Overview of Corporate Income Tax

Corporate Income Tax (CIT) refers to the tax that companies registered in Vietnam and foreign companies with income in Vietnam need to pay. The tax rate is usually 20%, but certain industries and regions may enjoy preferential tax rates.

Overview of the application process

The corporate income tax filing process is usually divided into five main stages, each involving different tasks and requirements.

The first is the preparation stage, where companies need to collect and organize financial statements, accounting records and other related documents, check income, expenses, taxable income and other data, and ensure that all deductions, exemptions and tax benefits have been correctly applied. The purpose of this stage is to ensure that all financial data is accurate before formal declaration, reduce the risk of declaration errors, and avoid potential fines or tax surcharges.

Next is the declaration stage, where the company calculates the corporate income tax payable based on the taxable income and fills out the corporate income tax return, ensuring that all necessary income, deductions, taxable amounts and preferential information are accurate. The core of the declaration stage is to accurately calculate the tax payable and prepare complete declaration materials for submission to the tax department.

The submission stage is the third step, where the enterprise must submit the corporate income tax return to the tax department in the prescribed time and manner, together with all required supporting documents and schedules, such as financial statements, tax incentive certificates, etc. The purpose of this stage is to formally report the enterprise’s taxable income and taxes payable to the tax authorities to ensure compliance with the declaration.

During the payment stage, the enterprise pays the corporate income tax payable within the prescribed period according to the declaration results. If the enterprise has prepaid part of the tax, it should check the difference between the prepaid tax and the actual tax payable during the annual tax settlement and make the supplementary payment or apply for a tax refund. The purpose of the payment stage is to ensure that the tax is paid on time and in full, and to ensure that the enterprise does not overpay or miss the payment of tax by checking the prepaid and actual tax payable.

Finally, in the follow-up stage, the company needs to keep the declaration and payment records, including declaration forms, tax payment vouchers, relevant financial statements, etc., and respond to the review or audit of the tax department, and deal with possible tax supplements, tax refunds or fines. The purpose of the follow-up stage is to ensure the integrity of the company’s tax records, and promptly handle the feedback from the tax department to maintain the company’s tax compliance.

Through these five stages, enterprises can complete the corporate income tax declaration process in a systematic and compliant manner, ensuring compliance with national tax laws and requirements.

Preparation

1.Collecting financial data

In the preparation stage, the enterprise first needs to collect complete financial data, including annual financial statements (such as income statement, balance sheet, cash flow statement), income and expenditure details, and other relevant financial records. Ensure that all financial data complies with Vietnam Accounting Standards (VAS), and the financial statements must be audited by a certified public accountant where applicable. Collecting accurate and complete financial data is the basis for ensuring subsequent tax declaration work.

2.Calculation of taxable income

Next, the company’s taxable income is calculated based on the collected financial data. This process involves the recognition and calculation of various deductible expenses, including operating costs (such as raw materials, wages, rent), depreciation and amortization, and qualified research and development expenses, which may enjoy tax incentives. In addition, companies must identify tax-exempt income, such as certain specific subsidies and government funding, and income from specific industries (such as high-tech enterprises). During the calculation process, the legality and accuracy of all deductible expenses and tax-exempt income must be confirmed, and all relevant supporting documents must be retained for future audits.

Application stage

1.Fill in the corporate income tax return

During the declaration stage, the enterprise needs to fill in the standard corporate income tax return form (Form 03/TNDN). The form includes basic information of the enterprise, such as name, tax number, address, etc., as well as detailed financial data, including income, expenditure and taxable income, etc. Based on these data, the enterprise needs to calculate the tax payable in the form.

When filling in the form, make sure that all information is complete and accurate. Pay special attention to using the latest version of the declaration form to avoid invalid declaration or the need to resubmit due to the use of expired forms. Filling in the correct declaration form is not only a compliance requirement, but also an important part of ensuring the smooth progress of tax declaration.

2.Preparation of additional documents

After completing the corporate income tax return, the company needs to prepare and attach the necessary supporting documents. These documents include audited financial statements, expense details (such as invoices, contracts, etc.), and documents proving tax-exempt income. These documents are used to prove the authenticity and legality of the data and information in the return.

When preparing these documents, ensure that all documents are organized in the format required by the tax department and confirm the authenticity and legality of their contents. At the same time, it is recommended that companies keep copies of these documents for future reference or to deal with possible tax audits. The completeness and accuracy of this link is directly related to the smooth passing of tax declarations and the compliance of enterprises.

Submission phase

1.Online Submission

During the submission stage, enterprises need to submit corporate income tax returns and additional documents through the electronic filing system of the Vietnam General Department of Taxation (https://thuedientu.gdt.gov.vn). The specific steps are as follows:

Log in to the electronic filing system: Use your company’s tax ID and password to log in to the Vietnam General Department of Taxation’s electronic filing platform.

