Which entities are subject to corporate income tax in Vietnam?

Which entities are subject to corporate income tax in Vietnam?

According to Clause 1, Article 2 of the 2008 Corporate Income Tax Law, entities subject to corporate income tax are organizations engaged in production, trading of goods, and services that generate taxable income as prescribed by the 2008 Corporate Income Tax Law, including:

- Enterprises established in accordance with the laws of Vietnam;

- Enterprises established under foreign laws with permanent establishments or without permanent establishments in Vietnam;

- Organizations established under the 2023 Cooperative Law;

- Public service units established under Vietnamese law;

- Other organizations engaged in production and business activities generating income.

Which entities are subject to corporate income tax in Vietnam? (Image from the Internet)

What incomes are subject to corporate income tax in Vietnam?

Based on Article 3 of the 2008 Corporate Income Tax Law, (amended by Clause 1, Article 1 of Law No. 71/2014/QH13 on tax amendments 2014), taxable income includes income from production, business activities of goods and services, and other incomes.

Other incomes include:

- Income from capital transfer, transfer of the capital contribution right;

- Income from real estate transfer, project transfer, investment project participation right transfer, exploration rights, mining rights, and mineral processing;

- Income from the right to use assets, the right to own assets, including income from intellectual property rights as prescribed by law;

- Income from the transfer, lease, liquidation of assets, including types of valuable papers;

- Interest income from deposits, lending, foreign currency sales; recovered bad debts already written off;

- Business income from previous years omitted and other incomes.

* Vietnamese enterprises investing abroad transferring income after paying corporate income tax abroad to Vietnam shall comply with foreign tax agreements if Vietnam has signed agreements for double taxation avoidance; if Vietnam has not signed such agreements, the difference is taxed if the foreign corporate income tax rate is lower than the corporate income tax rate stipulated by Vietnamese law.

What incomes are exempted from corporate income tax in Vietnam?

Pursuant to Article 4 of the 2008 Corporate Income Tax Law (amended by Clause 3, Article 1, 2013 Amended Corporate Income Tax Law, and Clause 2, Article 1 of Law No. 71/2014/QH13 on tax amendments 2014), income exempt from corporate income tax includes:

- Income from cultivation, livestock breeding, aquaculture, processing of agricultural, aquaculture products, salt production of cooperatives; income of cooperatives operating in agriculture, forestry, fishery, salt production in areas with socio-economic difficulties or areas with especially difficult socio-economic conditions; income of enterprises from cultivation, livestock breeding, aquaculture, processing of agricultural, aquaculture products in areas with especially difficult socio-economic conditions; income from fishery activities.

- Income from the implementation of technical services directly serving agriculture.

- Income from the implementation of scientific research and technology development contracts, products in the trial production period, products made from new technology applied for the first time in Vietnam.

- Income from production, business activities of goods and services of enterprises having at least 30% average annual labor as disabled people, people post-drug rehabilitation, HIV/AIDS infected persons and average annual labor from twenty people or more, excluding enterprises operating in finance, real estate business.

- Income from vocational training exclusively for ethnic minorities, disabled people, children in especially difficult circumstances, social evils subjects.

- Income distributed from capital contribution, joint ventures, associated with domestic enterprises after paying corporate income tax in compliance with the 2008 Corporate Income Tax Law.

- Funds received to use for educational, scientific research, cultural, artistic, charitable, humanitarian and other social activities in Vietnam.

- Income from the transfer of certified emission reductions (CERs) of enterprises granted emission reduction certificates.

- Income from the tasks assigned by the state for the Vietnam Development Bank in development investment credit, export credit; income from preferential credit for the poor and other policy targets of the Social Policy Bank; income of state financial funds and other state funds not aimed at profit as prescribed by law; income of organizations with 100% charter capital owned by the state established to handle non-performing loans of Vietnamese credit institutions.

- Undistributed income of socializing establishments in education - training, healthcare and other socializing sectors to reinvest to enhance the establishment according to the specific sector laws on education - training, healthcare and other socializing sectors; undistributed income forming assets of cooperatives established and operating under the 2023 Cooperative Law.

- Income from technology transfer within the prioritized sectors to organizations and individuals in areas with especially difficult socio-economic conditions.