased for employees exceeding legal limits;

- Operating expenses of certain business activities: banking, insurance, lottery, securities, and other specific business activities as regulated by the Minister of Finance.