Circular No. 141/2013/TT-BTC the Law Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax and the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax

THE MINISTRY OF FINANCE

Circular No. 141/2013/TT-BTC of October 16, 2013, guiding the implementation of the Government’s Decree No. 92/2013/ND-CP of August 13, 2013, detailing a number of articles, which take effect on July 1, 2013, of the Law Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax and the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax

Pursuant to June 3, 2008 Law No. 13/2008/QH12 on Value-Added Tax, and June 19, 2013 Law No. 31/2013/QH13 Amending and Supplementing a Number of Articles of the Law on Value-Added Tax;

Pursuant to June 3, 2008 Law No. 14/2008/QH12 on Enterprise Income Tax, and June 19, 2013 Law No. 32/2013/QH13 Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax;

Pursuant to November 29, 2006 Law No. 78/2006/QH11 on Tax Administration, and November 20, 2012 Law No. 21/2012/QH13 Amending and Supplementing a Number of Articles of the Law on Tax Administration;

Pursuant to the Government’s Decree No. 92/2013/ND-CP of August 13, 2013, detailing a number of articles, which take effect on July 1, 2013, of the Law Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax and the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax;

Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizations structure of the Ministry of Finance;

At the proposal of the General Director of Taxation;

The Minister of Finance guides the implementation of the Government’s Decree No. 92/2013/ND-CP of August 13, 2013, detailing a number of articles, which take effect on July 1, 2013, of the Law Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax and the Law Amending and Supplementing a Number of Articles of the Law on Value-Added Tax, as follows:

Chapter I

ENTERPRISE INCOME TAX

Article 1. Application of enterprise income tax to enterprises that have a total annual turnover not exceeding VND 20 billion

1. To apply the enterprise income tax rate of 20% from July 1, 2013, to enterprises established under Vietnamese law, including cooperatives and revenue-generating non-business units (below referred to as enterprises) that have a total annual turnover not exceeding VND 20 billion.

Total annual turnover serving as a basis for determining an enterprise subject to the tax rate of 20% is the enterprise’s total turnover in the preceding year which is determined based on the items coded [01] and [08] in the Appendix on production and business operation results in the tax period of the preceding year, made according to form No. 03-1A/TNDN enclosed with enterprise income tax finalization declaration form No. 03/TNDN issued together with the Finance Ministry’s Circular No. 28/2011/TT-BTC of February 28, 2011, and its revising or replacing legal documents (if any).

For new enterprises established from January 1, 2013, through June 30, 2013, their turnover is determined based on the item coded [21] “Turnover arising in the period” (excluding other incomes) in the declaration of enterprise income tax temporarily calculated in the first two quarters of 2013, made according to form No. 01A/TNDN issued together the Finance Ministry’s Circular No. 28/2011/TT-BTC of February 28, 2011, and its revising or replacing legal documents (if any).

In case the total period of production and business operation of an enterprise from its establishment to the end of 2012 enterprise income tax period is less than 12 months, or its tax period is longer than 12 months according to  regulations, the turnover used as a basis for determining that it is subject to the tax rate of 20% as prescribed in this Clause is its average monthly turnover in the 2012 enterprise income tax period, which must not exceed VND 1.67 billion.

For a new enterprise established during the first six months of 2013, its turnover used as a basis for determining that it is subject to the tax rate of 20% prescribed in this Clause is its average monthly turnover in the first six months of 2013, which must not exceed VND 1.67 billion.

New enterprises established from July 1, 2013 on, shall declare enterprise income tax temporarily calculated at the rate of 25% on a quarterly basis (except entities eligible for tax rate incentives). At the end of the fiscal year, if the average monthly turnover does not exceed VND 1.67 billion, the enterprises may finalize payable tax amounts at the rate tax of 20% (except incomes defined in Clause 2, Article 1 of this Circular). 

2. The tax rate of 20% prescribed in Clause 1 of this Article is not applicable to the following incomes:

a/ Incomes from capital transfer, transfer of the capital contribution right; incomes from transfer of real estate (except incomes from social housing investment and trading under Article 2 of this Circular), incomes from transfer of investment projects, transfer of the right to participate in investment projects, transfer of the right to explore and exploit minerals; and incomes from production and business activities outside Vietnam;

b/ Incomes from prospecting, exploration and exploitation of oil and gas and other precious and rare natural resources and incomes from mineral mining;

c/ Incomes from provision of services liable to excise tax prescribed in the Law on Excise Tax.

3. Principles of determination

a/ An enterprises shall account income subject to the tax rate of 20% separately from income not subject to this tax rate. If these incomes cannot be separately accounted, income subject to the tax rate of 20% is determined based on the proportion of goods and service sale turnover subject to the tax rate of 20% and the enterprise’s total turnover in the tax period.

b/ For the income separately accounted, the enterprise may offset profit against loss. The remaining income is eligible for the rate of enterprise income tax on profitable operation. The application of legal documents to the offsetting of profit against loss in certain periods is provided as follows:

- From July 1, 2013, through December 31, 2013, to apply Article 16 of June 3, 2008 Law No. 14/2008/QH12 on Enterprise Income Tax and its guiding documents;

- From January 1, 2014, to apply Clause 10, Article 1 of June 19, 2013 Law No. 32/2013/QH13 Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax, and its guiding documents. 

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