Q&A on tax policies and laws
Question:
Could the Tax Department please inform us: What is new in declaring and paying corporate income tax for Vietnamese enterprises investing abroad according to Circular 96/2015/TT-BTC?
Reply:
In Article 1, Circular 96/2015/TT-BTC dated June 22, 2015 of the Ministry of Finance amends and supplements a number of regulations on declaration and payment of corporate income tax for Vietnamese enterprises investing abroad, specifically as follows:
- Vietnamese enterprises investing abroad transfer the income after paying corporate income tax abroad to Vietnam for countries that have signed the Double Taxation Avoidance Agreement, in accordance with the provisions of the Agreement; for countries that have not signed the Double Taxation Avoidance Agreement, in case the corporate income tax in the country where the enterprise invests has a lower corporate income tax rate, the difference compared to the corporate income tax calculated according to the Law on Corporate Income Tax of Vietnam shall be collected.
- Income from overseas investment projects is declared in the corporate income tax finalization of the year in which income is transferred back to the country in accordance with the provisions of the law on foreign direct investment. Income (profit) and losses arising from overseas investment projects cannot be deducted from the loss and income (profit) arising domestically of the enterprise when calculating corporate income tax.
- In case a Vietnamese enterprise investing abroad transfers part of its income back to the country without declaring and paying tax on the income transferred back to the country, the tax authority shall determine taxable income from production and business activities abroad according to the provisions of the Law on Tax Administration.
- Simplify the records and documents when declaring and paying taxes of Vietnamese enterprises investing abroad for income from investment projects abroad to ensure similarity with the case of applying the agreement, including: (i) A copy of the Overseas Income Tax Declaration certified by the taxpayer; (ii) A copy of the overseas tax payment document certified by the taxpayer or the original confirmation by the foreign tax authority of the amount of tax paid or a copy of a document of equivalent value certified by the taxpayer./.
Nghe An Tax Department
