TAXATION

Associate Professor., Ph.D.

Nguyen Thi Thanh Hoai

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 Subject Addressed
1. An overview on tax

2. Value Added Tax (VAT)

3. Excise duty

4. Customs duty

5. Corporation Income Tax (CIT)

6. Personal income tax (PIT)

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 REFERENCES
1. Taxation – A University Textbook, Finance Publisher, 2023 -
Le Xuan Truong and Nguyen ThiThanh Hoai
2. Websites:
 www.mof.gov.vn
 www.gdt.gov.vn
 www.customs.gov.vn
 ….

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 CHAPTER 1

AN OVERVIEW ON TAXATION

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 Contents
1.1. Definition of tax
1.2. Characteristics of tax
1.3. The objective of taxation
1.4. Kinds of taxes
1.5. Standards of a modern tax system
1.6. Basic elements of a tax law
1.7. Principles of taxation

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 1.1. Definition

Read over all of the perceptions of tax in the

text book and answer the following questions:
 Who pay taxes? a person and entity

 To whom taxes are paid? the goverment

 What are taxes used for? public

 Is it compulsory or voluntary? compulsory

 What are the forms of taxes? money or asset

 Where does it come from? a part of income

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 1.1. Definition

Tax is a part of income which is legally

stipulated and compulsorily paid by
citizens to the government in order to
finance the public expenditures.

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 1.2. Characteristics
1) A compulsory payment
 What does a compulsory payment mean?
 Why does it need to be compulsory? if taxes were paid
voluntarily...for paying
taxes.
 From this feature, point out the differences
between tax and other revenues of the state. the
sale of
goverm
2) An indirect compensation payment ent;s
properti
es,
 Why isn't it a direct compensation payment? loans,
grants
or

 Point out the signs of indirect compensation. donaito

ns; but
unlike
fine
0 dc khon hoàn tr trc tip: vì: - ko o lng dc khon thu nhn c ca mi ng, taxes
Point out the signs of indirect compensatoin: có hoàn tr nma hoàn tr gián tip are not
paid as
ounish
ment
for
breakin
g a law
or rule.
8 PGS.,TS. Nguyễn Thị Thanh Hoài - HVTC 29 March 2024 unlike
fine
fine,
 1.3. The objective of taxation
1) To generate the government’s revenues
 Why is it an important revenue of the state
budget
 Names of countries where tax isn't an
important revenue of the state budget.
2) Macroeconomic activities adjustment
 To contribute to regulate economic cycle
- State 4 stages of economic cycle recsession, crisis, recovery,
prospwrity.

- Name some worst recessions in history

- Point out the way that tax help to regulate
economic cycle

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 1.3. The objective of taxation(continued)
 To contribute to balance the labor market and
control inflation
- Describe the way that taxes can help to
balance the labor market and control inflation
- Why is it said that using tax to balance the
labor market and control inflation is a two-
edge sword?

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 1.3. The objective of taxation(continued)
 To stimulate the economy to develop in
accordance with government’s directions
- Which elements of a tax is often used to
stimulate the economy to develop in
accordance with government’s directions
- Where and when should the tax rate be high?
Give example.
- Where and when should the tax rate be low?
Give example.
- Where and when should incentives are used?
- State some kinds of incentives in Vietnam’s
tax law.
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 1.3. The objective of taxation(continued)
 Domestic production protection
- Describe the way that tax can help to protect
the domestic production
- State the advantages and disadvantages of
protectionism
- Give some examples to demonstrate the use
of tax to protecting the domestic production in
Vietnam in recent years
- How does this role change in the context of
global integration

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 1.3. The objective of taxation(continued)
To correct problems caused by negative externalities
-Give some examples of positive externalities of
production
-Give some examples of negative externalities of
production
-What is market failure?
-Describe the way that tax can help to correct market
failure
-How does environment tax affect the producers who
pollute the air, rivers, lakes and oceans?
-Can only tax help to protect the environment? If no,
state some other instruments used to protect the
environment.
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 1.3. The objective of taxation(continued)
3) To contribute to reducing inequity in income
distribution
- What is equity? Give some examples of
inequity.
- How taxes can help to reducing inequity in
income distribution?

