THE NATIONAL ASSEMBLY
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SOCIALIST REPUBLIC OF VIET
NAM
Independence - Freedom - Happiness ---------- |
No. 14/2008/QH12
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Hanoi, June 3, 2008
|
LAW
Pursuant to the 1992 Constitution of the Socialist
Republic of Vietnam, which was amended and supplemented under Resolution No.
51/2001/QH10;
The National Assembly promulgates the Law on
Enterprise Income Tax.
Chapter I
GENERAL
PROVISIONS
Article 1.- Governing scope
This Law provides for enterprise income taxpayers,
taxable incomes, tax-exempt incomes, tax bases, tax calculation methods, and
tax incentives.
Article 2.- Taxpayers
1. Taxpayers are goods and service production and
business organizations which have taxable incomes under the provisions of this
Law (below referred to as enterprises), including:
a/ Enterprises established under Vietnamese law;
b/ Enterprises established under foreign laws (below
referred to as foreign enterprises) with or without Vietnam-based permanent
establishments;
c/ Organizations established under the Law on
Cooperatives;
d/ Non-business units established under Vietnamese
law;
e/ Other organizations engaged in income-generating
production and business activities.
2. Enterprises having taxable incomes under Article
3 of this Law shall pay enterprise income tax as follows:
a/ Enterprises established under Vietnamese law
shall pay tax on taxable incomes generated in and outside Vietnam;
b/ Foreign enterprises with Vietnam-based permanent
establishments shall pay tax on taxable incomes generated in Vietnam and
taxable incomes generated outside Vietnam which are related to the operation of
such establishments;
c/ Foreign enterprises with Vietnam-based permanent
establishments shall pay tax on taxable incomes generated in Vietnam which are
not related to the operation of such permanent establishments.
d/ Foreign enterprises without Vietnam-based
permanent establishments shall pay tax on taxable incomes generated in Vietnam.
3. Foreign enterprises permanent establishments are
production and business establishment through which foreign enterprises conduct
some or all income-generating production and business activities in Vietnam,
including:
a/ Branches, executive offices, factories,
workshops, means of transport, mines, oil and gas fields, or other places of
extraction of natural resources in Vietnam;
b/ Construction sites, construction works,
installation and assembly projects;
c/ Establishments providing services, including
consultancy services through employees or other organizations or individuals;
d/ Agents for foreign enterprises;
e/ Vietnam-based representatives, in case of
representatives which are competent to conclude contracts in the name of
foreign enterprises or representatives which are incompetent to conclude
contracts in the name of foreign enterprises but regularly deliver goods or
provide services in Vietnam.
Article 3.- Taxable incomes
1. Taxable incomes include income from goods and
service production and business activities and other incomes specified in
Clause 2 of this Article.
2. Other incomes cover income from the transfer of
capital or real estate; income from the right to own or use assets; income from
the transfer, lease or liquidation of assets; income from interests, loans or
foreign currency sales; refund of provisions; recovery of bad debts already
written off; collection of payable debts of unidentifiable creditors; omitted
income from previous years business activities, and other incomes, including
income generated from production and business activities outside Vietnam.
Article 4.- Tax-exempt incomes
1. Income from cultivation, husbandry and
aquaculture of organizations established under the Law on Cooperatives.
2. Income from the application of technical services
directly for agriculture.
3. Income from the performance of contracts on
scientific research and technological development, trial products and products
turned out with technologies applied for the first time in Vietnam.
4. Income from enterprises goods and service
production and business activities exclusively reserved for disabled,
detoxified and HIV-infected laborers. The Government shall specify criteria and
conditions for the determination of enterprises exclusively reserved for
disabled, detoxified and HIV-infected laborers.
5. Income from job-training activities exclusively
reserved for ethnic minority people, the disabled, children in extremely
disadvantaged circumstances and persons involved in social evils.
6. Incomes divided for capital contribution, joint
venture or association with domestic enterprises, after enterprise income tax
has been paid under the provisions of this Law.