Upload documents: Find the corresponding declaration portal in the system and upload the completed corporate income tax return form (Form 03/TNDN) and all necessary supporting documents, such as audited financial statements, expense details and proof of tax-exempt income.

Submit the declaration form: After completing the document upload, formally submit the declaration form and confirm in the system that the declaration form has been successfully submitted and accepted by the system.

During the submission process, be sure to complete all declaration and submission operations before the specified deadline to avoid fines due to late submission. At the same time, save the electronic receipt of submission confirmation, which will serve as proof that the company has submitted on time and be kept in the record for future reference or audit use.

2.Confirm submission

After successfully submitting the corporate income tax return and additional documents through the Vietnam General Department of Taxation’s electronic filing system, the enterprise should immediately confirm that the system has received and accepted the return. This step is crucial to ensure that the filing process is error-free.

Note:

Save the electronic receipt of submission confirmation: The electronic receipt is proof that the system has received the declaration. The company should properly preserve the receipt as a future reference or as evidence for tax audits.

Check the declaration status regularly: After submission, it is recommended that enterprises log in to the electronic declaration system regularly to check the declaration status to ensure that there is no missing or supplementary information to avoid the declaration being returned or needing to be resubmitted.

By promptly confirming submission and preserving relevant records, companies can effectively avoid potential fines or other compliance risks caused by reporting issues.

Payment stage

1.Calculation of tax payable

During the payment stage, the enterprise needs to calculate the amount of corporate income tax payable based on the submitted corporate income tax return. This step is an important part of ensuring that the enterprise pays taxes on time and in full.

Note:

Confirm the accuracy of calculations: Carefully check the data in your return to ensure that the amount of tax payable is calculated correctly. This includes verifying income, deductible expenses, taxable income, and applicable tax rates.

Consider any available tax incentives or reliefs: When calculating the tax payable, businesses should take full advantage of any tax incentives or reliefs they are eligible for. Make sure these are correctly applied in the calculation to avoid overpaying tax.

By accurately calculating the taxes payable, businesses can effectively manage their tax expenses, ensure compliance and avoid back taxes or penalties due to miscalculations.

2.Payment of Taxes

After completing the calculation of the tax payable, the enterprise needs to pay the tax to the tax authorities through bank transfer or other designated methods. This step ensures that the enterprise meets its tax obligations and avoids fines or other penalties due to late payment.

step:

Visit a bank or use online banking:

Businesses can choose to go to the bank in person or use the business’s online banking service to make tax payments.

Enter your tax authority account information and tax amount due:

Enter your tax authority account information accurately (usually provided on your return or notice from the tax authority) and enter the amount of tax due.

Complete the transfer and save the transfer receipt:

After confirming that all the information is correct, complete the bank transfer operation. After the transfer is successful, be sure to save the transfer receipt for your records.

Note:

Pay within the prescribed time limit: Be sure to pay your taxes within the prescribed time limit set by the tax authorities to avoid penalties or interest that may be incurred for late payment.

Keep tax payment receipts: Tax payment receipts are important proof that the company has fulfilled its tax obligations and should be properly preserved for future financial audits or tax inquiries.

By strictly following these steps and considerations, businesses can ensure their tax compliance and avoid additional costs due to late tax payments.

Subsequent stages

1.Record keeping

After completing the declaration and payment of taxes, the company must properly keep all relevant records. These records include copies of the declaration form, supporting documents (such as financial statements, invoices, contracts, etc.), and tax payment receipts. Proper preservation of these documents is not only a legal requirement, but also an important basis for future tax audits and financial inspections.

Note:

According to Vietnamese tax regulations, companies are required to keep these records for at least 10 years. This retention period ensures that in future tax inspections or audits, companies have sufficient documents to support the accuracy and compliance of their tax declarations and payments.

2.Tax Audit

At a later stage, the tax authorities may conduct a tax audit on the enterprise to check whether the enterprise’s declaration and tax payment comply with regulations. This process aims to ensure the accuracy, legality and consistency of the enterprise’s financial statements and tax declarations.

Note:

During the tax audit process, enterprises should actively cooperate with the tax authorities and provide the required documents and information in a timely manner. This includes providing all supporting documents related to the tax return, tax payment vouchers and other relevant financial records.

Ensuring the consistency of all financial records and reporting data is key to passing tax audits. Any inconsistencies or data errors may result in fines or back taxes.

By strictly following the subsequent stages, companies can effectively manage their tax compliance risks and ensure that there are no issues during tax audits.