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 1.4. Tax classification
1) Based on the way to levy
- Give some examples of direct tax
- Give some examples of indirect tax
- Which tax, direct or indirect one, is easier to
collect?
- Which one is more equitable?
2) Based on bases of taxes
- Give some examples of consumption tax
- Give some examples of property tax
- Give some examples of income tax
- Which of the above three kinds of tax is
15
unfair?
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 1.4.Tax classification

3) Based on the proportion between tax and

income
- Which tax, progressive or regressive, takes
more from the rich? Which takes more from
the poor?
- Why is VAT a regressive tax? Give an example
to demonstrate.
- Why is VAT still applicable despite of its
regressiveness?
- Is it right that a progressive tax is always a
good tax in term of equity?
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 1.4.Tax classification
4) Based on the power to levy
- Where doesn’t federal tax and local tax exist?
- Where does federal tax and local tax exist?
- Point out some countries where federal tax
and local tax exist?
- In an autonomy system, can a local authority
decide any tax they like and any tax rate they
like?

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 1.5. Standards of a Modern tax system
1) Equity
- What is horizontal equity?
- Point out the problems of horizontal equity
standard
- What is vertical equity?
- How to measure the ability to pay?
2) Efficiency
- There are two aspects of efficiency. What are
they?
- What does “efficiency in tax administration”
mean?
-
18
What Thị Thanh Hoài“efficiency
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29 March 2024
impact” mean?
 1.5. Standards of a Modern tax system (continued)

3) Stability
- Why should a tax system be stable?
- What should a government do in enacting a
tax law to get this standard?
4) Adaptability
- Why should a tax system be adaptable?
- What should a government do in enacting a
tax law to get this standard?

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 1.5. standards of a Modern tax system (continued)

5) Transparency
- What does transparency mean?
- Why should a tax system be transparent?
- What should a government do in enacting a
tax law to get this standard?

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 1.6. Basic Elements of a tax law
1) Name of a tax
2) Taxpayer
- Compare to meanings of taxpayer
3) Tax base
- How many types of tax base?
- Discuss the importance of tax base.
4) Tax rate
- What is tax rate?
- Describe all types of tax rate. Give example
for each.
- Discuss the advantages and disadvantages of
each type of tax rate
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 Chart of tax rates

Forms Ways of taxation

Specifi Single
c rate specific
rate
Tax Proportion
rate al rate Simple progressive
tax table

Ad Progressiv
e rate Marginal progressive
valore
tax table
m rate
Regressiv Wholly progressive
e rate rate table
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 1.6. Basic Elements of a tax law
5) Incentives
- Read over the course book and describe all
types of incentives
6) Procedure
- What are the contents of procedure?
- Describe two ways of representing this
element.
7) Punishment
- Why is punishment used in a tax law? What
would happen if there were no punishment
articles in a tax law?
- Describe
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types
Thanh Hoài
of violations of tax law.
23 - HVTC 29 March 2024
- Describe types of punishment.
 1.7.The principles of taxation
1) Benefit-received principle
- What is the root of this principle?
- What does this principle mean?
- In what circumstances can we apply this
principle? In what not?
2) Ability-to-pay principle
- What is the root of this principle?
- What does this principle mean?

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 1.7.The principles of taxation (continued)
3) Origin Principle
- What is the root of this principle?
- What does this principle mean?
4) Destination Principle
- What is the root of this principle?
- What does this principle mean?
- Give example of this principle in reality.

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 THE VIETNAM’S tax SYSTEM
 Value added tax;
 Excise duty;
 Customs duty;
 Environmental protection tax;
 Corporate income tax;
 Personal income tax;
 Agricultural land use tax;
 Non-agricultural land use tax;
 Natural resources tax.

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 Chapter 2

Value added tax

 REFERENCE
1. The Value Added Tax Law No. 01/ VBHN-VPQH of of
28/04/2016;
2.The Government’s Decree: No.31/VBHN-BTC of
26/12/2022
3. The Government’s Decree No. 94/2023/ NĐ-CP of
28/12/2023
4. Circular No.01/VBHN-BTC of 04/01/ 2024
 Brief contents

2.1. Concept and characteristics of VAT

2.2. Basic contents of VAT in Vietnam
 Chapter 2
2.1. Concept and characteristics of VAT
• What is VAT?
• Prove that VAT is a multi-phased consumption tax.
• Why is VAT a neutral tax?
• Prove that VAT is an indirect tax.
• Prove that VAT is a regressive tax.
 CHAPTER 2
2.2. Basic contents of VAT in Vietnam
2.2.1. Scope of application
2.2.2. Tax base
2.2.3. VAT method
2.2.4. Invoice, voucher
2.2.5. Tax declaration and payment
2.2.6. Tax refund

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 CHAPTER 2
2.2. Basic contents of VAT in Vietnam
2.2.1. Scope of application
2.2.1.1. Taxable goods and services
Goods and services used for production, business
and consumption in Vietnam (including imported
goods and services), except for those listed as
non-taxable items

Give some examples of taxable goods and services.

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 CHAPTER 2
2.2. Basic contents of VAT in Vietnam
2.2.1. Scope of application
2.2.1.2. NonTaxable goods and services
Point out characteristics of non-taxable goods and
services?

