When is the deadline for corporate income tax payment in Vietnam? What income is subject to corporate income tax?

When is the deadline for corporate income tax payment in Vietnam?

Pursuant to Clause 6, Article 8 of Decree 126/2020/ND-CP amended by Clause 3, Article 1 of Decree 91/2022/ND-CP, which provides for:

Types of taxes declared monthly, quarterly, annually, per occurrence of tax obligations and tax finalization declarations

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6. Corporate income tax (excluding corporate income tax from capital transfer of foreign contractors; corporate income tax declared as a percentage on revenue per occurrence or monthly as stipulated in Point đ, Clause 4 of this Article). Taxpayers must determine the provisional quarterly corporate income tax (including temporary allocation of corporate income tax to the provincial level where dependent units, business locations, and property transfer locations differ from the headquarters) and may deduct the tax previously paid from the annual finalization amount.

Taxpayers required to prepare quarterly financial statements according to accounting regulations shall determine provisional quarterly corporate income tax based on these statements and tax laws.

Taxpayers not required to prepare quarterly financial statements shall determine provisional quarterly corporate income tax based on quarterly production, business results, and tax laws.

The total corporate income tax provisionally paid for all 4 quarters must not be less than 80% of the corporate income tax payable as per the annual finalization. If the taxpayer pays less than the required provisional tax for the 4 quarters, they must pay late payment interest on the shortfall from the day immediately following the deadline for provisional tax payment of Q4 until the day before the remaining tax is paid to the state budget.

Taxpayers engaging in infrastructure, housing projects for transfer or lease-purchase, collecting advance payments from customers in accordance with law, shall provisionally pay corporate income tax quarterly at a rate of 1% on the collected payments. If infrastructure or housing has not yet been handed over and has not been accounted for in taxable income of the year, taxpayers shall not include it in the annual corporate income tax finalization but shall include it upon project handover, whether partial or full.

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Simultaneously, based on Article 44 of the Law on Tax Administration 2019, the deadlines for declaration, payment, and finalization of corporate income tax are as follows:

- Deadline for provisional quarterly corporate income tax: No later than the last day of the first month of the quarter following the quarter in which tax obligations arise.

- Deadline for year-end tax finalization: No later than the last day of the third month from the end of the calendar year or fiscal year.

Thus, corporate income tax will include quarterly provisional payments to be made by the last day of the first month of the subsequent quarter after the tax obligation arises. The total corporate income tax provisionally paid for all 4 quarters must not be less than 80% of the corporate income tax payable as per the annual finalization. The remaining corporate income tax shall be paid according to the annual finalization, namely by the last day of the third month from the close of the calendar or fiscal year.

When is the deadline for corporate income tax payment in Vietnam? What income is subject to corporate income tax? (Image from the Internet)

Which entities are corporate income taxpayers in Vietnam?

Article 2 of the Law on Corporate Income Tax 2008 (amended by Clause 1, Article 1 of the Law Amending Corporate Income Tax Law 2013) stipulates corporate income taxpayers as follows:

- Corporate income taxpayers are organizations engaged in the production, trading of goods, services with taxable income according to the Law on Corporate Income Tax 2008 (hereinafter referred to as enterprises), including:

+ Enterprises established under Vietnamese law;

+ Enterprises established under foreign laws (hereinafter referred to as foreign enterprises) having a permanent establishment in Vietnam or not;

+ Organizations established under the Law on Cooperatives 2023;

+ Public service units established under Vietnamese laws;

+ Other organizations with production, business income.

- Enterprises with taxable income stipulated at Article 3 of the Law on Corporate Income Tax 2008 must pay corporate income tax as follows:

+ Enterprises established under Vietnamese law pay tax on taxable income arising in Vietnam and abroad;

+ Foreign enterprises having a permanent establishment in Vietnam pay tax on taxable income arising in Vietnam and related to the activities of such permanent establishment;

+ Foreign enterprises without a permanent establishment in Vietnam pay tax on taxable income arising in Vietnam not related to a permanent establishment;

+ Foreign enterprises not having a permanent establishment in Vietnam pay tax on taxable income arising in Vietnam.

- A permanent establishment of a foreign enterprise is a production, business establishment through which all or part of the production, business activities are conducted in Vietnam, including:

+ Branches, executive offices, factories, workshops, transportation means, oil rigs, gas wells, mines or places for extraction of natural resources in Vietnam;

+ Construction sites, installation and assembly works;

+ Service provision establishments, including consultancy services through employees or other individuals or organizations;

+ Agents for foreign enterprises;

+ Representatives in Vietnam in cases of authorized representatives to sign contracts in the name of the foreign enterprise or representatives not authorized to sign contracts in the name of the foreign enterprise but regularly execute delivery of goods or provision of services in Vietnam.

What income is subject to corporate income tax in Vietnam?

According to Article 3 of the Law on Corporate Income Tax 2008 (amended by the Law Amending Various Taxes 2014), taxable income includes:

- Taxable income includes income from production and business operations of goods and services;

- Other income includes: income from capital transfer, transfer of capital contribution rights; income from real estate transfer, investment project transfer, right to participate in investment projects, rights to exploration, and exploitation, processing minerals; income from asset use rights, asset ownership rights, including income from intellectual property rights as prescribed by law; income from transferring, leasing, and liquidating assets, including securities; interest income from deposits, loans, foreign currency sales; recoveries from written-off bad debts; recoveries from payables without identifiable owners; income from overlooked business of previous years and other incomes.

Vietnamese enterprises investing abroad transfer their post-tax corporate income back to Vietnam; if Vietnam has a double taxation avoidance agreement with these countries, the agreement's regulations apply. For countries without such an agreement, if the corporate income tax rate in those countries is lower than Vietnam’s, the difference shall be collected based on the Law on Corporate Income Tax 2008 of Vietnam.