Brief Outline for Preparation of Annual Corporate Income Tax (“CIT”) Finalization in Vietnam
1. Deadline for CIT finalization
CIT payers prepare and submit the tax finalization dossiers no later than the last day of the 3rd month from end of the calendar year or fiscal year;
In case of submission of dossiers for business dissolution, contract termination or reorganization, the deadline for submission of annual CIT dossiers is no later than the 45th day from the date of the event execution.
Note: In case there has issue with the e-portal of the tax authority on the last day of the deadline for tax return submission, the taxpayers shall submit tax return and e-tax payment documents on the next day after the web portal is active.
Extension of deadline for submission of tax return dossiers:
In case taxpayers are unable to submit their tax return on time due to natural disasters, disasters, epidemics, fires or unexpected accidents, the head of the managing tax agency shall extend the deadline for tax return submission.
The extension time limit does not exceed 60 days for tax finalization dossier from the deadline of tax return submission.
Taxpayers must send to tax authorities a proposal for extension of deadline for submission of tax return before the deadline, which clearly states the reason for the extension and such proposal should be certified by the competent authority according to the law.
2. CIT calculation
The CIT payable is calculated as follows:
| CIT payable | = | Assessable income | – | Amount transferred to science and
technology fund (if any) |
x | Tax rate |
In which, the assessable income is calculated as follows:
| Assessable income | = | Taxable income | – | Tax-exempt income | + | Loss carry forward |
And the taxable income is calculated as follows:
| Taxable income | = | Revenue | – | Deductible expenses | + | Other incomes |
3. Deductible and non-deductible expenses
Pursuant to Article 4 Circular 96/2015/TT-BTC:
3.1. Deductible expenses
Every expense is deductible if all of these following conditions are satisfied:
– The actual expense incurred is related to the enterprise’s business operation;
– There are sufficient and valid invoices and supporting documents under the current regulations;
– There is non-cash payment evidence for any purchase of goods/ services of VND 20 million or over (including VAT).
3.2. Non-deductible expenses
– Expenditure on wages and bonuses to employees that have been included in operating costs but do not have proof of payment.
– Expenditure on employees’ clothing without invoices that exceeds VND 05 million/person/year.
– Payment for voluntary pension fund, life insurance premiums for employees that exceeds VND 03 million/person/month.
– Payment of interest on loan serving business operation which exceeds 150% of basic interest rate announced at the time of taking the loan.
– Depreciation of fixed assets that are not used for business operation, depreciation beyond the limit, depreciation without proof of ownership of the enterprise, depreciation that is not recorded in the accounting books.
– Expenditure of lease of assets from individuals without sufficient documents.
– Payment of fines for administrative violations (except for breach of contract).
– Provisions made and used against instructions of the Ministry of Finance.
– Expenditure on infrastructural development during investment phase to create fixed assets.
– Loss on exchange difference due to reassessment of foreign currency items at the end of the tax period
4. CIT finalization dossiers should include
– CIT declarations form (Form No. 03/TNDN issued under Circular 151/2014/TT-BTC);
– An annual financial statement includes:
- Balance sheet (Form No. B01-DN issued under Circular 200/2014/TT-BTC);
- Income Statement (Form No. B02-DNN issued under Circular 200/2014/TT-BTC);
- Cash flow statement according to direct method and indirect method (issued under Circular 200/2014/TT-BTC);
- The description of financial statement (Form No. B09-DN issued under Circular 200/2014/TT-BTC);
– Letter of authorization in case the preparer is not legal representative
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Legal background:
– Law on Tax Administration 2019;