INCOMES ARE TAXABLE CORPORATE INCOME TAX IN 2020

THE LATEST INCOMES ARE TAXABLE CORPORATE INCOME TAX:

❓ What are taxable incomes include? The latest regulations on incomes and other incomes are taxable corporate income tax.

How to determine taxable corporate income tax:

Base on Article 2 of Circular 96/2015/TT-BTC stipulating the determination of taxable incomes as follows:

Taxable incomes in the tax period include incomes from production and business activities of goods, services and other incomes.

Taxable incomes in the tax period is determined as follows:

Taxable incomes = (Revenue – deductible expenses) + Other incomes

The specific way to determine the above accounts is as follows:

1. Revenue subject to corporate income tax calculation:

Income from production and business activities of goods and services = Revenue from production and business activities of goods and services - Deductible expenses.

2. Deductible expenses:

Stipulating in Article 4 of Circular 96/2015/TT-BTC amending and supplementing Article 6 of Circular No. 78/2014/TT-BTC (amended and supplemented in Clause 2, Article 6 of Circular No. 119/2014/TT -BTC and Article 1 of Circular No. 151/2014/TT-BTC).

3. Other incomes are taxable corporate income tax:

Base on Article 5 of Circular 96/2015/TT-BTC, Article 7 of Circular No. 78/2014/TT-BTC and Article 2 of Circular 151/2014/TT-BTC stipulate other taxable incomes as follows:

1️⃣ Incomes from capital transfer, securities transfer as guided in Chapter IV of Circular 78.

2️⃣ Incomes from real estate transfer as guided in Chapter V of Circular 78.

3️⃣ Incomes from investment projects transfer; transfer the right to participate in investment projects; transfer the right to probe, exploit and process minerals as prescribed by law.

4️⃣ Incomes from assets ownership and the right to use, including royalties in any form, paid for the ownership or the right to use the assets; incomes from intellectual property rights; incomes from technology transfer as prescribed by law.

+ Incomes from intellectual property royalties and technology transfer is determined by the gross proceeds minus (-) the cost of capital or the cost of creating the transferring intellectual property right or technology, minus (-) costs of maintaining, upgrading and developing intellectual property rights, transferred technology and other deductible expenses.

5️⃣ Incomes from assets leasing in any form.

+ Incomes from assets leasing is determined by revenue from asset leasing minus (-) expenses: depreciation, maintenance, repair, assets leasing expenses for sublease (if any) and other deductible expenses related to assets leasing.

6️⃣ Incomes from assets transfer, assets liquidation (except real estate), other valuable papers.

+ This incomes is determined by (=) the revenue earned from the transfer or liquidation of assets minus (-) the residual value of the transferred or liquidated assets at the time of transfer or liquidation and deductible expenses related to the transfer and liquidation of assets.

7️⃣ Incomes from deposit interest and capital loan interest including late payment interest, installment interest, credit guarantee fee and other fees in the loan contract.

+ In case the incomes from deposit interest, capital loan interest is higher than the loan interest payments as prescribed, after compensating, the remaining difference shall be included in other incomes when determining taxable incomes.

+ In case the incomes from deposit interest, capital loan interests is lower than the loan interest payments as prescribed, after compensating, the remaining difference will be deducted to the main production and business incomes when determine taxable incomes.

8️⃣ Incomes from foreign currency sales = to gross proceeds from foreign currency sales minus (-) the total purchase price of the foreign currency sold.

9️⃣ Incomes from exchange rate difference, specifically determined as follows:

+ In the tax year, enterprises have exchange rate differences arising in the period and exchange rate differences due to re-evaluation of foreign currencies liabilities at the end of the financial year, then:

• The exchange rate difference arising in the period directly related to the revenues and expenses of the enterprise's main production and business activities shall be included in the expenses or incomes of the enterprise's main production and business activities. .
• The exchange rate difference arising in the period is not directly related to the revenue and expenses of the enterprise's main production and business activities, if loss on exchange rate difference is incurred, it shall be included in financial expenses, if profit on exchange difference is incurred, it shall be included in other incomes when determining taxable incomes.

+ Profit on exchange rate difference due to re-evaluation of foreign currencies liabilities at the end of the financial year should be compensated against loss on exchange rate difference due to re-evaluation of foreign currencies liabilities at the end of the financial year.

+ After compensating the profit or loss on the exchange rate difference directly related to the revenues, the expenses of the enterprise's main production and business activities shall be included in the income or expenses of the enterprise’s main production and business activities.

+ Profit or loss on the exchange rate difference that are not directly related to the revenues and expenses of the enterprise's main production and business activities shall be included in other incomes or financial expenses when determining taxable incomes.

+ For receivables and foreign currencies loans arising during the period, the exchange rate difference is included in deductible expenses or income as the difference between the exchange rate at the time that debts is recovered or recover the loan at the rate at which the receivable or initial loan was recorded.

+ The above exchange rate differences do not include exchange rate differences due to revaluation of year-end balances: cash, deposits, money in transit, and foreign currency receivables.

🔟 Doubtful debts have been deleted are now recoverable.

1️⃣1️⃣ Debts payable for which the creditor can’t be identified.

1️⃣2️⃣ The missed incomes from production and business activities of previous years have been discovered.

1️⃣3️⃣ In case the enterprise has a revenue of fines and compensation due to the partner's breach of the contract or bonuses due to good performance of commitments under the contract arising is higher than the fines payment or compensation due to breach of contract (these fines are not included in the administrative violations fines as prescribed by law on sanctioning of administrative violations), after compensating, the remaining difference shall be included in other incomes.