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 CHAPTER 2
2.2. Basic contents of VAT in Vietnam
2.2.1. Scope of application
2.2.1.3. Taxpayer
- Organizations and individuals who are engaged in
producing and/or trading goods and rendering
services subject to VAT in Vietnam
- Other organizations and individuals that import
goods or purchase services oversea subject to
VAT
Give some examples of Taxpayer.
Point out 2 main factors of Taxpayer
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 CHAPTER 2
2.2. Basic contents of VAT in Vietnam
2.2.1. Scope of application
2.2.1.4. Cases not required to calculate and declare VAT
- Not buying, selling transaction
- A business organization or businessperson in Vietnam
purchases services from a foreign organization that
does not have a permanent establishment in Vietnam,
or from an overseas individual that is not a resident in
Vietnam
- The non-business organizations and individuals shall
not pay VAT on the sale of their assets.
- The cases arises from management, to avoid tax fraud
35- Other cases
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 Practice
Which is Taxable, which is non - taxabbe
transactions?
1. Goods temporarily imported for re-export
2. Selling cloth in domestic market
3. Public transportation by bus
4. Education
 CHAPTER 2
2.2. Basic contents of VAT in Vietnam
2.2.2. Tax base
 Base price
 VAT rate

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 CHAPTER 2
2.2.2.1. Base price
 In principle, what is the base price?
 What is the base price for imported goods?
 Base prices in some special cases:
 For goods and services subject to other taxes such excise
duty, environmental protection tax
 For goods and services used for sales promotion
 For goods and services used for internal consumption
 For services of leasing assets
 For goods sold on installment or deferred payment
 For specific documents such as freight tickets, lottery
tickets…
 -…
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 CHAPTER 2
2.2.2.2. VAT rate
 How many rates are there? What are they?
 What is the purpose of zero rate?
 The key word for the application of zero rate?
 What transactions are applicable of zero rate?
 Transactions those regarded as export?
 What are conditions for zero rate?
 Point out the exceptions of zero rate: cases of exported
goods and services where zero rate are not applicable?

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 Practice
Which is 0% rate? (Given that VAT rate for car, beer is 10%)
1. A car production company sells cars to a trade company
in Ha Noi
2. A car production company exports cars to Laos
3. A beer production company sells beers to a company in
non-tariff zones
4. A car production company sells car to a company in non-
tariff zones
 CHAPTER 2
2.2. Basic contents ofVAT inVietnam
2.2.3. VAT method
- How many VAT method? What are they?
- Who has to apply this method
- Formula
- Give an example to illustrate

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 CHAPTER 2
2.2.3. 1.Credit method
- Who has to apply this method? Condition for applying credit
method?
- Formula:

VAT amount = Output VAT - Deductible input

payable VAT

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 CHAPTER 2
2.2.3. 1.Credit method
- How calculate output VAT?
- Which information need to be clarified when determine output
VAT?

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 CHAPTER 2
2.2.3. 1.Credit method
- The deductible input VAT?
- Principle of deductible input VAT:
+ Using for taxable goods and services (some exceptions)
+ Deducted right at the month of arising not depending on the
time to use the input materials

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 CHAPTER 2
2.2.3. 1.Credit method
- Conditions for deductible input VAT:
+ Apply credit method
+Legitimate invoices and vouchers
+ Non-cash payment applicable to transactions having value of
VND 20 million or more

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 Case study
The data during the month of an enterprise who applies credit method
sells product M are as follows:
-Sale of 5,000 units at the before-VAT price of VND 100,000/unit in
the domestic market.
- Export 400 units at FOB price of VND 110,000/ unit
-Purchase 3,000 units with before-VAT price of VND 90,000 per unit
- Purchase 300 units with price of VND 92,000 per unit stated on the
sale invoice
- VAT rate 10%
- Exported goods are supported with sufficient documents as
prescribed by law
- Purchasing goods with bank receipt
Required: Define the tax amount payable.
 CHAPTER 2
2.2.3. 2. Direct method
Case 1:
- Formula: VAT amount payable = Added value
x VAT rate
The added value of gold, silver and gem = the selling price
of gold, silver and gem (-) minus the purchase price of gold,
silver and gem respectively.
- Who has to apply this method?
for gold, silver and gem producing and trading activities

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 CHAPTER 2
2.2.3. 2. Direct method
Case 2:
- Formula: VAT amount payable = Turnover of the
goods sold or services provided x The ratio
- Who has to apply this method?

