Vietnam: Is income distributed from capital contribution after paying corporate income tax subject to corporate income tax?

Vietnam: Is income distributed from capital contribution after paying corporate income tax subject to corporate income tax?

Based on Clause 5, Article 4 of Law on Corporate Income Tax 2008, supplemented by Clause 3, Article 1 of Law on Amendments to the Law on Corporate Income Tax 2013, specific provisions on tax-exempt income are as follows:

Tax-Exempt Income

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5. Income from vocational training activities exclusively for ethnic minorities, the disabled, children in exceptionally difficult circumstances, and social evils subjects.

6. Income distributed from contribution, joint ventures, or associations with domestic enterprises after corporate income tax has been paid according to the provisions of this Law.

7. Donations received to be used for activities in education, scientific research, culture, arts, charity, humanitarian, and other social activities in Vietnam.

8. Income from the transfer of certified emission reductions (CERs) by enterprises issued such certificates.

9. Income from the execution of state-assigned tasks of the Vietnam Development Bank in development investment credit and export credit activities; income from credit activities for the poor and other policy subjects of the Social Policy Bank; income of state financial funds and other state funds operating for non-profit purposes according to law provisions; income of organizations 100% owned by the State of Vietnam established to handle bad debts of Vietnamese credit institutions.

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Thus, according to the above provisions, income distributed from capital contribution after corporate income tax has been paid is exempt from CIT.

Vietnam: Is income distributed from capital contribution after paying corporate income tax subject to corporate income tax? (Image from the Internet)

What types of income are subject to CIT in Vietnam?

According to Article 3 of Law on Corporate Income Tax 2008, amended and supplemented by Clause 1, Article 1 of Law No. 71/2014/QH13 on Amended Tax 2014, taxable income is specified as follows:

- Taxable income includes income from production and business activities of goods and services and other income.

- Other income includes: income from capital transfer, transfer of capital contribution rights; income from real estate transfers, transfer of investment projects, transfer of participation rights in investment projects, transfer of exploration, exploitation, and processing of minerals; income from the right to use assets, ownership of assets, including income from intellectual property rights as prescribed by law; income from the transfer, lease, liquidation of assets, including valuable papers; income from interest on deposits, lending capital, foreign currency sales; amounts collected from previously written-off bad debts; amounts collected from debts payable that are unidentified; income from business activities of previous years omitted and other income.

- Vietnamese enterprises investing abroad transferring income after paying corporate income tax abroad back to Vietnam, if the countries have signed agreements with Vietnam to avoid double taxation, the agreements shall be followed; for countries where Vietnam has not signed such agreements, if the corporate income tax rate in those countries is lower, the difference shall be collected according to the Vietnamese Law on Corporate Income Tax.

When is the deadline for CIT payment in Vietnam?

Based on Article 55 of Tax Administration Law 2019, the deadline for tax payment is specified as follows:

Tax Payment Deadline

1. If the taxpayer calculates tax, the deadline for tax payment is the last day of the tax filing deadline. For additional tax filing, the deadline is the tax filing deadline of the tax period with errors.

For corporate income tax, it is payable quarterly, with the deadline being the 30th day of the first month of the following quarter.

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

For natural gas, the resource and corporate income tax is paid monthly.

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CIT is payable quarterly, with the deadline by the 30th day of the first month of the succeeding quarter.