What are the regulations on the time for determining turnover for calculating taxable income in Vietnam?
What is the turnover to calculate taxable income according to the law?
Pursuant to Clause 1, Article 5 of Circular No. 78/2014/TT-BTC, the turnover for calculating taxable income is the total proceeds from the sale of goods, remuneration for processing and charges for provided services, including price subsidies, surcharges and extra fees that an enterprise may earn, regardless of whether or not these amounts have been collected.
- For enterprises paying value-added tax by the credit method, the turnover is exclusive of value-added tax.
- For enterprises paying value-added tax by the method of calculation directly based on added value, the turnover is inclusive of value-added tax.
- For enterprises providing services for which customers pay charges in advance for many years, the turnover for calculating taxable income shall be distributed to the number of years of advance payment or determined according to the lump-sum payment.
If such enterprises are enjoying tax incentives, the tax incentives shall be determined based on the total payable CIT of the years of advance payment divided by the number of years of advance payment.
What are the regulations on the time for determining turnover for calculating taxable income in Vietnam?
What are the regulations on the time for determining turnover for calculating taxable income in Vietnam?
Pursuant to Clause 2, Article 5 of Circular No. 78/2014/TT-BTC (amended by Article 3 of Circular No. 96/2015/TT-BTC), the time for determining turnover for calculating taxable income is:
- For goods sale: the time when the right to ownership and/or right to enjoyment of goods is transferred to the buyer.
- For service provision: the time when service provision is completed or part of service provision is completed except for the case in Clause 3 Article 5 of Circular No. 78/2014/TT-BTC, Clause 1 Article 6 of Circular No. 119/2014/TT-BTC.
- For air transport: the time when provision of transport services is completed.
- Other cases defined by law
Guide to determining turnover for calculating taxable income in a number of specific cases?
Pursuant to Clause 3, Article 5 of Circular No. 78/2014/TT-BTC (amended and supplemented by Clause 1, Article 6 of Circular No. 119/2014/TT-BTC), the turnover for calculating taxable income in a number of cases shall be determined as follows:
- For goods and services sold on installment or deferred payment, it is the lump-sum selling prices of goods or services, excluding installment or deferred payment interests.
- For goods and services used for exchange (excluding the goods and services used for sustaining production and business operation), it shall be determined according to the selling prices of products, goods or services of the same or similar categories on the market at the time of exchange.
- For goods processing activities, it is the proceeds from processing activities, including remuneration, expenses for fuel, power and auxiliary materials, and other expenses for the processing;
- For units selling their goods through agents or consignees and units operating as agents or consignees under agency or consignment contracts selling goods at set prices to enjoy commissions, the turnover shall be determined as follows:
+ For enterprises selling their goods through agents or consignees (including multi-level sales agents), the turnover is the total amount of goods sales;
+ For enterprises acting as agents or consignees for goods sale at prices set by enterprises delivering or consigning their goods, the turnover is the commission enjoyed under goods agency or consignment contracts.
- For asset lease, the turnover is the amount the lessee pays on a periodical basis under the lease contract. In case the lessee pays the rental in advance for many years, the turnover for calculating taxable income shall be distributed to the number of years of advance payment or is the turnover paid in a lump sum;
Enterprises may, based on the conditions for implementation of the accounting regime, actual invoices and documents and the determination of costs, select either of the following methods to determine turnover for calculating taxable income:
+ The turnover is the annual rental which is the paid rental divided by (:) the number of years of advance payment;
+ The turnover is the total rental of the number of years of advance payment;
In case an enterprise that is enjoying CIT incentives chooses the method of determining turnover for calculating taxable income which is the total rental paid in advance by the lessee for many years, the determination of the income tax amounts exempted and reduced shall be based on the total CIT amount of the number of years of advance payment divided by (:) the number of years of advance payment of the rental by the lessee;
- For golf course business, the turnover is the proceeds from the sale of membership cards and golf playing tickets and other revenues in the tax period which shall be determined as follows:
+ For the form of sale of daily golf tickets and cards, the turnover for determining taxed income is proceeds from the sale of tickets and cards and other revenues arising in the tax period.
