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Guidance on Corporate Income Tax finalization by General Tax Department in 2016 Print

07/08/2017 Newest VBP

On March 03rd 2017, General Department of Tax promulgated guidance on CIT finalization in 2016, including some noticeable points as follow:

  1. Adjusting terms of defining deductible expense when deciding taxable income of noncash payment document  in relation to goods and service purchase invoice per each time valued from 20 million dong or more : abolishing the regulation “the accounts on banking payment document which records the money transaction from purchaser’s account to seller’s account, have to be registered or be informed to tax authority” from December 15th 2016 stipulated at the Curricular No. 173/2016/TT-BTC. Before December 15th 2016, both purchaser and seller’s accounts which haven’t registered with tax authority, but enable to identity the purchase and sale transactions between buyer and seller are real; the invoice issued by seller to buyer is legal; in case seller declared tax in compliance with the regulation, buyer can account for deductible expense if meeting other terms of being counted in deductible expense complied with the regulation.
  2. The expense of welfare nature paid directly to employees is calculated in deductible expense  but not exceeding 01 month average actual salary actually paid in the tax year of the enterprise, note: the PIT consultancy cost for foreign employees unrelated to production and business activities, is not considered as the expense of welfare nature for employee, thus is not included in deductible expenses when calculating corporate income tax; the medical examination fee, the cost of buying motorbike insurance for employees  are the expense of welfare nature paid directly to employees.
  3. In term of putting into practice the tax rate at 17% to enterprises which have applied the tax rate at 20% from 2016. Clause 20, article 1of the Decree no. 12/2015/ND-CP dated February 12th 2015 by Government stipulates amendment and supplementation of clause 2 article 20 of the Decree no. 218/2013/ND-CP on corporate income tax: “…e) By the end of the 2015 tax period, if enterprises with investment projects was enjoying the preferential tax rate of 20% specified at clause 3 article 20 of this Decree, these enterprises are allowed applying the tax rate of 17% for the remaining period since January 01st 2016…”Based on above provisions, only enterprises  applying the preferential CIT rate of 20% up to the end of the 2015 tax period, meeting conditions for applying the tax rate of 20% by 2016 specified at clause 3 article 15 of the Decree No. 218/2013 /ND-CP, are permitted to put into practice  the CIT rate of 17% for the remaining period since January 01st 2016.
  4. CIT incentives for expansion investment, regular investment

Article 5 of the Curricular no.130/TT-BTC dated August 12th 2016 by Ministry of Finance stipulates: adding point a1 into Point a Clause 18 of the Circular  no.78/2014/TT-BTC by Ministry of Finance (amended, supplemented at Clause 4 Article 10 of the Curricular no.96/2015/TT-BTC dated June 22th 2016 by Ministry of Finance) as follow:

“ a1) For the period from 2009 to 2013, enterprises in the process of production and business using the fixed asset depreciation fund of the enterprises; profit after tax for reinvestment; capital within capital limit registered with the competent State management bodies for reinvestment in the supplementation of machinery and equipment on a regular basis, and not increasing their production in accordance with business plan registered or approved, don’t have to expand their investment”.