What is Corporate Income Tax (CIT)?
Corporate Income Tax (CIT) is a direct tax levied on the taxable income of enterprises operating in Vietnam. It is governed by the Law on Corporate Income Tax No. 14/2008/QH12, as amended by Laws No. 32/2013/QH13 and No. 71/2014/QH13.
Standard CIT Rate
The standard CIT rate in Vietnam is 20%, applicable to the majority of enterprises regardless of size or ownership structure.
Preferential Rates
Certain qualifying sectors enjoy reduced rates:
- 10% for 15 years: enterprises in especially difficult socioeconomic areas, high-tech zones, or economic zones
- 10% for the life of the project: education, healthcare, scientific research, cultural, and environmental enterprises
- 17% for 10 years: enterprises in difficult socioeconomic areas or certain agricultural sectors
Taxable Income Calculation
Taxable Income = Revenue − Deductible Expenses + Other Taxable Income
Deductible Expenses
Expenses are deductible when they meet all three conditions under Article 9 of the Law on CIT:
- Actually incurred and related to business production activities
- Supported by adequate invoices and vouchers as required by law
- For payments of VND 20 million or more, made via non-cash methods
Common deductible expenses include:
- Employee salaries and wages
- Depreciation of fixed assets (per Circular 45/2013/TT-BTC)
- Raw materials and input costs
- Marketing and sales expenses (capped at 15% of total deductible expenses)
- Loan interest (excluding interest on loans from non-credit institutions exceeding 150% of the State Bank's base rate)
CIT Declaration Deadlines
| Obligation | Deadline | |------------|----------| | Provisional quarterly CIT payment | 30th of the following quarter | | Annual CIT finalization declaration | 90 days from fiscal year-end | | Annual CIT finalization payment | 90 days from fiscal year-end |
Provisional quarterly payments must total at least 80% of the final annual CIT liability; underpayment beyond this threshold incurs late payment interest.
Key Compliance Steps
- Register tax code with the local tax authority upon business establishment
- Maintain proper accounting records per Vietnamese Accounting Standards (VAS)
- File quarterly provisional declarations (Form 01A/TNDN) — note: only payment is required quarterly, not a separate form filing
- Submit annual finalization (Form 03/TNDN) within 90 days of year-end
- Pay any outstanding CIT balance by the finalization deadline
Loss Carry-Forward
Enterprises may carry forward losses continuously for up to 5 years following the loss year, starting from the immediately following year (Article 9, Law on CIT).
Conclusion
Understanding CIT obligations is essential for financial planning and regulatory compliance in Vietnam. H&T Bay provides full-service CIT preparation, advisory, and filing support for enterprises of all sizes.