+ For the form of sale of tickets and membership cards paid in advance for many years, the turnover for determining taxed income of each year is the actually collected proceeds from the sale and other revenues divided by the number of years of card use or is the turnover paid in a lump sum.
- For credit activities of credit institutions and foreign bank branches, the turnover is interests from deposits and loans and turnover from financial leasing activities to be collected in the tax period which are accounted as turnover under current regulations on the financial mechanisms of credit institutions and foreign bank branches.
- For transportation activities, the turnover is the total turnover from passenger, cargo and luggage transportation arising in the tax period.
- For electricity and clean water supply, the turnover is the charge for supplied electricity or clean water recorded on added-value invoices. The time of determining the turnover for calculating taxable income is the date of certification of electricity or water meter readings recorded on electricity or clean water bills.
- For insurance business, the turnover for calculating taxable income is total proceeds from the provision of insurance services and other goods and services, including VAT-exclusive surcharges and extra fees that insurance enterprises earn, including:
+ Turnover from insurance business:
For insurance and reinsurance business, the turnover includes collected original insurance premiums; reinsurance premiums, commissions of reinsurance cession; fees for insurance policy management;
Charges for agency services including loss assessment, consideration for compensation, request for a third party to pay indemnities and handling of 100% compensated goods (excluding authorized assessment among internal- accounting member enterprises in the same independent-accounting insurer) after deduction of all payables to reduce revenues such as refunded insurance premiums; reduced insurance premiums; refunded reinsurance premiums; reduced reinsurance premiums; refunded commissions for reinsurance cession; and reduced commissions for reinsurance cession.
For insurance enterprises participating in co-insurance, the turnover for calculating taxable income of each party is the collected original premiums distributed in proportion to their co-insurance to each party excluding value- added tax.
For insurance contracts with agreement on payment for each period, the turnover for calculating taxable income is the receivable amount arising in each period.
In case there are authorized collection operations between affiliated enterprises or between dependent-accounting enterprises and the head office of the insurance enterprise, the turnover for calculating taxable income excludes the turnover from these authorized collection operations.
+ Turnover from insurance brokerage: Collected commissions for insurance brokerage after deducting insurance brokerage commissions, reduced and refunded insurance brokerage commissions.
- For construction and installation activities, the turnover is the value of constructions or construction items or the value of volume of constructions and installation already tested and accepted.
+ In case of construction and installation involving contracted supply of materials, machinery and equipment, the turnover is the money amount from construction and installation activities, including the value of materials, machinery and equipment.
+ In case of construction and installation without contracted supply of materials, machinery and equipment, the turnover is the money amount earned from construction and installation activities, excluding the value of materials, machinery and equipment.
- For business activities under business cooperation contracts:
+ In case the parties to a business cooperation contract divide the business result being the turnover from the sale of goods and services, the taxed turnover is the turnover of each party divided under the contract.
+ In case the parties to a business cooperation contract divide their business result being products, the taxed turnover is the turnover of products divided to each part under the contract.
+ In case the parties to a business cooperation contract divide their business result being pre-CIT profit, the turnover for determining the pre-tax income is the proceeds from the sale of goods or provision of services under the contract. The parties to the business cooperation contracts shall appoint a party as a representative to produce invoices, record turnover and expenses and determine the pre-CIT profit divided to each party. Each party shall perform its CIT obligation under current regulations.
+ In case the parties to a business cooperation contract divide their business result being after-CIT profit, the turnover for calculating taxable income is the proceeds from the sale of goods or provision of services under the contract. The parties to the business cooperation contract shall appoint a party as a representative to produce invoices, record turnover and expenses and declare and pay CIT on behalf of other parties.
- For prize-winning game business (casino, prize-winning electronic games, and betting entertainment business), the turnover is the proceeds from these activities including excise tax but minus the prizes paid to customers;
- For securities trading, its turnover is the proceeds from brokerage services, securities dealing, securities issuance underwriting, investment portfolio management, financial and securities investment consultancy, investment fund management, issuance of fund certificates, market organization services and other securities services as prescribed by law;
- For derivative financial services, their turnover is the proceeds from the provision of derivative financial services performed in the tax period.
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