Chương 2 Nghị định 124/2008/NĐ-CP: Căn cứ và phương pháp tính thuế

Chapter II

TAX BASES AND TAX CALCULATION METHODS

Article 5.- Tax bases

Tax bases include taxed income in a tax period and tax rate.

Tax period is specified in Article 5 of the Law on Enterprise Income Tax and the provisions of the law on tax administration.

Enterprises may choose to apply a tax period according to a calendar year or fiscal year and must register it with tax agencies before application.

Article 6.- Determination of taxed incomes

1. Taxed income in a tax period shall be determined as follows:

Taxed income = Taxable income - (Tax-exempt income + Losses carried forward under regulations)

2. Taxable income shall be determined as follows:

Taxable income = (Turnover - Deductible expenses) + Other incomes

For an enterprise conducting different business activities, taxable income from production and business activities is the total of incomes from all business activities. If a business activity makes losses, the enterprise may offset such losses with the taxable income of an income-generating business activity selected by the enterprise. The remaining income after loss offsetting is subject to the rate of enterprise income tax on income-generating business activities.

Income from real estate transfer must be separately accounted for tax declaration and payment and must not be included in incomes or used to offset losses made by other business activities.

3. Taxable incomes from some production and business activities shall be determined as follows:

a/ For income from capital transfer (excluding income from securities transfer specified at Point b of this Clause), taxable income is the total sum of money collected under a transfer contract minus (-) the purchase price of the transferred capital amount, minus (-) expenses for the transfer;

b/ For income from securities transfer, taxable income is the selling price minus (-) the purchase price of the transferred securities, minus (-) expenses for the transfer;

c/ For income from intellectual property copyright or technology transfer, taxable income is the total collected sum of money minus (-) the cost or expense for creating the transferred intellectual property right or technology, minus (-) the expense for maintaining, upgrading or developing the transferred intellectual property right or technology, and other deductible expenses;

d/ For income from asset lease, taxable income is the lease turnover minus (-) basic depreciation, expense for asset renovation, repair or maintenance, expense for lease of assets for sublease (if any) and other deductible expenses related to the lease;

dd/ For income from transfer or liquidation of assets (except real estate), taxable income is the sum of money collected from asset transfer or liquidation minus (-) the residual book value of assets at the time of transfer or liquidation and deductible expenses related to the transfer or liquidation;

e/ For income from foreign currency sales, taxable income is the total sum of money collected from foreign currency sales minus (-) the purchase price of the quantity of sold foreign currencies (excluding foreign exchange difference resulting from the re-valuation of monetary items of foreign currency origin at the end of a fiscal year or foreign exchange difference arising in the course of capital construction investment before production and business activities are carried out);

g/ For difference resulting from the re-valuation of fixed assets upon capital contribution, taxable income is the difference between the re-valuated value and the residual value of fixed assets, and shall be allocated to the number of years during which depreciation may be made for the re-valuated fixed assets at capital contributing enterprises.

For fixed assets transferred upon separation, split, consolidation, merger or transformation of enterprises, taxable income is the difference between the re-valuated value and the book value or the residual value of fixed assets.

For assets other than fixed assets, taxable income is the difference between the re-valuated value and the book value;

h/ For incomes received from overseas production, business or service activities, taxable income is the total of pre-tax incomes.

4. Incomes from oil and gas exploration and extraction activities shall be determined based on each oil and gas contract.

Article 7.- Determination and carrying forward of losses

1. Loss arising in a tax period is the negative (-) taxable income amount to be determined according to the formula specified in Clause 2, Article 6 of this Decree.

2. Loss-suffering enterprises may carry forward their losses to the subsequent year; these losses may be offset with taxable income. The maximum duration for carrying forward losses is five consecutive years, counting from the year following the year the losses arise.

3. Losses from real estate transfer must be separately accounted and may only be offset with this activity’s taxable income. The maximum duration for carrying forward losses is five consecutive years, counting from the year following the year the losses arise.

Article 8.- Turnover

Turnover used for calculating taxable income is specified in Article 8 of the Law on Enterprise Income Tax.

1. Turnover used for calculating taxable income is the total of sales, processing remunerations and service charges, including also subsidies and surcharges enjoyed by enterprises, regardless of whether money has been collected or not.

For enterprises declaring and paying value-added tax according to the tax credit method, turnover used for calculating enterprise income tax is exclusive of value-added tax. For enterprises declaring and paying value-added tax according to the method of calculation of tax based directly on added value, turnover used for calculating enterprise income tax is inclusive of value-added tax.

2. The time of determining turnover used for calculating taxable income for sold goods is the time of transfer of the right to own or use goods to purchasers.

The time of determining turnover used for calculating taxable income for services is the time of completing the provision of services to purchasers or the time of making service provision invoices.

