What are tax-exempt incomes in education – training, health, and other sectors in Vietnam?

What are tax-exempt incomes in education – training, health, and other sectors in Vietnam?

Based on Article 119 of the Law on Medical Examination and Treatment 2023 that amended and supplemented Clause 10 of Article 4 of the Law on Corporate Income Tax 2008 (amended by Clause 3 of Article 1 of the Law on Amendments to the Law on Corporate Income Tax of 2013, Clause 2 of Article 1 of the Law on Amendments to Tax Laws of 2014) regarding the tax-exempt incomes from corporate income tax (CIT) in education – training, health, and other sectors includes:

- The non-distributable portion of the income of medical examination and treatment facilities that are reinvested to develop those facilities;

- The non-distributable portion of healthcare facilities implementing private investments but not as medical examination and treatment facilities, and the non-distributable portion of education - training and other private investment facilities reinvested to develop those facilities according to specialized laws in the fields of education - training, healthcare, and other private investment sectors;

- The non-distributable portion of income forming the assets of cooperatives established and operating under the Cooperative Law 2023.

What are tax-exempt incomes in education – training, health, and other sectors in Vietnam? (Image from the Internet)

What is the corporate income tax rate for incomes?

Pursuant to Article 10 of the Law on Corporate Income Tax 2008 as amended and supplemented by Clause 6 of Article 1 of the Law on Amendments to the Law on Corporate Income Tax of 2013, the regulations are as follows:

Tax Rate

1. The corporate income tax rate is 22%, except for the cases specified in Clauses 2 and 3 of this Article and the subjects enjoying preferential tax rates specified in Article 13 of this Law.

Cases subject to the 22% tax rate will switch to a 20% tax rate starting from January 1, 2016.

2. Enterprises with an annual total revenue not exceeding twenty billion VND shall apply a tax rate of 20%.

The revenue used to determine whether an enterprise is eligible for the 20% tax rate as specified in this Clause is the revenue of the preceding year.

3. The corporate income tax rate for activities in the search, exploration, and exploitation of oil, gas, and other precious resources in Vietnam ranges from 32% to 50%, depending on each project and each business establishment.

The Government of Vietnam prescribes detailed guidelines for the implementation of this Article.

Thus, the current CIT rate applied to enterprises is 20%.

However, for enterprises engaging in oil, gas, and other precious resource exploration and exploitation in Vietnam, the tax rate ranges from 32% to 50% depending on each project and each business establishment.

What are required documents for corporate income tax declaration in Vietnam?

Based on the Tax Administration Law 2019 and Circular 80/2021/TT-BTC, the documents required for CIT declaration include:

(1) CIT declaration documents for real estate transfer activities, CIT from the transfer of the entire one-member limited liability company under organizational ownership in the form of capital transfer associated with real estate on each occurrence:

- CIT declaration form No. 02/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC applicable to real estate transfer activities;- CIT declaration form No. 06/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC applicable to the transfer of the entire one-member limited liability company under organizational ownership in the form of capital transfer associated with real estate.

(2) CIT declaration documents for taxpayers based on a percentage of revenue:

- Tax declaration documents for each occurrence:CIT declaration form No. 04/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.

- Yearly tax finalization documents:+ CIT declaration form No. 04/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.+ Annual financial statements or financial statements up to the time of the dissolution, bankruptcy, termination of operation, or reorganization of the enterprise as prescribed by the law on accounting and independent auditing (unless otherwise not required to prepare financial statements).

(3) CIT declaration documents for capital transfer activities by foreign contractors:- CIT declaration form No. 05/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC;- Copies of the transfer contract, certificate of capital contribution, original vouchers of the cost incurred (if any).

(4) CIT finalization documents for taxpayers with dependent units or business locations in different provinces or cities from the main office with income eligible for CIT incentives, including one or several CIT incentive appendices (depending on the actual arising of the taxpayer) as follows:

- Appendix for income from new investment projects, income of enterprises enjoying CIT incentives according to form No. 03-3A/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.

- Appendix for production expansion projects, improving capacity, or modernizing production technology according to form No. 03-3B/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.

- Appendix for enterprises employing ethnic minority workers or many female laborers in production, construction, and transportation according to form No. 03-3C/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.

- Appendix for science and technology enterprises or enterprises transferring technology in prioritized fields according to form No. 03-3D/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.

- Appendix for CIT paid abroad according to form No. 03-4/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.

- Appendix for CIT on real estate transfer activities according to form No. 03-5/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.

- Appendix for science and technology fund usage report according to form No. 03-6/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.

- Appendix for distributing the amount of CIT payable to localities enjoying revenue from manufacturing establishments according to form No. 03-8/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.

- Appendix for distributing the amount of CIT payable to localities enjoying revenue from real estate transfer activities according to form No. 03-8A/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.

- Appendix for distributing the amount of CIT payable to localities enjoying revenue from hydropower production according to form No. 03-8B/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.

- Appendix for distributing the amount of CIT payable to localities enjoying revenue from lottery business activities according to form No. 03-8C/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.

- Appendix for aggregating documents of temporary CIT payment from real estate transfer activities collected in installments but not delivered within the year according to form No. 03-9/TNDN issued along with Appendix 2 Circular 80/2021/TT-BTC.

- For enterprises with overseas investment projects, in addition to the above documents, they must also submit: Copies of foreign tax declarations confirmed by the taxpayer; Copies of foreign tax payment receipts confirmed by the taxpayer, or original confirmation from the foreign tax authority of the paid tax amount, or copies of equivalent value documents confirmed by the taxpayer.