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 CHAPTER 2
2.2. Basic contents ofVAT inVietnam
2.2.4. Invoice, voucher
 Which type of taxpayers apply value added invoice?
 Which type of taxpayers apply sale invoice?
 Ways to write the value added invoice?
 Ways to use invoices in special cases?

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 CHAPTER 2
2.2. Basic contents ofVAT inVietnam
2.2.5. Tax declaration and payment
- Deadlines,
- Places and procedures
- Currency for tax payment

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 CHAPTER 2
2.2. Basic contents ofVAT inVietnam
2.2.6. Tax refund
 How many cases where input VAT can be claimed for
refund? Describe each.
 In what case, input VAT can be refund monthly?
 Explain the rationale of VAT refund? Are they all the like?
 What is the deadline for the settlement of VAT refund?

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 CHAPTER 3
Excise duty

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 CHAPTER 3
REFERENCE
- Law on excise duty No. 02/VBHN-VPQH, 28/4/2016
- Law No. 03/2022, 11/01/2022
- Decree No. 26/VBHN- BTC, 23/04/2019,
- Circular No 12/ VBHN-BTC,15/05/2017

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 CHAPTER 3
Contents

3.1. Concept and characteristics

3.2. Excise duty in Vietnam

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 CHAPTER 3
3.1. Concept and characteristics
 Prove that excise duty is one-stage sale tax
 How wide is the scope of excisable goods and services?
 What are the rates of excise duty like? Are they higher or
lower than the normal sale taxes?
 Compare excise duty to VAT?

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 CHAPTER 3
3.2. Excise duty in Vietnam
3.2.1. Taxpayer
 Producers and importers of goods which are subject to excise
tax.
 Providers of services which are subject to excise tax.
 Exporters that purchase excise tax-liable goods from producers
for export and do not export but sell them domestically shall pay
excise tax.

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 CHAPTER 3
3.2. Excise duty in Vietnam
3.2.2. Excisable goods and services
- How many iterms are excisable?
- Why these goods and services are excisable?

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 CHAPTER 3
3.2. Excise duty in Vietnam
3.2.3. Non excisable transactions
 What are the rationale of non-excisable transactions?
 Put them into group of similar features.

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 CHAPTER 3
3.2. Excise duty in Vietnam
3.2.4. Base price
 In principle, what is base price of excise duty like?
 For imported goods, base price for excise duty at
importation:
Taxable price = Price on which import duty is calculated +
Import duty

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 CHAPTER 3
3.2. Excise duty in Vietnam
3.2.4. Base price
 Base price for goods sold at domestic?
Taxable price for imported goods sold by the importer and for locally
made goods:
(Selling price exclusive of VAT-Environmental
protection tax (if any))
Taxable price = -------------------------------------------------
(1 + Excise tax rate)

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 CHAPTER 3
3.2. Excise duty in Vietnam
3.2.4. Base price
 Base price for goods sold at domestic?
How do you determine base price in the following cases:
- Donations, gifts, exchange
- For dancing halls
- For entertainment with bet tickets
- ….

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 CHAPTER 3
3.2. Excise duty in Vietnam
3.2.5. Excise duty rate
 What is the highest rate?
 What is the lowest rate?
 Point out the rationale of different rates among different
goods and service
 Point out the rationale of different rates among different sub-
type of the same goods, including:
- Cars of different engine capacity
- Cars of different kind of energy used
- Alcohol of different degree of content

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 CHAPTER 3
3.2. Excise duty in Vietnam
3.2.6. Excise duty deduction( credit)
 Subject for excise tax deduction
- Taxpayer that produces excise tax - liable goods from excise tax
- liable raw materials.
- Importer when sells excise tax - liable imported goods
domestically is entitled to deduction of the excise tax amount
paid at importation.

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 CHAPTER 3
3.2.6. Excise duty deduction( credit)
 Conditions for excise tax deduction
- For importation materials subject to excise tax to manufacture
goods subject to excise tax, and for importation goods subject to
excise tax, the receipt of excise tax payment at importation is the
basis for excise tax deduction.

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 CHAPTER 3
3.2.6. Excise duty deduction( credit)
 Conditions for excise tax deduction
-For cases of purchasing raw materials directly from domestic
producers:
+ Goods sale and purchase contract, clearly indicating that the
goods are produced directly by the seller, copy of the seller’s
business registration certificate (containing the seller’s signature
and seal);
+ Via-bank payment documents;
+ Documents as a basis for excise tax deduction are value-added
invoices issued upon goods purchase.

