Shall computerized lottery business distribute and pay corporate income tax in Vietnam?

Can computerized lottery business distribute and pay corporate income tax in Vietnam?

Based on Article 17 of Circular 80/2021/TT-BTC which provides regulations on tax declaration, tax calculation, tax finalization, distribution, and payment of corporate income tax as follows:

Tax declaration, tax calculation, tax finalization, distribution, and payment of corporate income tax

1. Cases eligible for distribution:

a) Computerized lottery business;

b) Real estate transfer activities;

c) Dependent units, business locations which are production facilities;

d) Hydropower plants located across multiple provinces.

2. distribution method:

a) distribution of corporate income tax for Computerized lottery business:

The corporate income tax payable to each province where the electronic lottery business is conducted equals (=) the corporate income tax payable by the electronic lottery business multiplied (x) by the percentage (%) of actual lottery ticket sales revenue from electronic lottery business activities in each province over the total actual lottery ticket sales revenue of the taxpayer.

Actual lottery ticket sales revenue from electronic lottery business activities is determined according to the provisions at point a clause 2 Article 13 of this Circular.

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According to the above regulation, the cases eligible for corporate income tax distribution include:

- Computerized lottery business.

- Real estate transfer activities.

- Dependent units, business locations which are production facilities.

- Hydropower plants located across multiple provinces.

Thus, it can be seen that businesses engaged in Computerized lottery business will be eligible to distribute and pay corporate income tax.

What is the corporate income tax period in Vietnam?

The tax period is regulated under Article 5 of the 2008 Corporate Income Tax Law as follows:

(1) The corporate income tax period is determined by the calendar year or the financial year, except for case (2).

(2) The corporate income tax period for each instance of income generation applies to foreign businesses as specified in points c and d, clause 2, Article 2 of the 2008 Corporate Income Tax Law.

*Note: Businesses can choose the tax period according to the calendar year or financial year but must notify the tax authority before implementation.

How to determine taxable income for corporate income tax in Vietnam?

Based on Article 7 of the 2008 Corporate Income Tax Law (amended and supplemented by clause 4 Article 1 of the 2013 Amended Corporate Income Tax Law) and guided by Article 6 of Decree 218/2013/ND-CP, the determination of taxable income is specifically as follows:

(1) Taxable income in the tax period is determined by taxable income minus exempt income and losses carried forward from previous years.

Taxable income in the tax period is determined as follows:

(2) Taxable income is the revenue minus deductible expenditures from production and business activities plus other income, including income received outside of Vietnam.

Taxable income is determined as follows:

- A business with multiple business activities calculates taxable income from production and business as the total income of all business activities.

- In the case of a business activity incurring a loss, the loss can be offset against taxable income from income-generating business activities as the business itself selects. The remaining income post-offset applies the corporate income tax rate of the income-generating business activities.

- Income from real estate transfers, investment project transfers, participatory rights in investment projects, exploration rights, mining rights, mineral processing rights should be separately identified for tax declaration.

- For the case of transferring participatory rights in investment projects, investment project transfers (except exploration, mining projects), real estate transfers incurring losses, these losses can be offset against profits from production and business activities in the tax period.

- When a business is dissolved and sells its real estate which is a fixed asset, the income from the real estate transfer (if any) can be offset against income from the business's production and business activities.

What is the formula for calculating the corporate income tax payable in Vietnam?

As stipulated in clause 1, Article 3 of Circular 78/2014/TT-BTC (amended by Article 1 of Circular 96/2015/TT-BTC), the regulation is as follows:

Tax Calculation Method

1. The corporate income tax payable in the tax period equals taxable income minus the deduction for scientific and technological research (if any) multiplied by the corporate income tax rate.

Corporate income tax payable is determined by the following formula:

Corporate Income Tax Payable = (Taxable Income - Deduction for Science and Technology Fund (if any)) x Corporate Income Tax Rate

- Vietnamese enterprises investing abroad that remit income back to Vietnam after having paid foreign corporate income tax in countries that have signed agreements to avoid double taxation will comply with those agreements; for countries not having signed such agreements, if the corporate income tax in countries where enterprises invest is lower, the difference will be collected according to Vietnam's Corporate Income Tax Law.

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The formula for calculating the corporate income tax payable is:

Corporate Income Tax Payable = (Taxable Income - Deduction for Science and Technology Fund (if any)) x Corporate Income Tax Rate

In the event that a business establishes a science and technology fund, this amount will be deducted from taxable income.