Final assignment determination of corporate income tax for vietnam foreign trade commercial joint stock bank

VNU – UNIVERSITY OF ECONOMICS AND BUSINESSFinance and Banking *** FINAL ASSIGNMENT DETERMINATION OF CORPORATE INCOME TAX FOR VIETNAM FOREIGN TRADE COMMERCIAL JOINT STOCK BANK HOSE: VCB L

VNU – UNIVERSITY OF ECONOMICS AND BUSINESS

Finance and Banking

***

FINAL ASSIGNMENT DETERMINATION OF CORPORATE INCOME TAX FOR VIETNAM FOREIGN TRADE COMMERCIAL JOINT STOCK BANK (HOSE: VCB)

LECTURERS: TS Lê Hồng Thái

TS Đỗ Thị Thơ COURSE: Tax - FIB2015-E STUDENT: Phạm Thị Cẩm Tú

ID: 22050639

CLASS: QH-2022-E TCNH 6

TABLE OF CONTENTS

List of tables and figures 3

INTRODUCTION 4

Chapter 1: Overview of Vietnam Foreign Trade Joint Stock Commercial Bank Vietcombank 5

1.1 General overview of Vietcombank: 5

1.1.1 Overview of Vietcombank: 5

1.1.2 Financial information of Vietcombank: 6

1.2 Banking activities related to tax obligations: 7

CHAPTER 2: Taxes Related to the Operations of Vietcombank 8

2.1 Corporate income tax: 8

2.1.1 Concept: 8

2.1.2 Method of determining corporate income tax: 9

2.1.3 Notes when calculating corporate income tax: 10

2.2 Value-added tax: 11

2.2.1 Concept of value added tax: 11

2.2.2 Basis for determining value added tax: 12

2.2.2.1 Deduction method: 12

2.2.2.2 Direct Method Based on Value Added: 12

2.2.3 Notes when calculating value-added tax: 13

2.2.3.1 Correctly determine revenue: 13

2.2.3.2 VAT declaration: 13

2.2.3.3 Common violations of VAT: 13

CHAPTER 3: Corporate income tax based on revenue and expenses according to Vietcombank's income statement for 2023 15

REFERENCE 17

LIST OF TABLES AND FIGURES

Table 1.1 Summary of subsidiaries, joint ventures, and associated

companies of Vietcombank

Table 3.1 Quarterly Asset Structure Report (2021-2024) of

Vietcombank

Table 3.2 Quarterly profit growth report (2021-2024) of Vietcombank Table 3.3 Mid-year performance report for the six-month period ending

June 30, 2024

INTRODUCTION Taxes are an important tool for the state in regulating the economy, including encouraging or restricting certain economic activities through tax policy In addition, taxes are also used as a tool to reduce income and wealth inequalit contributing to sustainable development and social equity From the taxpayer's point of view, this is an obligatory contribution that is connected to the taxp rights as well as their duties Countries' tax policy regimes have tended to co and exhibit similarities in recent decades Vietnam, a nation that is developing rapidly, is not an exception to this pattern Over the past 10 years, Viet Nam system has been comprehensively reformed, and its structure is increasingly improved, in accordance with the country's socio-economic context in each perio approaching international practice In the above context, tax management needs t

be strengthened and focused more to ensure the sustainable development of the economy, while minimizing tax liability evasion or tax fraud, especially in the foreign sector In addition, effective tax management also helps tax authorities evaluate the impact of each type of tax on the production and business activ the enterprise From there, tax authorities can advise and propose appropriate policy adjustments, both creating favorable conditions for businesses to develop and ensuring that state budget revenue is not affected

This essay will identify the main taxes that directly affect Vietnam Joint Stock Commercial Bank for Foreign Trade (Vietcombank) and determine corporate income tax based on revenue and expenses in the income statement of busine based on necessary assumptions

Chapter 1: Overview of Vietnam Foreign Trade Joint Stock Commercial Bank

Vietcombank

1.1.General overview of Vietcombank:

1.1.1 Overview of Vietcombank:

Formerly the Vietnam Foreign Trade Bank, now the Vietcombank Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), was established and officially commenced operations on April 1, 1963, with its predecessor bei the Central Foreign Exchange Management Department (under the State Bank of Vietnam) As the first state-owned commercial bank chosen by the Government pilot privatization, Vietcombank officially operated as a joint-stock commercial bank on June 2, 2008, after successfully implementing the privatization plan through an initial public offering After more than half a century of operation market, Vietcombank is now one of the largest commercial banks in Vietnam Vietcombank currently has more than 600 branches/transaction

offices/representative offices/member units both domestically and internationally Vietcombank is proud:

Leading bank among credit institutions in Vietnam in the Top 500 World Best Banks according to the 2022 ranking published by The Banker magazine

The only bank from Vietnam in the Top 30 Strongest Banks in the Asi Pacific region according to The Asian Banker

