Is income from the transfer of rights to extract minerals to an entity within the same province in Vietnam subject to CIT?

Is income from the transfer of rights to extract minerals to an entity within the same province in Vietnam subject to CIT?

Pursuant to Point b, Clause 2, Article 3 of Decree 218/2013/ND-CP providing for taxable income for corporate income tax (CIT) as follows:

Taxable Income

1. Taxable income includes income from production, business activities of goods and services, and other incomes specified in Clause 2 of this Article. For enterprises registered for business and having income specified in Clause 2 of this Article, this income is determined as income from the production and business activities of the establishment.

2. Other incomes include:

a) Income from capital transfer includes income from transferring part or all of the capital invested in enterprises, including cases of selling enterprises, transferring securities, transferring capital contribution rights, and other forms of capital transfer according to the law;

b) Income from transferring investment projects, income from transferring the right to participate in investment projects, income from transferring the rights to explore, exploit, and process minerals according to the law; income from real estate transfer as specified in Articles 13 and 14 of this Decree;

c) Income from rights of use, ownership of assets, including income from intellectual property rights, income from technology transfer according to the law;

d) Income from the transfer, lease, liquidation of assets (except real estate), including other valuable papers;

Thus, regardless of the transfer to an entity within the province in Vietnam, as long as there is income from transferring rights to explore, exploit, and process minerals according to the law, it is still considered as taxable income for CIT.

Is income from the transfer of rights to extract minerals to an entity within the same province in Vietnam subject to CIT? (Image from the Internet)

Is income from the transfer of rights to extract minerals eligible for CIT incentives in Vietnam?

Pursuant to Clause 2, Article 19 of Decree 218/2013/ND-CP stipulating conditions for enjoying corporate income tax incentives as follows:

Conditions for applying corporate income tax incentives

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2. Corporate income tax incentives specified in Clauses 1 and 4, Article 4 and Articles 15, 16 of this Decree, and the 20% tax rate specified in Clause 2, Article 10 of this Decree do not apply to the following incomes:

a) Income from capital transfer, transfer of capital contribution rights; income from real estate transfer, except income from investment in social housing business specified in Point d Clause 2 Article 15 of this Decree; income from transfer of investment projects, transfer of the right to participate in investment projects, transfer of mineral exploration and exploitation rights; income received from production and business activities outside Vietnam;

b) Income from activities of searching, exploring, exploiting oil, gas, other rare resources, and income from mineral exploitation activities;

c) Income from service business subject to excise tax according to the Law on Excise Tax;

d) Other incomes specified in Clause 2, Article 3 of this Decree not related to production and business activities enjoying tax incentives (in cases meeting the conditions for incentives concerning fields or sectors specified in Articles 15, 16 of this Decree).

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Thus, income from the transfer of rights to explore, exploit, and process minerals according to the law will not be subject to corporate income tax incentives.

When is the revenue determined for calculating taxable income on currently sold goods in Vietnam?

Pursuant to Clause 2, Article 8 of Decree 218/2013/ND-CP stipulating revenue as follows:

Revenue

Revenue for calculating taxable income is carried out according to Article 8 of the Law on Corporate Income Tax.

1. Revenue for calculating taxable income is the total money from sales, processing, supply of services, including subsidies, surcharges, and extras that enterprises receive, regardless of whether the money has been collected or not.

For enterprises declaring and paying value-added tax by the credit method, the revenue for corporate income tax is revenue exclusive of value-added tax. For enterprises declaring and paying value-added tax directly on added value, the revenue for corporate income tax includes value-added tax.

2. The point of time for determining revenue to calculate taxable income for sold goods is when the ownership or right of use of goods is transferred to the buyer.

The point of time for determining revenue to calculate taxable income for services is when the service provision to buyers is completed or when the service invoice is issued.

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Thus, the point of time for determining revenue to calculate taxable income for sold goods is when the ownership or right of use of the goods is transferred to the buyer.

Note: The point of time for determining revenue to calculate taxable income for services is when the provision of services to buyers is completed or when the service invoice is issued.