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 CHAPTER 3
3.2.6. Excise duty deduction( credit)
 Determination excise tax deduction amount
- For purchasing raw materials directly from domestic producers:
The amount of excise tax paid by the buyer when buying
materials equals (=) taxable price multiplied by (x) excise tax
rate, in which:
Taxable price = [VAT- exclusive buying price minus(-)
Environmental protection tax (if any)] /(1 + Excise tax rate)
The deductible excise tax amount equals payable excise tax or
paid excise tax on the quantity of materials used for
manufacturing goods sold in the period

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 CHAPTER 3
3.2.7. Excise duty payable calculation
- For importation goods at the importation stage:
Excise duty payable =Base price of goods xTax rate
- For goods/service sold in the domestic market:
+ If there is no tax deduction:
Excise duty payable=Base price of goods/service xTax rate
+ If there is tax deduction:
Excise duty payable= Excise tax amount payable for excise tax-
liable goods ex-warehoused for sale in the period minus (-) The
payable excise tax or paid excise tax on the quantity of materials
used for manufacturing goods sold in the period (or on the the
quantity of imported goods sold in the period)
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 Case study
In a car producing company has following data in a tax month:
Sale of 5-seat car at domestic market: 10 units with before VAT price of 450
million dongs each
Sale of 5-seat car to an EPZ company: 4 units with before VAT price of 780
million dongs each
Sale of 12-seat ambulance car to a hospital: 2 units with before VAT price of
650 million dongs each
Sale of 5-seat car exported: 100 units with FOB price of 350 million dongs
each. Exported cars have sufficient documents as required by law
Deductible input VAT: VND 5,000 million
 Excise duty rate: 50%
VAT rate: for ambulance car 5%, for other: 10%
Task: Determine excise duty and VAT amount payable.

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 CHAPTER 3
3.2.8. Tax declaration and payment
- Deadlines,
- Places and procedures and
- Currency for tax payment
3.2.9. Tax reduction, and refund
- Case for reduction, exemption?
- How many cases where excise duty can be claimed for refund?

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 CHAPTER4
Customs duty

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 CHAPTER4
References
1. The Export Import Tax Law No. 107/2016 of 06/04/2016
3. The Government’s Decree 11/VBHN-BTC of 16/6/2023
4. Circular No 38/2015/TT-BTC of 25/ 03 /2015
5.Circular No 39/2018/TT–BTC of 20/ 04 /2018 amending Circular
No 38/2015/TT-BTC

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 CHAPTER 4
Contents

4.1. Concept and characteristics of customs duty

4.2. Basic contents of customs duty in Vietnam

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 CHAPTER 4
4.1. Concept and characteristics of customs duty
 What is customs duty?
 Prove that customs duty is an indirect tax.
 Why is customs duty a consumption tax?
 Prove that customs duty is attached to foreign activities.
 Show evident that customs duty is dependent on some
international factors.

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 CHAPTER 4
4.2. Basic contents of customs duty in Vietnam
 Taxpayers
 Taxable goods
 Non-taxable goods
 Tax base
 Tax rate
 Methods
 Tax exemption
 Tax refund
 Tax payment

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 CHAPTER 4
4.2. Basic contents of customs duty in Vietnam
4.2.1. Taxpayers
 Classify customs duty taxpayers based on legal features?
 In what case, a person can be a taxpayer for other’s imported
goods?

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 CHAPTER 4
4.2. Basic contents of customs duty in Vietnam
4.2.2.Taxable goods
 Name cases where goods is subject to customs duty?
 Are there any case where an item of goods is still in Vietnam
territory but considered to be exported?
 Are there any case where an item of goods is transferred from
a place in Vietnam to other place in Vietnam but considered to
be imported?

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 CHAPTER 4
4.2. Basic contents of customs duty in Vietnam
4.2.3. Non-taxable goods
 How many kinds of transactions where imports and exports
are not subject to customs duty?
 Discover the rationale of non-dutiable goods?
 Prove that “cases Petroleum portion when exporting, which is
used to pay royalties to the State” is a kind of tax
expenditure?

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 CHAPTER 4
4.2. Basic contents of customs duty in Vietnam
4.2.4. Tax base
 State bases of customs duties in 3 cases: ad-valorem rate;
specific rate and hybrid method.
 How does dutiable quantity determined?
 How many methods are used to determine base price for
import duties? Describe each?

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 CHAPTER 4
4.2. Basic contents of customs duty in Vietnam
4.2.5. Tax rate
 How many kind of import duty rates are there? What are they?
To what case are they applicable?
 How is normal rate determined from MFN rate?
 How does the origin of imported goods affect import duty
amount payable?
 Point out significance of import duty rates to business?