7. Received financial supports used for educational,
scientific research, cultural, artistic, charitable, humanitarian and other
social activities in Vietnam.
Article 5.- Tax period
1. An enterprise income tax period is the calendar
year or fiscal year, except the cases defined in Clause 2 of this Article.
2. The enterprise income tax period upon each time
of income generation applies to foreign enterprises specified at Points c and
d, Clause 2, Article 2 of this Law.
Chapter II
TAX
BASES AND TAX CALCULATION METHODS
Article 6.- Tax bases
Tax bases include taxed income and tax rate.
Article 7.- Determination of taxed income
1. Taxed income in a tax period is the taxable
income minus tax-exempt incomes and losses carried forward from previous years.
2. Taxable income is turnover minus deductible
expenses for production and business activities plus other incomes, including
income received outside Vietnam.
3. Income from real estate transfer must be separately
determined for tax declaration and payment.
The Government shall detail and guide the
implementation of this Article.
Article 8.- Turnover
Turnover is the total sales, processing
remuneration, service provision charges, subsidies and surcharges enjoyed by
enterprises. Turnover is calculated in Vietnam dong; foreign currency turnover,
if any, must be converted into Vietnam dong at the average exchange rate on the
inter-bank foreign currency market announced by the State Bank of Vietnam at
the time foreign-currency turnover is generated.
The Government shall detail and guide the
implementation of this Article.
Article 9.- Deductible and non-deductible expenses
upon determination of taxable incomes
1. Except the expenses specified in Clause 2 of this
Article, enterprises are entitled to deduction of all expenses which fully meet
the following conditions:
a/ They are actually paid expenses related to
production and business activities;
b/ They are accompanied with adequate invoices and
documents as prescribed by law.
2. Non-deductible expenses upon determination of
taxable incomes include:
a/ Expense not fully satisfying the conditions
specified in Clause 1 of this Article, except the uncompensated value of losses
caused by natural disasters, epidemics or other force majeure circumstances;
b/ Fine for administrative violations;
c/ Expense already covered by other funding sources;
d/ Business administration expense allocated by
foreign enterprises to their Vietnam-based permanent establishments in excess
of the level calculated according to the allocation method prescribed by
Vietnamese law;
e/ Expense in excess of the law-prescribed norm for
the deduction and setting up of provisions;
f/ Expense for raw materials, materials, fuel,
energy or goods in excess of the wastage rate set by enterprises and notified
to tax offices and the actual ex-warehousing price;
g/ Payment for interests on loans for production and
business activities of entities other than credit institutions or economic
organizations in excess of 150% of the basic interest rate announced by the
State Bank of Vietnam at the time of loaning;
h/ Fixed asset depreciation made in contravention of
law;
i/ Expenses advanced in contravention of law;
j/ Salaries and wages of owners of private enterprises;
remuneration paid to enterprise founders who do not personally administer
production and business activities; salaries, wages and other accounted amounts
payable to laborers which have actually not been paid to them or paid without
invoices or documents as prescribed by law;
k/ Loan interests paid corresponding to the
insufficient amount of the charter capital;
l/ Credited input value-added tax, value-added tax
to be paid according to the credit method, and enterprise income tax;
m/ Expense for advertisement, marketing, sales
promotion and brokerage commissions; expense for reception, protocol and
conferences; expense in support of marketing and payment discount; expense for
press agencies newspapers given as presents or gifts directly related to production
and business activities in excess of 10% of total deductible expenses; for
newly set up enterprises, such expense in excess of 15% of total deductible
expenses for the first 3 years from the date of setting up. Total deductible
expenses exclude the expenses specified at this Point; for trade activities,
total deductible expenses exclude purchasing prices of sold goods;
n/ Financial supports, excluding those for
educational and healthcare activities and for mitigating natural disaster
consequences and building houses of gratitude for the poor as prescribed by
law.
3. Deductible foreign currency expenses upon the
determination of taxable incomes must be converted into Vietnam dong at the
average exchange rate on the inter-bank foreign currency market announced by
the State Bank of Vietnam at the time foreign currency expenses arise.
