Regulations on corporate income tax exemption for medical establishments in Vietnam will be amended from January 1, 2024?
Amending regulations on corporate income tax exemption from January 1, 2024 applicable to medical establishments in Vietnam?
Pursuant to Article 119 of the 2023 Law on Medical Examination and Treatment in Vietnam, which has amended and supplemented Clause 10, Article 4 of the 2008 Law on Corporate Income Tax in Vietnam (amended by Clause 3, Article 1 of the 2013 Law on Amendments to the Law on Corporate Income Tax, Clause 2 Article 1 of the 2014 Law on Amendments to Tax Laws) on incomes exempt from CIT in the education - training, health, and other sectors, including:
- The undistributed part of income of medical establishments retained for investment in development of those medical establishments;
- The undistributed part of income of private health facilities which are not medical establishments providing medical examination and treatment services, and the undistributed part of income of private facilities in the education – training, other sectors needing the private-sector involvement that is retained to invest in those facility’s development in accordance with laws on education – training, health, and other sectors needing the private-sector involvement;
- The undistributed part of income forming assets of cooperatives that are established and operated in accordance with the Law on Cooperatives.
Compared with the current regulations, Article 4 of the 2008 Law on Corporate Income Tax in Vietnam (amended by Clause 3, Article 1 of the 2013 Law on Amendments to the Law on Corporate Income Tax, Clause 2, Article 1 of the 2014 Law on Amendments to Tax Laws) stipulates incomes exempt from CIT in the education - training, health, and other sectors, including:
- The undistributed part of income of private facilities in the education – training, health, and other sectors needing the private-sector involvement that is retained to invest in those facility’s development in accordance with laws on education – training, health, and other sectors needing the private-sector involvement;
- The undistributed part of income forming assets of cooperatives that are established and operated in accordance with the Law on Cooperatives.
Regulations on corporate income tax exemption for medical establishments in Vietnam will be amended from January 1, 2024?
How do healthcare services use the state budget?
Healthcare activities are carried out from financial sources as prescribed in Article 106 of the 2023 Law on Medical Examination and Treatment in Vietnam, including the state budget.
Pursuant to Article 107 of the 2023 Law on Medical Examination and Treatment in Vietnam on the state budget expenditures on healthcare as follows:
- State budget expenditures shall be used for paying medical establishments for their providing healthcare services on the list of healthcare services funded by the state budget in accordance with laws, and for their performing the tasks ordered or assigned by competent state agencies.
- State budget expenditures shall be used as financial support for public medical establishments in accordance with laws on state budget and laws on financial autonomy applied to public service units, including financial support for those public medical establishments that fail to meet their recurrent expenditures.
- State budget expenditures shall be used as other investments in development of medical establishments in accordance with laws.
- State budget expenditures shall be used as payments or financial support for health insurance contributions of beneficiaries of State-funded payments or financial support for their health insurance policies as defined in laws on health insurance.
Which activities are public medical establishments entitled to State funding?
This content is prescribed in Article 108 of the 2023 Law on Medical Examination and Treatment in Vietnam on autonomy of public medical establishments as follows:
- Public medical establishments shall be entitled to State funding to perform their functions and tasks assigned by competent state agencies; shall be responsible for effectively using financial resources in accordance with law, upholding their potentials and strengths, and improving the quality of healthcare services.
In addition, medical establishments may enjoy autonomy in deciding on their organization and personnel, performing tasks, developing professional and other activities to support medical examination and treatment activities according to regulatory provisions of this Law and other relevant laws.
Medical establishments shall implement financial autonomy under laws, and the following practices of financial autonomy:
- Deciding for themselves on details and rates of payments for services and goods related to medical examination and treatment, assistance for patients and their families in accordance with law, except for services and goods of which prices are fixed by the State;
- Deciding for themselves to use legitimate revenues for investment in projects on implementation of medical examination and treatment activities pursuant to laws;
- Deciding for themselves on details and amounts of payments funded by revenues generated from medical examination and treatment services and public services, and funding for placement of orders according to the internal spending regulations of medical establishments according to the regulatory provisions of laws and financial viability of each medical establishment;
- Deciding for themselves to use public property in accordance with laws for the purposes of developing medical examination and treatment activities according to the principles of preservation and development; receiving, managing, exploiting and using property gifted or donated by entities and persons according to the principles of publicity, transparency and non-binding interest relation between the parties to serve the work of medical examination and treatment;
- Medical establishments that can cover investment and recurrent expenditures on their own may decide for themselves on prices of healthcare services, but not exceeding the corresponding prices for healthcare services quoted by the Minister of Health, except for the prices of on-demand healthcare services and the prices of healthcare services formed from cooperation activities in the mode of public-private partnership as defined in clause 7 and 9 of Article 110 herein.
The 2023 Law on Medical Examination and Treatment in Vietnam takes effect from January 1, 2024.
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