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 CHAPTER 4
4.2. Basic contents of customs duty in Vietnam
4.2.6. Methods
 Describe methods for 3 cases:
- Ad-valorem rate applicable
- Specific rate applicable
- Both ad-valorem rate and specific rate (Hybrid method)

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 CHAPTER 4
4.2. Basic contents of customs duty in Vietnam
4.2.6. Methods
Ad-valorem rate applicable
Import or export tax payable = Quantity imports or exports x
Base price of each unit of goods x Tax rate of the item
concerned

Specific rate applicable

Import or export tax amount payable = Quantity of imports and
exports x Specific rate per unit of goods

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 Case study
We have data of a company engaged in trading in a tax month as
follows:
1. Export 500 units of clothes to USA. The selling price at the
company gates is 20 USD per unit.The freight for that batch of
goods to the export gate is VND 10 million.
2. Importation of 5-seat car: 10 unit with CIF price of 10,000 USD per
unit. CIF price was accepted as import duty base price.
3. Company sells in the domestic market 8 unit of 5-seat car with
before VAT price VND 1,500,000,000/unit
Task: Calculate export duty, import duty, excise duty and VAT
amount payable by that company. Given that: export duty is 2%;
import duty rate applicable to car is 70%; the excise duty rate
applicable to car is 50%, VAT rate: 10%. Exchange rate applicable 1
UDS= VND23,000. Company had paid the excise duty and VAT at the
importation stage.
 CHAPTER 4
4.2. Basic contents of customs duty in Vietnam
4.2.7.Tax exemption
 How many cases where imports or exports are
free from customs duties?
 Explain the rationale of customs duty exemptions?

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 CHAPTER 4
4.2. Basic contents of customs duty in Vietnam
4.2.8. Tax refund
 How many cases where imports or exports are refunded?
 Explain the rationale of customs duty refund?
4.2.9. Tax payment
 The tax amount payable must be paid before customs clearance,
except for those tax payers guaranteed by a bank or a credit
institution where the tax payment deadline is the guarantee
duration but must not exceed 30 days, counting from the date
taxpayers register their customs declarations.
 For taxpayers entitled to the privilege: tax payment on monthly
basis, the tax payment deadline is 10 days of the following
84 month.
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 CHAPTER 5

CORPORATE INCOME TAX

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 CHAPTER 5
REFERENCES
 The CIT Law No 01/VBHN-VPQH, 30/01/2023
 The Government’s Decree No. 09/VBHN-BTC,of 07/5/2018
 Circular No. 66/VBHN-BTC of 19/12/2019

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 contents
1.1. Concept and characteristics
1.2. Basic contents of Vietnam’s CIT

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 contents
1.1. Concept and characteristics
 What is CIT?
 What is the core part of the base of CIT?
 Point out characteristics of corporate income
tax?
 Point out strong points and weak points of CIT as
being a direct tax?
 Prove that CIT is less sensitive than PIT.
 In what case, CIT is regarded as a withholding tax
of PIT? In what case not?

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 contents
1.2. Basic contents of Vietnam’s CIT
1) Taxpayers
2) Tax base and calculation
3) CIT rate
4) CIT from capital transfer
5) CIT from real estate transfer
6) Incentives

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 1. Taxpayers

Who is liable to pay corporate income tax in

Vietnam?

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 2. CIT Base and calculation

 How to determine CIT payable?

 How to determine taxable income?
 How to determine base income?
 Distinguish taxable income and base income.
 Explain each factor of base income: Base
turnover, deductible expenses, other incomes,
exempt incomes, losses carried forward,
transfer to STDF.

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 2. CIT Base and calculation
- Income from overseas
Vietnamese enterprises that are engaged in offshore investment
activities and remit their incomes to Vietnam after paying CIT in
foreign countries shall comply with the double taxation
avoidance agreements concluded between Vietnam and such
countries, for foreign countries with which Vietnam has
concluded double taxation avoidance agreements.
For foreign countries with which Vietnam has not yet concluded
any double taxation avoidance agreement, if the CIT rate
applicable in a country from which incomes are remitted to
Vietnam is lower than that prescribed by the Vietnamese law on
CIT, only difference must be collected

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 Case study
A Vietnamese company in 2023 received income
after paying tax at source at the tax rate of 12%
from an overseas investment is VND
880,000,000.The country from where the company
received income for investment has not yet signed
double taxation agreement with Vietnam.
Task: Calculate the CIT payable in Vietnam?
 2.1. Base turnover
 What is base turnover under CIT?
 What is the time of booking turnover for CIT
purpose?
 What are excluded out of base turnover?