The Government shall detail and guide the
implementation of this Article.
Article 10.- Tax rates
1. The enterprise income tax rate is 25%, except the
cases specified in Clause 2, this Article, and Article 13, of this Law.
2. The enterprise income tax rate applicable to
activities of prospecting, exploring and exploiting oil and gas and other
precious and rare natural resources is between 32% and 50%, depending on each
project or business establishment.
The Government shall detail and guide the
implementation of this Article.
Article 11.- Tax calculation method
1. An enterprise income tax amount payable in a tax
period is the taxed income multiplied by the tax rate; in case an enterprise
has paid income tax outside Vietnam, the paid tax amount may be subtracted but
must not exceed the enterprise income tax amount payable under the provisions
of this Law.
2. The tax calculation method applicable to
enterprises listed at Points c and d, Clause 2, Article 2 of this Law complies
with the Governments regulations.
Article 12.- Places for tax payment
Enterprises shall pay tax at places where they are
headquartered. In case an enterprise has a dependent cost-accounting production
establishment operating in a province or centrally run city other than the
place of its headquarters, the payable tax amount shall be calculated based on
the ratio of expenses between the place where the production establishment is
located and the place where the enterprise is headquartered. The
decentralization, management and use of tax revenues comply with the State
Budget Law.
The Government shall detail and guide the
implementation of this Article.
Chapter III
ENTERPRISE
INCOME TAX INCENTIVES
Article 13.- Tax rate incentives
1. Newly set up enterprises under investment
projects in geographical areas with extreme socio-economic difficulties,
economic zones or hi-tech parks; newly set up enterprises under investment
projects in the domains of high technology, scientific research and
technological development, development of the States infrastructure works of
special importance, or manufacture of software products are entitled to the tax
rate of 10% for fifteen years.
2. Enterprises operating in education-training, vocational
training, healthcare, cultural, sports and environmental domains are entitled
to the tax rate of 10%.
3. Newly set up enterprises under investment
projects in geographical areas with socio-economic difficulties are entitled to
the tax rate of 20% for ten years.
4. Agricultural service cooperatives and peoples
credit funds are entitled to the tax rate of 20%.
5. For large-scale and hi-tech projects in which
investment should be particularly attracted, the duration for application of
tax rate incentives may be extended but must not exceed the duration specified
in Clause 1 of this Article.
6. The duration for application of tax rate
incentives specified in this Article is counted from the first year an
enterprise has turnover.
The Government shall detail and guide the
implementation of this Article.
Article 14.- Tax exemption and reduction duration
incentives
1. Newly set up enterprises under investment
projects in geographical areas with extreme socio-economic difficulties,
economic zones or hi-tech parks; newly set up enterprises under investment
projects in the domains of high technology, scientific research and
technological development, development of the States infrastructure works of
special importance or manufacture of software products; newly set up
enterprises operating in education-training, vocational training, healthcare,
cultural, sports and environmental domains are entitled to tax exemption for no
more than four years and a 50% reduction of payable tax amounts for no more
than nine subsequent years.
2. Newly set up enterprises newly set up under
investment projects in geographical areas with socio-economic difficulties are
entitled to tax exemption for no more than two years and a 50% reduction of
payable tax amounts for no more than four subsequent years.
3. The tax exemption or reduction duration specified
in this Article is counted from the first year an enterprise has taxable
income; in case an enterprise has no taxable income for the first three years
from the first year it has turnover, the tax exemption or reduction duration is
counted from the fourth year.
The Government shall detail and guide the
implementation of this Article.
Article 15.- Other cases eligible for tax reduction
1. Production, construction or transport enterprises
which employ many female laborers are entitled to reduction of enterprise
income tax amounts equal to additional expenses for female laborers.
2. Enterprises which employ many ethnic minority
laborers are entitled to reduction of enterprise income tax amounts equal to
additional expenses for ethnic minority laborers.
