Is bank deposit interest calculated together with income from production and business activities entitled to CIT incentives in Vietnam?
- Are deposits at banks eligible for CIT incentives for enterprises that enjoy incentives by area?
- In which case will bank deposits be eligible for CIT incentives in Vietnam?
- Is bank deposit interest calculated together with income from production and business activities entitled to CIT incentives in Vietnam?
Are deposits at banks eligible for CIT incentives for enterprises that enjoy incentives by area?
Pursuant to Point b, Clause 4, Article 18 of Circular No. 78/2014/TT-BTC (amended by Clause 2, Article 10 of Circular No. 96/2015/TT-BTC) as follows:
Conditions for application of CIT incentives
…
4. Incentives for enterprises whose projects of investment are given CIT incentives because their fields or areas are given investment incentives (hereinafter referred to as favored fields and favored areas) are determined as follows:
…
b) In case of an enterprise whose project of investment is given CIT incentives because it is located in a favored area (including industrial parks, economic zones, hi-tech zones), incomes given CIT incentives are those derived from business activities within such area, except for the incomes mentioned in Points a, b, c Clause 1 of this Article.
- In case of an enterprise whose project of investment in transport is given CIT incentives because it is located in a favored area (including industrial parks, economic zones, hi-tech zones), the enterprise will be given CIT incentives for incomes from transport services based in the favored area, whether the departure or destination is located in the same area as the project.
Example 15a: In 2015, a new enterprise is established in Son La province, which is an extremely disadvantaged province, to provide transport services. Thus, the enterprise will be given CIT incentives applied to extremely disadvantaged areas.
In 2015, it has several fixed routes (from Son La to Hanoi and vice versa; from Son La to Ha Long city and vice versa) and contractual routes (from Son La to Da Nang city and vice versa; from Hanoi to Da Nang city and vice versa; from Bac Ninh city to Son La).
CIT incentives for incomes from transport services are determined according to the area in which the project is established (Son La province), whether the departure or destination is located in such area. To be specific:
+ Incomes from the following routes are given CIT incentives: fixed routes from Son La to Hanoi and vice versa, from Son La to Ha Long city and vice versa; contractual routes from Son La to Da Nang city and vice versa, from Bac Ninh city to Son La.
+ Income from the route from Hanoi to Da Nang city is not given CIT incentives because both the departure place and destination are not located in Son La province.
- If an enterprise whose project of investment is given CIT incentives because it is located in a favored area earns incomes outside the area in which the project is located:
(i) If the area in which the income is earned is not a favored area, the income will not be given CIT incentives.
(ii) If the area in which the income is earned is a favored area, the income will be given CIT incentives. CIT incentives for such income shall be determined according to the time and level of incentives in the area.
Thus, according to the above regulations, in case of an enterprise whose project of investment is given CIT incentives because it is located in a favored area (including industrial parks, economic zones, hi-tech zones), incomes given CIT incentives are those derived from business activities within such area.
Thus, deposits at banks are not eligible for CIT incentives by area.
Is bank deposit interest calculated together with income from production and business activities entitled to CIT incentives in Vietnam?
In which case will bank deposits be eligible for CIT incentives in Vietnam?
Pursuant to Point a, Clause 4, Article 18 of Circular No. 78/2014/TT-BTC (amended by Clause 2, Article 10 of Circular No. 96/2015/TT-BTC) stipulating as follows:
Conditions for application of CIT incentives
…
4. Incentives for enterprises whose projects of investment are given CIT incentives because their fields or areas are given investment incentives (hereinafter referred to as favored fields and favored areas) are determined as follows:
a) In case of an enterprise whose project of investment is given CIT incentives because of its favored field, the incomes from such field, incomes from liquidation of refuses and scrap of products in such field, exchange differences directly related revenues and expenses of such field, demand deposit interest, and other directly related incomes are also given CIT incentives.
Thus, interest from bank deposits will enjoy CIT incentives in case of an enterprise whose project of investment is given CIT incentives because of its favored field, the incomes from such field, incomes from liquidation of refuses and scrap of products in such field, exchange differences directly related revenues and expenses of such field, demand deposit interest, and other directly related incomes are also given CIT incentives.
Is bank deposit interest calculated together with income from production and business activities entitled to CIT incentives in Vietnam?
Pursuant to Clause 4, Article 18 of Circular No. 78/2014/TT-BTC (amended by Clause 2, Article 10 of Circular No. 96/2015/TT-BTC), then:
For enterprises enjoying CIT incentives according to fields of investment incentives:
During the period of enjoying corporate income tax incentives, if an enterprise earns income from interest on deposits in a bank, the enterprise is not required to calculate it separately from income from production and business activities entitled to CIT incentives.
For enterprises enjoying CIT incentives by area:
During the period of enjoying corporate income tax incentives, if an enterprise earns income from bank deposits, the enterprise must separately calculate income from production and business activities entitled to corporate income tax incentives (including preferential tax rates, tax exemption and reduction rates) and income from business activities that are not eligible for tax incentives (especially bank deposits) to declare and pay taxes separately.
In case the enterprise does not separately calculate income from production and business activities entitled to tax incentives and income from production and business activities not entitled to tax incentives, the income from production and business activities shall be tax incentives are determined as follows:
Income from production and business activities tax incentives = total taxable income x with a percentage (%) of revenue or deductible expenses of tax incentive production and business activities compared to total revenue or total deductible expenses of the enterprise in the tax period.
In case there is a deductible revenue or expense that cannot be accounted for separately, such deductible revenue or expense is determined according to the ratio between deductible revenue or expenses of production and business activities enjoying tax incentives on total deductible revenue or expenses of the enterprise.
LawNet