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 2.2. Deductible expenses
 What are conditions for deductions as CIT
purpose? Describe them?
 Conditions for deductions as CIT purpose:
Expenses are deductible if they are not in the list of
non-deductible expenses stipulated by legislation and
meet the following conditions:
a, Actual expenses used for generating income or for
the purpose of business
b, Legitimate invoices and vouchers
c,There is proof of non-cash payment for each invoice
for purchase of goods/ services of VND 20 million
95 or over
PGS.,TS. (including
Nguyễn VAT).
Thị Thanh Hoài - HVTC 29 March 2024
 2.2. Deductible expenses
 How many kinds of non – deducible expenses
are there under the Act of CIT of Vietnam?
 Find deductible expenses that cannot exceed a
ceiling imposed by law?

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29 March 2024
HVTC
 2.2. Deductible expenses
Non – deducible expenses
- Expenses that do not meet all of the conditions for
deductions as CIT purpose
- Expenses covered with other sources; expenses
covered by the enterprise’s science and technology
fund; Purchase of golf membership; golfing
expenses.
- Payment of fines for administrative violations,
- Provisions exceed the level allowed by legislation

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 2.2. Deductible expenses
Non – deducible expenses
-Depreciation of fixed assets in one of the following cases:
+ Depreciation of fixed assets that are not used for
business operation.
+ Depreciation of fixed assets without proof of ownership
of the enterprise (except for fixed assets under a lease
purchase contract).
+ Depreciation of fixed assets that is not recorded in the
accounting books under applicable accounting
regulations.
+ Depreciation beyond the limit imposed by the Ministry of
Finance
+ Depreciation of fixed assets that have been fully
depreciated
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98 29 March 2024
 2.2. Deductible expenses
Non – deducible expenses
- Expenditure on consumption of raw materials, fuel,
energy, and goods beyond limits on reasonable
expenses imposed by the State.
- In-kind expenditure on employees’ clothing without
invoices. Monetary expenditure on employees’
clothing that exceeds VND 05 million/person/year.
- Rewards for ideas and innovations without specific
regulations, without a council to assess ideas and
innovations.

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 2.2. Deductible expenses
Non – deducible expenses
- Expenditures on wages and bonus for employees
in one of the following cases:
+ Expenditure on wages and other payables to
employees that have been included in operating
costs in the period but are not actually paid or do
not have proof of payment as prescribed by law.
+ Wages, bonuses for employees that are not
specified in one of the following documents:
employment contract, collective bargaining
agreement, financial regulation of the company,…
100 PGS.,TS. Nguyễn Thị Thanh Hoài - HVTC 29 March 2024
 2.2. Deductible expenses

Non – deducible expenses

- Expenditures on wages and bonus for employees
in one of the following cases:
+ Expenditures on wages, salaries, and allowances
of employees that have not been paid after the
annual tax declaration is submitted, unless the
enterprise has made a provision for inclusion in the
wage fund of the succeeding year. The annual
provision is decided by the enterprise, provided it
does not exceed 17% of the released wage fund.

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 2.2. Deductible expenses
Non – deducible expenses
- Expenditures on wages and bonus for employees
in one of the following cases:
+ Wages and salaries of the owner of a private
company, a single-member limited liability company
(owned by an individual); wages of the founders,
members of the Board of members or the Executive
Board who do not directly participate in business
administration

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 2.2. Deductible expenses
Non – deducible expenses
- Expense in excess of the level of VND 3
million/month/person for setting up the voluntary
pension fund and buying voluntary retirement
insurance for employees; expense in excess of the
level prescribed by the laws on social insurance and
health insurance for setting up funds of social
security nature (social insurance and additional
retirement insurance), health insurance fund and
unemployment insurance fund for employees.

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 2.2. Deductible expenses
Non – deducible expenses
- Payment of interest on loan serving business operation
taken from entities other than credit institutions or
business organizations which exceeds 150% of basic
interest rate announced by the State bank at the time of
taking the loan.
-Payment of interest on loan equivalent to charter capital
deficit (or invested capital in case of private companies)
according to the capital contribution schedule, even if
the enterprise is already in operation.
- Payment of loan interest during investment phase which
has been included in value of assets or value of
constructions invested.
104 PGS.,TS. Nguyễn Thị Thanh Hoài - HVTC 29 March 2024
 2.2. Deductible expenses
Non – deducible expenses
- Provision of sponsorship for education for
illegitimate recipients or without documentation
- Provision of sponsorship for healthcare for
illegitimate subjects or without documentation.
- Provision of disaster recovery aid for illegitimate
subjects or without documentation

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 2.2. Deductible expenses
Non – deducible expenses
- Provision of sponsorship for building gratitude
houses, houses for the poor, or great unity houses
for illegitimate recipients or without documentation
- Provision of sponsorship for scientific research
against the law; provision of sponsorship for
beneficiaries of incentive policies against the law;
provision of sponsorship for extremely
disadvantaged areas State programs.

