Corporate income tax is applied to income from business activities (profits from production, business, services, or financial activities). However, according to regulations, in some cases businesses can be exempt from corporate income tax.
1. Corporate income tax payers
According to current regulations, corporate income tax payers include organizations that produce and trade goods and services with taxable income according to regulations (collectively referred to as “enterprises”), including:
- Enterprises established under the laws of Vietnam;
- Enterprises established under foreign laws (below referred to as foreign enterprises) with or without Vietnam-based permanent establishments;
- Organizations established under the Law on Cooperatives;
- Non-business units established under the laws of Vietnam;
- Other organizations engaged in income-generating production and business activities.
2. Which incomes are exempt from corporate income tax?
Incomes that are exempt from corporate income tax include:
- Incomes from farming, breeding, aquaculture, salt production of cooperatives; incomes of cooperatives from agriculture, forestry, fisheries, and salt production in localities facing socio-economic difficulties or localities facing extreme socio-economic difficulties; incomes of enterprises from farming, breeding, aquaculture in localities facing extreme socio-economic difficulties; incomes from fisheries.
- Income from the performance of technical services directly serving agricultural exempted from tax includes: income from water irrigation and drainage services, plowing, harrowing, dredging of canals and ditches in the field; insect and diseases prevention services for crops, livestock; services of agricultural products harvest.
- For income from the performance of the contract for scientific research and technological development, income from the sale of products made on trial and income from products made by new technology first applied in Vietnam. The tax exemption period must not exceed 01 year from the start date of revenue from the sale of products under the contract for scientific research and technological application, production on trial or by new technology.
- Incomes from production and sale of goods and services of enterprises that have at least 30% of the employees are disabled people, detoxified people, suffers of HIV/AIDS.
Noted that, the enterprise which is exempt from corporate income tax must have at least 20 employees, except for enterprises engaged in finance and real estate business.
- Income from vocational training dedicated to the ethnic minorities, the disabled, underprivileged children, the objects of social evils, the persons under rehabilitation, the rehabilitated persons, drug users, HIV/AIDS sufferers.
Where the vocational training school includes other subjects, the Exempt income is determined by the ratio between a number of ethnic minorities, the disabled, underprivileged children, the objects of social evils, the persons under rehabilitation, the rehabilitated persons, drug users, HIV/AIDS sufferers and the total learners of the establishment.
- Income divided from capital contribution, share purchase, joint venture and economic association with domestic enterprises. After the party receiving the contributed capital, issuing stocks or performing the joint venture and association has paid tax under the provisions of the Law on corporate income tax, including the case where the party receiving the contributed capital, issuing stocks or performing the joint venture and association is enjoying preferential tax specified
- The grants received are used for educational activities, scientific research, culture, art, charity, humanity and other social activities in Vietnam.
- Incomes from the transfer of Certified Emissions Reductions (CERs) of enterprises issued with CERs.
- Incomes from the performance of tasks of the Vietnam Development Bank, which are assigned by the State, in credit for development and export; incomes from granting credit to the poor and beneficiaries of policies of Vietnam Bank for Social Policies; incomes of state financial funds and other state funds serving non-profit purpose incomes of organizations, of which 100% charter capital is possessed by the State, that are established by the Government to settle bad debts of Vietnamese credit institutions.
- Undistributed incomes of private organizations, which make investment in education, health, and other fields, that are kept to serve their development in accordance with the laws on education, health, and other fields; the incomes that form the undistributed assets of cooperatives established and operating in accordance with the Law on Cooperatives.
- Incomes from transfer of technologies that are prioritized to be to organizations and individuals in localities facing extreme socio-economic difficulties.
- Incomes of bailiff offices during pilot period as prescribed by law.
The application of corporate income tax exemption for each specific case will be carried out in accordance with the provisions of law.
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