The Government shall detail and guide the
implementation of this Article.
Article 16.- Carrying forward of losses
1. Loss-suffering enterprises may carry forward
their losses to the subsequent year; those losses may be included in taxed
income. The time limit for carrying forward losses is five years, counting from
the year following the year the losses arise.
2. Enterprises suffering losses from real estate
transfer activities may only carry forward losses into those activities taxed
income.
Article 17.- Deduction for setting up of enterprises
scientific and technological development funds
1. Enterprises established and operating under
Vietnamese law may deduct up to 10% of taxed income for setting up their
scientific and technological development funds.
2. Within five years after being set up, if a
scientific and technological development fund is not used, has been used below
70% or used for improper purposes, the enterprise shall remit into the state
budget the enterprise income tax amount calculated on the income already
deducted for setting up the fund but not used or used for improper purposes and
the interest on that enterprise income tax amount.
The enterprise income tax rate used for calculating
the to-be-recovered tax amount is the tax rate applicable to the enterprise
during the time of operating the fund.
The interest rate for calculating the interest on
the to-be- recovered tax amount calculated on the unused fund amount is the
interest rate for one-year term treasury bonds applicable at the time of
recovery, and the interest payment period is two years.
The interest rate for calculating the interest on
the to-be- recovered tax amount calculated on the fund amount used for improper
purposes is the interest used for late payment fines under the provisions of
the Tax Administration Law, and the interest payment period is counted from the
time a fund is set up to the time of recovery.
3. Enterprises may not account expenses covered by
their scientific and technological development funds as deductible ones upon
the determination of taxable incomes in a tax period.
4. Enterprises scientific and technological
development funds may be used only for scientific and technological investment
in Vietnam.
Article 18.- Conditions for application of tax
incentives
1. Enterprise income tax incentives specified in
Articles 13, 14, 15, 16 and 17 of this Law apply only to enterprises which
implement regulations on accounting, invoices and documents and pay tax
according to declaration.
2. Enterprises shall account separately income from
production and business activities eligible for tax incentives specified in
Articles 13 and 14 of this Law from income from production and business
activities ineligible for tax incentives; if those incomes cannot be separately
accounted, income from production and business activities eligible for tax
incentives shall be determined based on the ratio between turnover from
production and business activities eligible for tax incentives and total
turnover.
3. Enterprise income tax incentives specified in
Articles 13 and 14 of this Law do not apply to:
a/ Incomes specified in Clause 2, Article 3 of this
Law;
b/ Income from activities of prospecting, exploring
and mining oil, gas and other precious and rare natural resources;
c/ Income from prize-winning game or betting
business as prescribed by law;
d/ Other cases specified by the Government.
Chapter IV
IMPLEMENTATION
PROVISIONS
Article 19.- Implementation effect
1. This Law takes effect on January 1, 2009.
2. This Law replaces Enterprise Income Tax Law No.
09/2003/QH11.
3. Enterprises which enjoy enterprise income tax
incentives under Enterprise Income Tax Law No. 09/2003/QH11 may continue
enjoying those incentives for the remaining duration under Enterprise Income
Tax Law No. 09/2003/QH11; in case enterprise income tax incentives, including
tax rate incentives and tax exemption and reduction duration, are lower than
the tax incentives specified in this Law, the tax incentives under this Law
apply for the remaining duration.
4. Enterprises which are entitled to tax exemption
or reduction duration under Enterprise Income Tax Law No. 09/2003/QH11 but have
no taxable income yet, the tax exemption or reduction duration will be counted
under this Law and from the date this Law takes effect.
Article 20.- Implementation guidance
The Government shall detail and guide the
implementation of Articles 4, 7, 8, 9, 10, 11, 12, 13, 14, 15 and 18 and other
necessary contents of this Law to meet management requirements.
This Law was passed on June 3, 2008, by the XIIth
National Assembly of the Socialist Republic of Vietnam at its third session.
CHAIRMAN OF THE NATIONAL
ASSEMBLY
Nguyen Phu Trong |