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 2.2. Deductible expenses
Non – deducible expenses
- Input VAT that has been deducted or refunded;
- input VAT of fixed assets being cars for the
transport of 9 persons or fewer that exceeds the
deductible limit prescribed in legislative documents
on VAT;
- CIT; personal income tax unless the employment
contract states that employees’ salaries are
exclusive of personal income tax

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 2.3. Other incomes
- Interests
 Received interest > payable interest: other income
 Received interest < payable interest: Set off
against taxable income
- Fines for breach of economic contracts
 Received compensation > payable fines: other
income
 Compensation < payable fines: Set off against
other income then taxable income

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 2.3. Other incomes
- Property liquidation
Income from liquidation=Liquidation turnover-
Liquidation expenses-Book value at the time of
liquidation
- Bonuses, gifts, presents
- Capital transfer
- Revenue from domestic joint venture
- Patents, copyrights…

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 2.4. Exempt incomes
List exempt incomes stipulated by the Act of
Corporate Income Tax in Vietnam?

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 2.5. Losses carried forward
 Carried forward since the subsequent year of loss
 Consecutive 5 years

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 3.CIT rates
 Standard rate: 20%
 Preferential rates: 10, 15 and 17%
 High rate: 32 to 50%

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 Case study
Data for the tax year N of Dragon Co. are as follows(mill VND):
1. Base turnover: 500,000
2. Total expenses : 460,000 of which:
- Salaries expenses with illegitimate vouchers: 200
- Donation to a pagoda: 100
- Value added tax paid under credit method: 150
- Donation with legitimate vouchers to a high school: 30
- The rest expenses except for the above expenses are deductible.
3. Turnover from selling of fixed asset: 100, selling expense: 3, booking
value: 7
4. Income received from a joint venture (which is established in Vietnam)
which has paid the CIT: 600
5. Income received from an investment project in country A after payment of
CIT for country A at the rate of 15%: VND 1,700 million. Country A has not
signed the double taxation avoidance agreement with Vietnam
Required: Calculate the CIT amount payable for the tax year, given that:CIT
rate is 20%.
 4. Other incentives
 Tax holidays
- Newly founded in difficult socio-economic conditions
areas
- Newly founded in high tech…
- Newly founded in important infrastructure
 Other exempts
- Female employees in production, transportation and
construction Company
- Minority employees

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 5. Tax declaration and payment
- Deadlines,
- Places and procedures
- Currency for tax payment

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 CHAPTER 6
Personal income tax (PIT)

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 CHAPTER 6
References
- PIT Law No 15/VBHN –VPQH; 11/12/2014
- Resolution No 954/2020/UBTVQH14; 02/06/2020
- PIT Decree No 14/VBHN-BTC; 26/5/2015
- PIT Circular No 02/VBHN-BTC; 04/01/2024

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 CHAPTER 6
Contents
6.1. Concept and characteristics of PIT
6.2. Basic contents of PIT in Vietnam

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 CHAPTER 6
6.1. Concept and characteristics of PIT
 What is PIT?
 Prove that PIT is a direct tax
 Why is PIT accepted worldwide although it is
sensitive?

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 CHAPTER 6
6.2. Basic contents of PIT in Vietnam
 Taxpayers
 Assessable incomes
 Exempt incomes
 Tax reduction
 Method of tax calculation to business
incomes and salaries of residents
 Method of tax calculation to other incomes of
residents
 Method of tax calculation to non-residents

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 CHAPTER 6
6.2.1. Taxpayers
 Define resident taxpayers and non-resident
taxpayers under the Law on PIT of Vietnam.
 Distinguish the differences in tax liabilities
between resident taxpayers and non-resident
taxpayers.

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 CHAPTER 6
6.2.2. Taxable incomes
 Identify 10 classes of taxable incomes.
 What is remuneration in kind? Name some of
them.
 Which incomes are excluded from assessable
incomes?

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 CHAPTER 6
6.2.3. Exempt incomes
 What are exempt incomes?
 Point out the rationale of exempt incomes?

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 CHAPTER 6
6.2.4. Tax reduction
 Point out cases where PIT reduction is applicable.
 Discuss the rationale

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 CHAPTER 6
6.2.5. Method of Tax calculation for incomes of
residents
 Formula of defining base incomes of residents

 Explain the factors of the formula.

 How to calculate PIT payable for residents?

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 CHAPTER 6
6.2.6. Method of Tax calculation for incomes of non
residents
 Formula of defining base incomes of non-residents

 Explain the factors of the formula.

 How to calculate PIT payable for non- residents?

126 PGS.,TS. Nguyễn Thị Thanh Hoài - HVTC 29 March 2024