New regulations on corporate income tax and personal income tax

The Government has just issued a Decree12/2015/ND-CPdetailing the implementation of the Law amending and supplementing a number of articles of the Laws on Taxes and amending and supplementing a number of articles of the Decrees on Taxes. This newly issued Decree contains many new points on corporate income tax and personal income tax.

Additional cases are subject to preferential tax rate of 10%

Amending and supplementing the provisions on corporate income tax in Decree 218/2013/ND-CP, Decree 12/2015/ND-CP added 2 cases that are eligible for a preferential tax rate of 10% for a period of 15 years, including: Firstly, income of enterprises from implementing investment projects in the manufacturing sector, except for projects producing goods subject to special consumption tax and mineral exploitation projects, with a minimum investment capital scale of VND 12,000 billion, using technology that must be appraised according to the provisions of the Law on High Technology, the Law on Science and Technology, disbursing the total registered investment capital within no more than 5 years from the date of investment permission according to the provisions of the law on investment.

Second, the enterprise's income from implementing new investment projects to produce products in the List of priority supporting industrial products for development that meet one of the following criteria: 1- Supporting industrial products for high technology according to the provisions of the Law on High Technology; 2- Supporting industrial products for the production of products in the following industries: Textile - garment; leather - footwear; electronics - information technology; automobile manufacturing and assembly; mechanical engineering, which as of January 1, 2015 cannot be produced domestically or can be produced but must meet the technical standards of the European Union (EU) or equivalent.

Personal income tax rate for income in each industry

At the same time, the Decree also amends and supplements the provisions on personal income tax in Decree 65/2013/ND-CP. In particular, regarding tax on business income, the newly issued Decree clearly states that business individuals pay personal income tax at a percentage (%) on revenue corresponding to each field and business line. Business individuals in many fields and lines of business shall declare and calculate tax according to the tax rate applicable to each field and business line. In case business individuals do not declare or declare inconsistently with the actual business, the tax authority shall determine according to the provisions of the law on tax administration.

Taxable revenue from business is the total sales, processing fees, commissions, and supply of goods and services arising during the tax period.

Another new point of Decree 12/2015/ND-CP is the clear regulation of tax rates on business income for each field and industry of production and business. Specifically, the tax rate on income from distribution and supply of goods is 0.5%; services, construction without contracted materials is 2% (except for asset leasing, insurance agency, lottery agency, multi-level marketing 5%); production, transportation, services associated with goods, construction with contracted materials is 1.5%; other business activities are 1%.

According to the Government Electronic Information Portal