Is the only representative of Vietnam in the Top 1,000 largest listed companies globally (ranked 950th) as selected by Forbes Magazine

Awarded the "Best Support Bank during Covid-19 in Vietnam" in 2022 by Th Asian Banker magazine, recognizing Vietcombank's outstanding contributions to the domestic market in terms of business efficiency and policies responding to Covid-19 pandemic

1.1.2 Financial information of Vietcombank:

Vietnamese name: Ngân hàng thương mại cổ phần ngoại thương Việt Na English name: Joint stock commercial bank for foreign trade of Viet Nam Trading name: VIETCOMBANK

Establishment and operation license number: 138/GP-NHNN issued by the State Bank of Vietnam on 23/05/2008

Business registration certificate:

Business code: 0100112437

Business registration certificate number 0103024468 issued by the

Department of Planning and Investment of Hanoi City on June 2, 2008 (initial registration)

13th amendment registration on January 16, 2019

Charter capital (Owner's investment capital): 37,088,774,480,000 VND

Stock code: VCB

Par value per share: 10,000 VNDTotal number of shares: 3,708,877,448 Address: 198 Trần Quang Khải, Lý Thái Tổ Ward, Hoàn Kiếm District, Hanoi City, Vietnam

Phone number: 84 - 24 - 3934 3137

Fax: 84 - 24 - 3826 9067

Website: www.vietcombank.com.vn

1.2.Banking activities related to tax obligations:

Commercial banking activities:

Accept demand deposits, time deposits, savings deposits, and other types o deposits

Issuing certificates of deposit, promissory notes, treasury bills, and bonds t raise capital domestically and internationally

Borrowing from the State Bank in the form of refinancing, borrowing fro domestic and foreign credit institutions, and financial organizations in accordance with the law

Other forms of capital mobilization

Credit activities: The bank provides credit to organizations and individuals both domestically and internationally in the following forms:

Lending

Bank guarantees

Issuing credit cards

Domestic payment guarantees, international payment guarantees as

regulated by law

Discounting, rediscounting transfer instruments and other valuable papers Other forms of credit extension as regulated by law

Payment and treasury services:

The bank opens payment accounts and provides payment instruments, offering payment and treasury services to domestic and international customers in accordance with the law

Provide domestic payment services including checks, payment orders, payment mandates, collection orders, collection mandates, letters of credit, bank cards, and agency collection and payment services

Implement international payment services and other payment services after obtaining approval from the State Bank

Vietcombank owns 7 subsidiaries, 2 joint ventures, and 1 associated company:

Table 1.1 Summary of subsidiaries, joint ventures, and associated companies

of Vietcombank

Company Field of activity Ownership

ratio Vietcombank Money Transfer One

Member Limited Liability Company Remittance 100%

Vietnam Finance Limited Liability

Company in Hong Kong (Vinafico) Financial services 100%

Vietcombank Tower 198 LLC

Vietcombank Securities Limited

Liability Company (VCBS)

Securities 100%

One Member Limited Liability Company

Financial Leasing Vietcombank Financial leasing 100%

Vietcombank Laos Limited Liability

Vietcombank Bonday Joint Venture

Vietcombank Money Transfer Company Money transfer 87,5%

Vietcombank VCBF Joint Venture

Securities Investment Fund Management

Company

Investment fund management

51%

Vietcombank-Bonday-Ben Thanh

Limited Liability Joint Venture Company

(VBB)

Office rental 52%

Source: Notes to the Consolidated Financial Statements

CHAPTER 2: Taxes Related to the Operations of Vietcombank

Based on the separate interim financial statements for the six-month period end June 30, 2024, of the enterprise, several types of taxes that the enterprise is obligated to pay to the state budget have been identified:

Corporate income tax (CIT)

Value-added tax (VAT)

2.1 Corporate income tax:

2.1.1 Concept:

Corporate Income Tax (CIT) is a tax levied on the taxable income of produc business and service organizations (collectively referred to as enterprises) over a certain period (usually one year)

2.1.2 Method of determining corporate income tax:

Calculation Component Formula

Corporate Income Tax Payable = [Taxable Income - Contribution to Science

and Technology Development Fund (if any)] × Tax Rate

Taxable Income = Taxable Income Subject to Tax –

(Tax-Exempt Income + Losses Carried Forward) Taxable Income Subject to Tax = Revenue Used for Tax Calculation -

Deductible Expenses + Other Income

Of which:

Science and Technology Development Fund: Enterprises are allowed to allocate up to 10% of their taxable income for activities related to resea and the application of scientific and technological advancements in business operations

Tax-Exempt Income: Includes income from activities such as cultivation, livestock farming; income from joint ventures where the receiving party h already paid corporate income tax; income from scientific research activities, etc

Carried Forward Losses: Losses can be carried forward to offset taxable income for a maximum of 5 years

Costs subtracted:

- Actual expenditure incurred in connection with the production and business activities of the undertaking;

- Expenditure has enough invoices and documents according to the provisions of law

