What is the corporate income tax rate for rare resource exploration in Vietnam?

What is the corporate income tax rate for rare resource exploration in Vietnam?

According to Article 10 of the Law on Corporate Income Tax 2008, as amended and supplemented by Clause 6, Article 1 of the 2013 Law on Amendments to the Law on Corporate Income Tax, the tax rate is regulated as follows:

Tax Rate

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

Cases subject to the 22% tax rate as stipulated in this clause shall switch to a 20% tax rate from January 1, 2016.

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

The revenue used as a basis for determining whether an enterprise is eligible for the 20% tax rate in this clause is the revenue of the preceding fiscal year.

3. The corporate income tax rate for exploration, exploitation, and extraction activities of oil, gas, and other rare resources in Vietnam ranges from 32% to 50% depending on the respective project and business establishments.

The Government of Vietnam provides detailed regulations and guidelines for the implementation of this Article.

Thus, the corporate income tax rate for rare resource exploration in Vietnam ranges from 32% to 50%.

What is the corporate income tax rate for rare resource exploration in Vietnam? (Image from the Internet)

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

According to Article 7 of the Law on Corporate Income Tax 2008, as amended and supplemented by Clause 4, Article 1 of the 2013 Law on Amendments to the Law on Corporate Income Tax, the determination of taxable income is regulated as follows:

Determination of Taxable Income

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

2. Taxable income is calculated by subtracting deductible expenses from revenue from production and business activities, plus other income, including income received outside Vietnam.

3. Income from the transfer of real estate, transfer of investment projects, transfer of rights to participate in investment projects, and transfer of rights to explore, exploit, and process minerals must be separately identified for tax declaration and payment. Income from the transfer of investment projects (except for exploration and exploitation), rights to participate in investment projects (except for exploration rights), and real estate transfer, if loss occurs, can be offset against profits from production and business activities during the tax period.

Therefore, according to the regulation, it can be seen that taxable income for corporate income tax is determined by taxable income minus tax-exempt income and losses carried forward from previous years.

Can corporate income tax be paid in the area where the headquarters is located in Vietnam?

According to Article 12 of Decree 218/2013/ND-CP, regulations on where corporate income tax is paid are as follows:

[1] Enterprises pay tax at the locality where the head office is situated. In the case of enterprises having branches operating on an accounting dependency in provinces, cities under central authority different from the locality where the head office is situated, the tax shall be calculated and paid both at the place of the head office and at the place where the production establishment is located.

Corporate income tax payable in provinces and cities under central authority, where the production establishment operates on an accounting dependency, is determined by multiplying the corporate income tax payable in the period of the enterprise by the ratio of costs incurred at the production establishment operating on an accounting dependency to the total costs of the enterprise.

The tax payment specified in this section does not apply to projects, project items, or construction establishments operating on an accounting dependency.

The decentralization, management, and use of corporate income tax revenue shall be implemented following the Law on State Budget.

[2] Subsidiaries of enterprises accounting for the entire industry if having income from sources other than their main business shall pay tax at the province or city under central authority where such business activities occur.

[3] The Ministry of Finance provides guidance regarding the place for tax payment specified in this Article.

Thus, enterprises can completely pay corporate income tax in the area where their headquarters is located. Other cases may apply to the locations specified.