3. Turnover used for calculating taxable income in some cases is specified as follows:

a/ For goods sold by installment payment, it shall be determined based on the lump-sum selling price, excluding installment or deferred payment interests;

b/ For goods and services used for barter, donation or internal consumption, it shall be determined based on the selling price of products, goods or services of the same or similar categories at the time of barter, donation or internal consumption;

c/ For goods processing activities, it is the proceeds from processing activities, including remuneration, expenses for fuel, power and auxiliary materials, and other expenses;

d/ For asset lease, it is the rental paid periodically by the lessee under the lease contract. In case the lessee advances the rental for many years, it shall be allocated to the number of years for which the rental has been advanced;

dd/ For credit or financial leasing activities, it is receivable loan interest or financial lease turnover arising in a tax period;

e/ For golf course business activities, it is the proceeds from the sale of membership cards and golf playing tickets and other revenues in a tax period;

g/ For transportation activities, it is the whole turnover from freights for passenger, cargo and luggage transportation arising in a tax period;

h/ For electricity and clean water supply activities, it is the sum of money indicated on the value-added invoice;

i/ For insurance or re-insurance business activities, it is the receivable sum of principal insurance premiums; agency service charges (including those for loss survey, indemnity consideration, claim for a third party to pay indemnities, disposal of goods subject to 100% indemnity); re-insurance undertaking charges; re-insurance commissions; and other revenues minus (-) refunded or reduced insurance premiums, re-insurance undertaking charges and refunded or reduced re-insurance transfer commissions;

In case of co-insurance, turnover used for calculating taxable income is principal insurance premiums allocated according to the co-insurance ratio, exclusive of value-added tax.

For insurance policies containing an agreement on periodical payment of premiums, it is the receivable sum of money arising in each period.

k/ For construction and installation activities, it is the value of the work, work item or work volume tested upon take-over. If construction or installation activities do not involve the supply of materials, machinery and equipment, it is exclusive of the value of materials, machinery or equipment;

l/ For business activities conducted under business cooperation contracts without the establishment of legal persons:

- If parties to a business cooperation contract divide business results based on the sales turnover of goods or services, it is the turnover divided to each party under the contract;

- If parties to a business cooperation contract divide business results based on products, it is the turnover of products divided to each party under the contract;

- If parties to a business cooperation contract divide business results based on pre-tax profits, it is the goods or service sales under the contract.

m/ For casino, prize-winning video game or betting entertainment business services, it is the excise tax-inclusive proceeds from these services minus (-) prizes already paid to customers;

n/ For securities trading, it is the proceeds from securities brokerage, dealing, issuance underwriting and investment consultancy, investment fund management, fund certificate issuance, market organization and other securities services under law;

o/ For oil and gas prospecting, exploration and extraction activities, it is the whole oil and gas sales turnover under arms length contracts in a tax period.

p/ For derivative financial services, it is the proceeds from the provision of derivative financial services in a tax period;

The Ministry of Finance shall specify this Article and some other specific cases.

Article 9.- Deductible and non-deductible expenses upon determination of taxable incomes

1. Except for the expenses specified in Clause 2 of this Article, enterprises may deduct any expenses which fully meet the following conditions:

a/ They are actually paid for production and business activities;

b/ They are accompanied with adequate invoices and documents as prescribed by law.

In case of purchase of agricultural, forestry or fishery products from producers or fishermen; purchase of handicraft products made of jute, sedge, bamboo, leaf, rattan, straw, coconut husk or shell or materials taken from agricultural products, from craftsmen; purchase of soil, rock, sand or gravel from local mining inhabitants; purchase of scraps from individual collectors or second-hand domestic appliances from households or individuals, and purchase of services from non-business individuals, there must be documents of payment to sellers and lists of goods or services signed by responsible at-law representatives or authorized persons of enterprises.

2. Non-deductible expenses upon determination of taxable incomes provided for in Clause 2, Article 9 of the Law on Enterprise Income Tax are specified as follows:

a/ Expenses not fully satisfying the conditions specified in Clause 1 of this Article, except the uncompensated value of losses caused by natural disasters, epidemics, fires or other force majeure circumstances;

Uncompensated value of losses caused by natural disasters, epidemics, fires or other force majeure circumstances is the total value of losses minus (-) the value which must be compensated by insurance enterprises or other organizations or individuals under law.

b/ The business administration expense allocated by an overseas enterprise to its Vietnam-based permanent establishment in excess of the prescribed level shall be calculated according to the following formula:

c/ Expense in excess of the prescribed level of deduction for the setting up of provisions;

d/ Fixed asset depreciation made in contravention of the Finance Ministry’s regulations, including depreciation for passenger cars of 9 seats or less (except cars used for commercial transportation of passengers or for tourist or hotel business) corresponding to the historical cost in excess of VND 1.6 billion/car; depreciation for civil aircraft or yachts not used for commercial cargo or passenger transportation or for tourist or hotel business;

dd/ Advanced expenses in contravention of law;

Advanced expenses include those for regular overhaul of fixed assets; those for activities of which turnover has been accounted but contractual obligations have not yet been fulfilled; and other advanced expenses under the Finance Ministry’s regulations.

e/ Loan interests paid corresponding to insufficient charter capital amount to be contributed according to the schedule indicated in the enterprises charter; interests on loans for the performance of oil and gas prospecting, exploration and extraction contracts;

g/ Expense for advertisement, marketing, sales promotion and brokerage commissions (excluding insurance brokerage commissions under the law on insurance business or commissions for agents selling goods at set prices); 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 enterprises established on or after January 1, 2009, such expense is in excess of 15% of total deductible expenses for the first 3 years from the date of establishment.