- Do not exceed the norm (for some expenses with norms)

- Invoices for purchasing goods and services each time worth 20 million VND (price with VAT) or more must have non-cash payment documen Corporate income tax rate:

- Tax rate since January 1, 2016: 20%

- Tax rates apply to businesses conducting oil and gas exploration and exploitation from 32% to 50%

- The tax rate applies to businesses conducting search and exploration to exploit rare resources with a tax rate of 50% If 70% of the area l

in a particularly difficult area is given tax incentives, the tax rate is Taxable income:

- According to Circular 78/2014/TT-BTC, Income subject to corporate income tax is revenue from production and trading activities of goods, services and other types of income including:

- Income from capital transfers, real estate transfers

- Income from ownership and use of assets, leasing or liquidation of as

- Interest income on bank deposits, loans, foreign currency sales,

provisions

- Collection of written-off bad debts now claimed; unidentified liabilities owed to the owner

2.1.3 Notes when calculating corporate income tax:

Identify losses and carry forward losses:

Only if a production or business enterprise is profitable will it generate taxabl income For manufacturing and business enterprises that suffer losses, the law allows losses to be transferred to income in the following years According to Clause 2, Article 9 of Decree 78/2014/TT-BTC, after tax settlement, businesses that suffer losses will transfer all and continuously the losses to income in th following years The time for carrying forward losses shall be continuous, not exceeding five years, from the year following that in which the loss was inc After a period of 05 years from the year following the year in which the l incurred, if the loss incurred has not been fully transferred, it will not be transferred to the income of the following years Thus, enterprises are only all

to carry over losses continuously for no more than 5 years from the followin when losses arise If the enterprise declares VAT according to the deduction method, the turnover does not include VAT If the enterprise declares VAT by means, the turnover includes VAT Carry-over losses are those selected by the

undertaking to cover its losses The remaining income after making up for los must still apply the corporate income tax rate

Some non-deductible expenses that businesses need to be aware of:

Expenses that do not meet the conditions stipulated by regulations, except special cases

Depreciation expenses for the following fixed assets are not deductible:

- Not used for business and production activities

- Lack of documents proving ownership by the business establishment (except for finance-leased fixed assets)

- Not managed, monitored, or recorded in the enterprise's accounting books

- Depreciation exceeding the current limits set by the Ministry of Financ Enterprises with high economic efficiency are allowed to apply accelerated depreciation, but not exceeding twice the depreciation rate determined by straight-line method When applying accelerated depreciation, enterprises must ensure profitability

Fixed assets that have been fully depreciated

Depreciation corresponding to the value of construction works on land tha

is not used for business and production activities

Cost of consumables in excess of reasonable

Loss and damaged supplies have been compensated by organizations and individuals

Wages and salaries actually not paid or without invoices or documents according to regulations

Wages and bonuses are not recorded in labor contracts, collective labor agreements, financial regulations or bonus regulations

Wages and salaries that have not been spent until the deadline for subm final settlement documents for the actual year, unless the enterprise has s

up a salary reserve fund

The reserve level is no more than 17% of the real salary fund

- The provisioning of the salary reserve fund ensures that after setting u the business there is no loss, if there is a loss, it cannot be deduct 17%

- In case the previous year has a salary reserve fund set up but after months from the end of the financial year the enterprise has not used has not used it all, the following year's costs must be written down Excess expenditure of 1 million VND/month/person to deduct voluntary pension funds, buy voluntary pension insurance, or do not clearly state th

conditions and benefits or the business does not fully fulfill its obligation regarding Compulsory insurance for employees

Expenditure on costumes in cash exceeds 5 million VND/person/year; Expenditure in kind without invoices or documents

Fines for administrative offences

2.2 Value-added tax:

2.2.1 Concept of value added tax:

Value-added tax is a tax imposed on the added value of goods or services a the process from production, circulation to consumption

2.2.2 Basis for determining value added tax:

2.2.2.1 Deduction method:

Taxpayers must maintain complete accounting books, invoices, and documents in accordance with current regulations and at a scale large enough to meet the thresholds set by the regulatory authorities (According to Article 12 of Circular 219/2013/TT-BTC amended by Circular No 119/2014/TT-BTC and Circular No 93/2017/TT-BTC) )

Tax Calculation Formula

VAT payable = Output VAT – Deductible input

VAT Output VAT = Taxable price x Tax rate

Of which:

Deductible input VAT:

- Total VAT recorded on VAT invoices when purchasing goods and servic used for production and trading of VAT-liable goods and services (including fixed assets)

- VAT stated on tax payment documents of imported goods

- Documents for paying VAT on behalf of foreign parties

- Other deductions (special documents)

Output VAT = Total VAT of goods and services sold recorded on the va added invoice

Taxable price: is the selling price excluding VAT as recorded on the sales invoice of the seller, service provider, or on the import documents Tax rate: according to regulations

2.2.2.2 Direct Method Based on Value Added: