Tax incentives and standards for businesses in the education sector

For businesses operating in the field of education and training, there will be special tax incentives compared to businesses operating in other fields. So what are those tax incentives and what are the company standards in the education and training sector?

1. What tax incentives do businesses operating in the field of education and training enjoy?

When operating, businesses will have to pay corporate income tax (CIT). Businesses operating in the field of education and training are no exception.

Detailed regulations on corporate income tax for businesses related to education and training are mentioned in Circular 78/2014/TT-BTC. Specifically, in Article 11 of the Circular, the corporate income tax rate is preferentially applied throughout the operating period at 10%. This tax rate is applied to specific education and training sectors in fields including vocational training, health, sports, and environmental culture. The detailed list of types, sizes, standards and criteria of enterprises will be implemented in accordance with the Prime Minister’s regulations.

Vietnam’s Tax Incentives to Support the Education Sector

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Please note, preferential corporate income tax rates only apply to education and training enterprises that implement accounting, invoices, and vouchers and pay corporate income tax according to declaration. During the period of enjoying corporate income tax incentives, if an enterprise carries out production and business activities outside the list of incentives, it must declare them separately from the incentives and pay taxes in accordance with regulations. For items that are not eligible for preferential tax rates, businesses will have to pay corporate income tax according to current regulations of 20%.

In addition to the 10% tax rate incentive, in the early stages of establishment, education and training businesses also enjoy many incentives. As follows:

Enterprises will be exempt from taxes for the first 4 years from the year of establishment. At the same time, businesses are also entitled to a 50% reduction in tax payable in the next 9 years as prescribed in Clause 1, Article 19 of Circular 78/2014/TT-BTC. Corporate income will be calculated from the implementation of new investment projects in the field of socialization of education in areas with difficult or extremely difficult socio-economic conditions according to the Appendix issued with Decree No. 218/ 2013/ND-CP of the Government.

Enterprises will be exempt from taxes for the first 4 years from the year of establishment. At the same time, businesses are also entitled to a 50% reduction in tax payable in the next 5 years for corporate income from implementing new investment projects in the field of socialized education that are not in the list of areas with poor socio-economic conditions. difficult or extremely difficult situations according to the Appendix issued with Decree No. 218/2013/ND-CP of the Government.

Is Private School Tuition Tax Deductible?

2. VAT on educational activities

  • Teaching and vocational training according to the provisions of law including teaching foreign languages, information technology, teaching dance and singing, painting, and professional knowledge: This is an object not subject to VAT.
  • Deductible input VAT: Business accounting course
  • Goods and services used for production, business, and services subject to VAT are fully deductible, including input VAT without compensation for lost VATable goods.
  • And input VAT on goods and services (including fixed assets) used simultaneously for the production and sale of goods and services used for the production and sale of goods and services subject to VAT.

If the company has teaching and vocational activities according to the provisions of law, this activity is not subject to VAT. The company is only allowed to deduct input VAT on goods and services used for the production and sale of goods and services subject to VAT.

3. Things to note when doing accounting in the education sector

  • First: When receiving tuition from students, issue an invoice.
    Second: Businesses are not subject to VAT, accountants still declare VAT monthly
  • Third: In case personal income tax (PIT) arises, make a monthly or quarterly personal income tax report. If there is no personal income tax, then at the end of the year, finalize personal income tax and pay it.

Today, as society develops more and more, the field of education is increasingly focused on investment. So for businesses providing education and training services, what is the difference in tax policy compared to other business activities? Above are tax incentives and standards for businesses in the education sector. Hope the above information is useful to readers. If you have other questions that need advice or support, please contact us, our team will answer quickly and in the most detail.

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