Does corporate income from pending bank deposit interest incur corporate income tax (CIT)?
Which incomes of the enterprise are subject to corporate income tax?
According to the regulations in Article 3 of Decree 218/2013/ND-CP amended by Clause 1 Article 1 of Decree 91/2014/ND-CP and Clause 3 Article 6 of Decree 12/2015/ND-CP, the following incomes of enterprises are subject to corporate income tax:
- Income from manufacturing, trading of goods and services, and other income from manufacturing and trading activities of the establishment as prescribed in Clause 2 of this Article, including:
+ Income from capital transfer, including income from transferring a part or all of the invested capital in an enterprise, income from selling enterprises, transferring securities, transferring contribution rights and other forms of capital transfer.
+ Income from the transfer of investment projects, income from transferring the right to participate in investment projects, income from transferring the right to explore, exploit, and process minerals as prescribed by law;
+ Income from real estate transfer as prescribed in Articles 13 and 14 of Decree 218/2013/ND-CP;
+ Income from the right to use and own assets, including income from intellectual property rights, and income from technology transfer.
+ Income from transfer, lease, liquidation of assets (excluding real estate), including other types of valuable papers;
+ Income from deposits, loans, and foreign currency sales, including:
++ Interest from deposits at credit institutions, interest from loans in all forms as prescribed by law, including late payment interest, installment interest, credit guarantee fees, and other fees in the loan contract; income from foreign currency sales; exchange rate differences from re-evaluating foreign currency-denominated payable debts at the end of the fiscal year; exchange rate differences arising in the period (except for exchange rate differences arising during the basic construction investment to form fixed assets of newly established enterprises with these fixed assets yet to be put into production and business operations per the guidance of the Ministry of Finance).
++ For receivable debts and loans in foreign currency arising in the period, the exchange rate difference of these receivable debts and loans is the difference between the exchange rate at the time of debt collection and the exchange rate at the time of initial recognition of the receivable debt or loan;
+ Provisions for expenses not used or only partly used as of the time limit for provisioning that the enterprise does not account for reducing expenses;
+ Bad debts that have been written off but are now recovered;
+ Payable debts for which creditors cannot be identified;
+ Income from business activities of previous years that were omitted and discovered later;
+ The difference between fines, compensations for breaches of economic contracts, or bonuses for fulfilling contractual commitments (excluding fines and compensations recorded as value reduction in the investment period) minus (-) fines and compensations for breaches of contracts as prescribed by law;
+ Sponsorships in cash or in-kind received;
+ The difference from re-evaluating assets as prescribed by law to contribute capital, transfer when splitting, merging, consolidating, changing the type of enterprise, except for equitization, reorganization, and renewal of enterprises where the state holds 100% of charter capital.
Enterprises receiving assets are accounted for at re-evaluated price when determining deductible expenses as prescribed in Article 9 of this Decree.
+ Other incomes, including incomes exempt from tax prescribed in Clauses 6 and 7 of Article 4 of this Decree.
Is enterprise income from interest on bank deposits before maturity subject to corporate income tax?
Is enterprise income from interest on bank deposits before maturity subject to corporate income tax?
According to the provisions of Clause 7 Article 7 Circular 78/2014/TT-BTC, amended by Clause 1 Article 5 Circular 96/2015/TT-BTC, the content is as follows:
Other incomes
Other incomes include the following incomes:
...
7. Income from deposits, loans, including late payment interest, installment interest, credit guarantee fees, and other fees in the loan contract.
- In case the revenue from deposits and loans is higher than the loan interest paid as prescribed, after offsetting, the remaining difference is included in other incomes when determining taxable income.
- In case the revenue from deposits and loans is lower than the loan interest paid as prescribed, after offsetting, the remaining difference reduces the main production and business income when determining taxable income.
Thus, according to the above regulations, taxable income from bank deposit interest must be the amount that actually arises.
To be specific: Official Dispatch 57306/CTHN-TTHT of 2022 (here) provides guidance on a similar case for Sun Asterisk Vietnam LLC as follows:
Corporate income tax law does not stipulate determining forecasted income that has not actually arisen to be included in taxable income in the tax period. In case Sun Asterisk Vietnam LLC has actual income from bank deposit interest, this income is included in taxable income of the period when the income actually arises according to the guidance in Clause 7 Article 7 Circular 78/2014/TT-BTC.
What is the corporate income tax rate for enterprises with a revenue of 19 billion VND?
According to the regulations in Article 10 of Decree 218/2013/ND-CP on corporate income tax rates as follows:
- The corporate income tax rate is 22%, except for enterprises subject to the tax rate of 20% and tax rates from 32% to 50% as prescribed in Clauses 2 and 3 of this Article and subjects entitled to tax incentives as prescribed in Articles 15 and 16 of this Decree.
From January 1, 2016, cases subject to the tax rate of 22% as prescribed in this Clause shall apply a tax rate of 20%.
- Enterprises established and operating per Vietnamese law, including cooperatives, public service providers engaged in manufacturing, trading goods, and services with annual revenue not exceeding 20 billion VND shall apply a tax rate of 20%.
The annual revenue used to determine whether enterprises are subject to a tax rate of 20% as prescribed in this Clause is the total revenue from selling goods and providing services of the enterprise in the preceding year.
- The corporate income tax rate for activities of searching, exploring, and exploiting oil and gas and other precious resources in Vietnam is from 32% to 50%. For activities of searching, exploring, and exploiting oil and gas, based on the location, exploitation conditions, and mine reserves, the Prime Minister of the Government of Vietnam shall decide the specific tax rate suitable for each project and each business establishment as proposed by the Minister of Finance. For platinum, gold, silver, tin, tungsten, antimony, gemstones, and rare earth mines, the tax rate is 50%, and for mines with 70% or more of the allotted area in areas with outstanding socio-economic difficulties on the list of areas eligible for corporate income tax incentives issued together with this Decree, the corporate income tax rate is 40%.
Thus, for enterprises with an annual revenue of 19 billion VND, the corporate income tax rate applied is 20%.
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