+ In case the enterprise has a revenue of fines and compensation due to the partner's breach of the contract or bonuses due to good performance of commitments under the contract arising is lower than the fines payment or compensation due to breach of contract (these fines are not included in the administrative violations fines as prescribed by law on sanctioning of administrative violations), after compensating, the remaining difference is calculated as other incomes deduction.

+ In case the unit does not arise any other incomes in the year, it will be calculated as production and business activities incomes deduction.

+ The above-mentioned fines and compensations do not include fines and compensations recorded as a decrease in the value of the constructions during the investment period.

1️⃣4️⃣ Differences due to revaluation of assets as prescribed by law for capital contribution, for asset transfer upon division, separation, consolidation, acquisition, types of business converting (except in the case of equitization, reorganization and renewal of enterprises with 100% state capital), specifically determined as follows:

+ The increase or decrease difference due to re-evaluation of assets is the difference between the re-evaluation value and the residual value of the asset recorded in the accounting books and calculated once in other incomes (for the increase differences) or other incomes deduction (for decrease differences) in the tax period when determining taxable corporate income tax having re-evaluated assets.

+ The increase or decrease difference due to re-evaluation of land use right value for: capital contribution (where the enterprise receiving the land use right value is gradually allocated the land value to deductible expenses), transferring when dividing , separation, consolidation, acquisition, types of business converting, capital contribution to investment projects to build houses and infrastructure for sale and calculated once in other (for the increase differences) or other incomes deduction (for decrease differences) in the tax period when determining taxable corporate income tax with the right to use the re-evaluated land.

+ The increased differences due to re-evaluation of land use rights value contributed as capital to the enterprise to form fixed assets for production but the enterprise receiving the land use rights value are not allowed to depreciate and the land value is not allocated into deductible expenses, this difference shall be gradually calculated into other incomes of the enterprise having the re-evaluated land use right for a maximum period of not more than 10 years, starting from the year of land use right value is contributed as capital. Enterprises must notify the number of years they allocate to other incomes when submitting their corporate income tax finalization declarations of the year they start declaring this income (year in which land use rights value is re-evaluated for capital contribution).

+ In case, after capital contribution, the enterprise continues to transfer contributed capital equal to the land use rights value (including the case of transfer contributed capital 10 years ahead of time), the incomes from contributed capital transfer equal to the land use rights value that must be calculated and declared and paid for according to the real estate transfer incomes.

+ Differences due to re-evaluation of land use rights value include: for long-term land use rights, it is the difference between the re-evaluation value and the value of land use rights recorded in the accounting books; for land use rights with a term, it is the difference between the re-evaluation value and the unallocated residual value of the land use right.

+ Enterprises receiving assets as capital contribution, receiving transferred assets upon division, separation, consolidation, acquisition, types of business converting may depreciate or gradually allocate them to expenses according to the re-evaluated price (except the value of land use rights is not distributed or allocated to expenses as prescribed).

1️⃣5️⃣ Gifts, gifts in cash, gifts in kind; income received in cash or in kind from funding sources; income received from marketing support, expense support, payment discount, promotional bonus and other support. For incomes received in kind, the value of the object is determined by the value of equivalent goods or services at the time of receipt.

1️⃣6️⃣ Money, assets and other material welfare received by the enterprise from organizations and individuals under agreements or contracts in accordance with civil law since the enterprise hands over the old land location for relocation of production and business establishments after deducting related expenses such as relocation costs (transportation and installation costs), residual value of fixed assets and other costs (if any).

+ Particularly for money, assets and material welfare that enterprises receive according to State policies and are approved by competent State agencies to relocate production establishments, it shall be managed and used in accordance with relevant laws.

1️⃣7️⃣ Accrued expenses into expenses but not used or not used up according to the set-up period but the enterprise does not account for the adjustment of expenses; construction warranty provisions reimbursement.

1️⃣8️⃣ Incomes related to the goods consumption and provide services that are not included in the revenue such as: bonuses for fast ship clearance, bonuses for F&B services and hotels after deducting expenses to generate that income.

1️⃣9️⃣ Incomes from the sale of scrap and discarded products, after deducting recovery costs and consumption costs, is determined as follows:

+ In case an enterprise arises incomes from the sale of scraps and discarded products generated in the production process of products are eligible for corporate income tax incentives, this income is entitled to corporate income tax incentives.

+ In case an enterprise arises incomes from the sale of scraps and discarded products generated in the production process of products are not eligible for corporate income tax incentives, this income should be included in other incomes. .

2️⃣0️⃣ The export and import tax refund on goods actually exported or imported, arising in the settlement year of corporate income tax, shall be deducted from expenses in that settlement year.

+ In case the import and export tax refund of goods actually exported or imported is incurred in the previous years of corporate income tax finalization, it shall be included in other incomes of the settlement year.

+ If this income is directly related to the production and business sectors that are eligible for corporate income tax incentives, this income will be eligible for corporate income tax incentives.

+ If this income is not directly related to the production and business sectors eligible for corporate income tax incentives, this income shall be included in other incomes.

2️⃣1️⃣ Incomes from share capital contribution activities, joint ventures and domestic economic links are divided from incomes before corporate income tax is paid.

2️⃣2️⃣ In case the enterprise accepts new capital contributors as prescribed by law, the amount of money spent by the new capital contributor is higher than the value of that member's contributed capital in the total charter capital of the company. The business will handle it as follows:

+ If this higher difference is determined to be owned by the enterprise and added to the business capital, it is not included in the taxable income to calculate the corporate income tax of the enterprise receiving the capital contribution.

+ If this higher difference is divided among the former capital contributors, then this difference is the income of the former capital contributors.

2️⃣3️⃣ Other incomes as prescribed by law.

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