Lecture taxation chapter 6 corporate income tax (cit)

TAXATION Chapter 6 Corporate Income Tax (CIT) REFERENCES 1 Law on CIT No 14/2008/QH12 dated 03 June 2008; 2 Law No 32/2013/QH13 dated 19 June 2013 on amendments and complements of CIT; 3 Law No 71/201[.]

Chapter 6: Corporate Income Tax (CIT)

1 Law on CIT No.14/2008/QH12 dated 03 June 2008;

2 Law No.32/2013/QH13 dated 19 June 2013 on

amendments and complements of CIT;

3 Law No.71/2014/QH14 dated 26 November 2014

on amendments and complements of CIT;

4 Decree 218/2013/ND-CP dated 26 December 2013;

5 Decree 91/2014/ND-CP dated 01 October 2014;

6 Decree 12/2015/ND-CP dated 12 February 2015;

7 Decree 100/2016/ND-CP dated 01 July 2016;

8 Circular 78/2014/TT-BTC dated 18 June 2014;

9 Circular 119/2014/TT-BTC dated 25 August 2014;

10 Circular 151/2014/TT-BTC dated 10 October 2014;

11 Circular 96/2015/TT-BTC dated 22 June 2015;

12 Circular 130/2016/TT-BTC dated 12 August 2016.

LEARNING OUTCOMES

• LO 6-1: Understand concept, characteristics and role of CIT

• LO 6-2: Specify taxable subjects and taxpayers of current

CIT of Vietnam

• LO 6-3: Define tax base, tax period and tax rate of current

CIT of Vietnam

• LO 6-4: Recognize revenues, deductible expenses and

other incomes of current CIT of Vietnam

• LO 6-5: Explain tax exemption, loss transfer and tax

incentives of current CIT of Vietnam

• LO 6-6: Define incomes from capital transfer, security

transfer and real estate transfer

OVERVIEW OF CIT

▪ Definition

+ Corporate Income Tax (CIT) is a direct tax levied on incomes

of enterprises through their business activities

+ Other calls of CIT: Enterprise Income Tax (EIT) or Corporation Tax (CT)

LO 6-1: Understand concept, characteristics and role of CIT.

OVERVIEW OF CIT

▪ Characteristics

+ A progressive tax.

+ Taxpayers are also taxable entities.

+ Depending on business results of enterprises or investors.

▪ Roles:

+ A tool of regulating income, ensuring social justice.

+ Contribute to encourage investments.

+ Contribute to restructure the economy by industries and territories.

+ Create revenues for state budget.

TAXABLE OBJECTS & TAXPAYERS

▪ Taxable objects

+ Incomes from business activities including production, sales of goods and provisions of services.

+ Other incomes

▪ Taxpayers:

+ Enterprises (Enterprise Law, Foreign Law, Investment Law, etc.) + Public non-business units (with taxable incomes)

+ Cooperatives (Cooperative Law)

+ Foreign contractors (Contractor's tax)

LO 6-2: Specify taxable objects and taxpayers of current CIT of VN.

TAX BASES

▪ a

LO 6-3: Define tax bases, tax period and tax rates of current CIT of

Vietnam.

CIT payable = (

Taxed incomes

-Science and technology fund

if any

) × CIT rate

Taxed incomes =

Taxable incomes

-Tax exempted incomes

-Losses carried forward under regulations

Taxable incomes = Revenues

-Deductible expenses +

Other taxable incomes

TAX PERIOD

▪ Tax period

+ A calendar year (from 1 Jan to 31 Dec)

+ Or a fiscal year applied by enterprises.

▪ Notes:

+ not exceed 15 months:

➢ the first tax period for newly established

enterprises;

➢ the final tax period for merging, dissolving or

liquidating enterprises.

+ CIT is temporarily paid quarterly, four times a

year, and one annual settlement.

EX 5-1:

Phuong Dong Company established in July

July to December 2013 From 2014 onwards, its tax period is 12 months from Jan to Dec.

Phuong Tay Company established in Nov

Nov 2013 to December 2014 From 2015 onwards, its tax period is 12 months from Jan to Dec.

Phương Nam Company dissolved in Jan

2013, its final tax period is 13 months from Jan 2012 to Jan 2013.

Phương Bac Company dissolved in May

2013, its final tax period is 5 months from Jan 2013 to May 2013.

TAX RATES

▪ Currently, the CIT standard rate is 20%

▪ Certain industries are liable to higher tax rates:

➢ Companies operating in the oil and gas industry are subject

to rates ranging from 32% to 50%, depending on the location and specific project

➢ Companies engaging in prospecting, exploration and

exploitation of mineral resources are subject to CIT rates of 40% or 50% depending upon location