Corporate income tax policy of FDI enterprises in Vietnam

Corporate income tax policy is one of the important factors affecting investment decisions of FDI enterprises in Vietnam. This article will analyze corporate income tax regulations applicable to FDI enterprises, including taxable subjects, tax calculation methods, tax incentives and exemptions, and some important notes to help FDI enterprises operate effectively in Vietnam.

Overview of corporate income tax policy of FDI enterprises

Pursuant to Article 2 of the Law on Corporate Income Tax 2008, corporate income taxpayers include:

• The enterprise is established according to the provisions of Vietnamese law;
• Enterprises established under foreign laws;
• The organization is established under the Law on Cooperative;
• The public service unit is established according to the provisions of Vietnamese law;
• Other organizations with production and business activities that generate income.

Meanwhile, FDI enterprises are foreign-invested enterprises established and operating in accordance with Vietnamese law, specifically the Law on Investment 2020.

Thus, enterprises with foreign investment (FDI) are subject to corporate income tax.

Instructions for calculating corporate income tax for FDI enterprises

Formula for calculating corporate income tax for FDI enterprises:

• For enterprises that set up funds for science and technology development:

Corporate income tax payable = (Taxable income – Scientific and technological fund appropriation) x Corporate income tax rate.

• For businesses that do not have a fund for science and technology development

Corporate income tax payable = Taxable income x corporate income tax rate.

In there,

• Taxable income = taxable income – tax-free income + carried forward losses
• Taxable income = Revenue – deductible expenses + other income.

Corporate income tax incentives for FDI enterprises

FDI enterprises enjoy preferential corporate income tax rates when implementing investment projects in industries or areas with investment incentives according to the law.

Preferential tax rates

According to Article 19 of Circular 78/2014/TT-BTC amended and supplemented by Circular 96/2015/TT-BTC, FDI enterprises enjoy preferential tax rates as follows:

• Newly established businesses enjoy a tax incentive of 10% throughout their operating period.
• Income from implementing new investment projects in areas with difficult socio-economic conditions is subject to a tax rate of 17% for 10 years.
• Income of farming, livestock, and processing enterprises in the agricultural and aquaculture sectors in areas with difficult or extremely difficult socio-economic conditions will be subject to a tax rate of 15%.
• Enterprises that are People’s Credit Funds, Cooperative Banks and Microfinance Institutions: Apply a tax rate of 17%.

Corporate income tax exemption

Pursuant to Article 20, Circular 78/2014/TT-BTC, some FDI enterprises will be eligible for corporate income tax exemption, specifically as follows:
Tax exemption for 04 years, 50% reduction of tax payable for the next 09 years for:

1. Enterprise income arising from investment in new projects is entitled to a 10% tax incentive for 15 years.
2. Enterprise income arises from investing in new projects in the field of socialization and implemented in areas with difficult or especially difficult socio-economic conditions.

Tax exemption for 04 years, 50% reduction of tax payable within the next 05 years for enterprise income arising from investment in new projects in socialized fields not in areas with poor socio-economic conditions difficult, especially difficult.
Tax exemption for 02 years, 50% reduction of tax payable within the next 04 years for:

1. Income from implementing new investment projects: Tax rate of 17% applies for 10 years.
2. Enterprise income arising from investment in new projects in industrial parks.

Consulting services on corporate income tax policy for foreign invested enterprises in Long Phan

At Long Phan, we provide comprehensive consulting and support services on corporate income tax (CIT) policies for foreign-invested enterprises. Our services include:

• Consulting on subjects subject to corporate income tax;
• Consulting on preferential corporate income tax policies for FDI enterprises;
• Consulting on tax optimization options;
• Support for accurate determination of tax obligations;
• Consulting and guidance on preparing documents and procedures to enjoy corporate income tax incentives;
• Consulting and support in preparing complete tax declaration documents and records;
• Support in drafting financial reports and tax-related documents;
• Support in submitting documents and carrying out tax declaration procedures at competent agencies;
• Explain and protect the interests of businesses before tax authorities;
• Consulting on handling problems arising during the tax declaration and payment process.

Accurate compliance with corporate income tax regulations is extremely important, helping FDI enterprises ensure transparency and avoid risks. We provide professional solutions, helping businesses effectively manage tax obligations. Please contact the hotline 0906735386 for detailed advice and best support from the Long Phan team of experts.