On December 07, 2020, the General Department of Taxation of Vietnam issued the Official Dispatch No. 5189/TCT-CS on introduction of new points of the Decree No. 126/2020/NĐ-CP elaborating the Law on Tax Administration, especially the new points on declaration of corporate income tax (CIT) in Decree No. 126/2020/NĐ-CP.
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The Official Dispatch No. 5189/TCT-CS of the General Department of Taxation of Vietnam has clarified 06 new points on declaration of CIT (except for CIT on petroleum exploration and extraction) specified in Decree No. 126/2020/NĐ-CP elaborating the Law on Tax Administration of Vietnam. To be specific:
First: Declaration of corporate income tax every time the tax on transfer of real estate incurs is only required if the taxpayer pays tax directly on revenue under corporate income tax laws (Point e Clause 4 Article 8).
Before, according to Article 16 of Circular No. 151/2014/TT-BTC of the Ministry of Finance of Vietnam, CIT on real estate transfer shall be declared whenever it is incurred by the taxpayer that is not a real estate company, or by the real estate company that wishes to do.
Second: The total amount of provisional corporate income tax paid in the first 03 quarters of the year shall be at least 75% of the terminal tax from the tax period 2021. Otherwise, late payment interest shall be charged on the arrears over the period from the deadline for paying corporate income tax of the third quarter to the date of payment of the arrears (Point b Clause 6 Article 8).
Before, according to Clause 6 Article 4 of Decree No. 91/2014/NĐ-CP of Vietnam’s Government and Article 17 of Circular No. 151/2014/TT-BTC, if the total of four provisional tax payments is smaller than the amount payable according to the financial statement by 20% or more, the taxpayer shall incur an interest on the amount that exceeds the 20% difference from the next day of deadline for paying taxes in the 4th quarter of the company to the day on which the actual outstanding tax is paid.
Third: In case the taxpayer executes a project of investment in infrastructure or housing for transfer or lease purchase and collects progress payments from customers, provisional corporate income tax shall be paid quarterly at the rate of 1% of the amount collect (Point b Clause 6 Article 8).
Before, according to Article 16 of Circular No. 151/2014/TT-BTC of the Ministry of Finance of Vietnam, if the company is able to determine the expenses in proportion to recorded revenues, it shall pay CIT according to the difference between revenues and expenses; if not, it shall provisionally pay CIT at 1% of the revenue.
Fourth: CIT shall be declared where the dependent unit or business location generates income eligible for corporate income tax incentives at the tax authority of the province other than the province in which the taxpayer is headquartered (Point h Clause 1 Article 11).
Before, according to Article 16 of Circular No. 151/2014/TT-BTC of the Ministry of Finance of Vietnam, the taxpayer must include the tax incurred by the affiliate in the CIT declaration at its headquarter.
Fifth: The national defense and security company shall declare CIT in accordance with the Law on Tax Administration of Vietnam. To be specific:
- The taxpayer shall calculate the provisional corporate income tax every quarter, submit the annual and terminal tax finalization when the national defense or security company is dissolved, shuts down, terminate a contract or undergoes rearrangement to the tax authority that supervises that company and pay the tax to the state budget in accordance with Decree No. 126/2020/NĐ-CP.
- Tax finalization dossier: shall be made in accordance with point 7 Appendix I issued together with Decree No. 126/2020/NĐ-CP.
Before, Point b Clause 2 section II of Joint Circular No. 85/2005/TTLT/BTC-BCA of the Ministry of Public Security of Vietnam and Clause 2 Article 3 of Joint Circular No. 206/2014/BTC-BQP of the Ministry of National Defense of Vietnam stipulate:
- Security companies affiliated to the Ministry of Public Security, national defense companies affiliated to the Ministry of National Defense (security and national defense companies for short) that earn revenues from manufacture and supply of public products and services and other products and services shall calculate the corporate income tax amount payable and pay the equivalent amount to the account of the Department of Finance affiliated to the Ministry of Public Security or the Ministry of National Defense.
- Every quarter, the Department of Finance affiliated to the Ministry of Public Security or the Ministry of National Defense shall furnish a statement of provisional corporate income tax paid by security and national defense companies to General Department of Taxation and remit the corporate income tax amount of these companies to the State Treasury at the same administrative level with the supervisory tax authorities of these companies.
- Every year, the Department of Finance affiliated to the Ministry of Public Security or the Ministry of National Defense shall send a final statement of corporate income tax to General Department of Taxation, and remit the remaining corporate income tax amount payable after finalization of the security and national defense companies to the State Treasury at the same administrative level with the supervisory tax authorities of these companies. The deadline for paying corporate income tax that remains after finalization is June 30 of the following year.
Sixth: Supplement Appendices 03-3D/TNDN; 03-8A/TNDN; 03- 8B/TNDN; 03-8C/TNDN; 03-9/TNDN enclosed with the final statement No. 03/TNDN (List of tax declaration in Appendix 1 issued together with Decree No. 126/2020/NĐ-CP).
Ty Na
