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Tax deductible fees include fees linked to increasing profits with proper documentation and not on the list of non-deductible fees. It is recommended that a corporation are looking for professional records to ensure the latest regulations. As in the case for businesses like insurance plan companies, securities trading and lotteries, the Ministry of Finance was outlined specific guidance on deductible fees for CIT purposes. Research and progress money for companies doing business in the country are tax deductible with the assorted of setting aside up to 10 p.c. of annual profits before tax to the fund.
The government allows taxpayers to hold forward tax losses for five years although hold-back of losses is not allowed. The country additionally follows transfer pricing regulations and cases wherein transactions are decided between linked parties, and the mechanisms for picking the market "arms length" transaction value are present. Companies will need to submit an annual declaration detailing linked party transactions and transfer pricing methodologies used to authorities along side their annual CIT return.
* Depreciation of fixed assets not in accordance with the existing regulations
* Employee remuneration fees which do not seem to be in reality paid or do not seem to be stated in a labor contract or collective labor agreement
* Life insurance plan premiums for employees
* Interest on loans corresponding to the portion of charter capital not yet contributed
* Reserves for research and progress not in accordance with the existing regulations
* Interest on loans from economic organizations exceeding one and a half instances the interest rate set by the State Bank of Vietnam
* Provisions for inventory devaluation, terrible accounts, financial investment losses, product warranties or construction work which do not seem to be in accordance with the existing regulations
* Advertising, promotion (except certain models), conferences/parties, commissions or prompt payment discounts exceeding 10 p.c. of total other deductible fees (this cap has been increased to 15 p.c. for newly established enterprises for the first three operating years)
* Unrealized foreign alternate losses
* Donations except donations for schooling, healthcare, regular disasters or constructing charitable houses for the deficient
* Management fees allocated to permanent establishments in Vietnam by the foreign companys head office which do not seem to be in accordance with the regulations
* Penalties
* Creditable input value-added tax, corporate income tax, personal income tax and other fees and charges
Companies operating in Vietnam should be conscious that the Vietnamese government has delayed the schedule for quarterly payments of corporate income tax for 2010. Tax payments for the first quarter of the year has been moved to July 30, 2010 and the second quarter payment deadline is now October 30, 2010 even as the third quarter payment deadline is on January 31, 2011. The fourth quarter payment is due on April 30, 2011.
Corporate income tax is based on the sales of goods and services. In 2009, the CIT rate changed from 28 p.c. to 25 p.c.. Businesses in the oil and gas industry are subject to raised CIT rates ranging from 32 to 50 p.c. based on their projects. A company computes its taxable profits based on the big difference between total revenue, be it locally or foreign sourced, and deductible fees as well to assessable income.