Total deductible expenses exclude the expenses specified above; for trade activities, total deductible expenses exclude purchasing prices of sold goods.

h/ Recovered expenses in excess of the ratio set in approved oil and gas contracts; if an oil and gas contract does not set the ratio of recoverable expenses, the expense in excess of 35% must not be included in deductible expenses;

Expenses which may not be included in recoverable expenses include:

- Expenses specified in Clause 2, Article 9 of the Law on Enterprise Income Tax;

- Expenses arising before oil and gas contracts come into force, except those agreed under oil and gas contracts or decided by the Prime Minister;

- Oil and gas commissions and other expenses not included in recoverable expenses under contracts;

- Interests on investments in prospecting, exploration and development of oil and gas fields and oil and gas extraction;

- Fines and damages.

i/ Credited input value-added tax, enterprise income tax and other taxes, charges, fees and revenues not allowed to be accounted as expenses under the Finance Ministry’s regulations;

k/ Expenses not corresponding to taxed turnover;

k/ Foreign exchange rate difference resulting from the re-valuation of monetary items of foreign currency origin at the end of a tax period; foreign exchange rate difference arising in the course of capital construction investment.

The Ministry of Finance shall specify deductible and non-deductible expenses mentioned in this Article.

Article 10.- Tax rates

Enterprise income tax rates are specified in Article 10 of the Law on Enterprise Income Tax.

1. The enterprise income tax rate is 25%, except the cases specified in Clause 2, this Article, and Article 15, of this Decree.

2. The enterprise income tax rate applicable to activities of prospecting, exploring and extracting oil and gas and other precious and rare natural resources in Vietnam is between 32% and 50%. Based on the location, mining conditions and reserves of mines, the Prime Minister shall, at the proposal of the Minister of Finance, decide on a specific tax rate applicable to each project or business establishment.

Other precious and rare natural resources mentioned in this Clause include platinum, gold, silver, tin, tungsten, antimony, gems and rare earths.

Article 11.- Tax calculation method

1. An enterprise income tax amount payable in a tax period is equal to taxed income multiplied by (x) the tax rate; in case an enterprise has paid income tax on incomes arising overseas, the paid tax amount may be subtracted but must not exceed the enterprise income tax amount payable under the Law on Enterprise Income Tax.

2. The payable enterprise income tax amount applicable to real estate trading is income from real estate trading multiplied by (x) the tax rate of 25%.

3. For enterprises defined at Points c and d, Clause 2, Article 2 of the Law on Enterprise Income Tax, the payable enterprise income tax amount is the percentage (%) of the sales turnover of goods and services in Vietnam, specifically:

a/ Services: 5%, goods supplied together with services: 1%;

b/ Copyright royalties: 10%;

c/ Charter of aircraft (including aircraft engines or spare parts) or seagoing ships: 2%;

d/ Hire of machinery, equipment or means of transport (except those specified at Point c of this Clause): 5%;

dd/ Loan interests: 10%;

e/ Securities transfer: 0.1%;

g/ Offshore construction, transportation or re-insurance, and other activities: 2%.

4. For oil and gas extraction under contracts indicating the accounting of turnover and expenditures in a foreign currency, taxed income and payable tax amount shall be calculated in such foreign currency.

Article 12.- Places for tax payment

1. Enterprises shall pay tax in localities where they are headquartered. For an enterprise that has a dependent cost-accounting production establishment operating in a province or centrally run city other than the locality where it is headquartered, the tax amount shall be calculated and paid in the locality where the enterprise is headquartered and the locality where its production establishment is based.

The enterprise income tax amount calculated and paid in a province or centrally run city where the dependent cost-accounting production establishment is based is the enterprise income tax amount payable by the enterprise in a period multiplied by (x) the ratio between expenses incurred by the production establishment and total expenses incurred by the enterprise.

Tax payment specified in this Clause is not applicable to works, work items or dependent cost-accounting construction establishments.

The decentralization, management and use of enterprise income tax revenues must comply with the State Budget Law.

2. Dependent cost-accounting units of enterprises practicing cost-accounting in the whole system that have incomes from activities other than their major business activities shall pay tax in provinces or centrally run cities where other activities are carried out.

3. The Ministry of Finance shall guide places for tax payment referred to this Article.