Vietnamese firms allowed to repatriate losses, drafted modification in CIT Law
23/06/2011 09:19 am
Laws - Ministry of Finance planned to reduce Corporate Income Tax (CIT) burden on enterprises investing overseas, according to its draft regulation.
Accordingly, if overseas projects, due to a number of objective reasons (such as disaster, accident…), have to face suspension and bring in losses which Vietnamese enterprises have to suffer, the losses are able to be declared and added to CIT from following CIT period.
The time for transferring losses is no more than 5 years from the day when enterprises admitted losses. Maximum loss subject to transfer is equal to overseas investment capital according to the approval of Ministry of Planning and Investment at the point of time when investment certificate is given.
In order to get loss compensation, the losers have to show copies of overseas investment certificates, certificate for ending operation; audited fiscal reports, transfer contract of projects…
In addition, enterprises must have identification for paid taxes, exempted taxes, transferred loss, non-transferred loss of business operation in previously fiscal years.
Pursuant to Circular 11/2010/TT-BTC, the tax liability of Vietnamese investors who invest overseas on exported machine, equipments, materials, fuels (excluding natural resources, unprocessed minerals) to create fixed assets of overseas projects will be levied with VAT of 0%.
Vietnamese firms, who have overseas investment projects and earn income from production and business in foreign countries, must declare and pay CIT according to the two-tier tax agreement between Vietnam and the country where that firm conducts investment projects (if any).
CIT required to be taxed and declared on overseas income is 25%, without incentives (if any) which Vietnam’s overseas investors enjoy according to current Law on CIT.
Accordingly, if overseas projects, due to a number of objective reasons (such as disaster, accident…), have to face suspension and bring in losses which Vietnamese enterprises have to suffer, the losses are able to be declared and added to CIT from following CIT period.
The time for transferring losses is no more than 5 years from the day when enterprises admitted losses. Maximum loss subject to transfer is equal to overseas investment capital according to the approval of Ministry of Planning and Investment at the point of time when investment certificate is given.
In order to get loss compensation, the losers have to show copies of overseas investment certificates, certificate for ending operation; audited fiscal reports, transfer contract of projects…
In addition, enterprises must have identification for paid taxes, exempted taxes, transferred loss, non-transferred loss of business operation in previously fiscal years.
Pursuant to Circular 11/2010/TT-BTC, the tax liability of Vietnamese investors who invest overseas on exported machine, equipments, materials, fuels (excluding natural resources, unprocessed minerals) to create fixed assets of overseas projects will be levied with VAT of 0%.
Vietnamese firms, who have overseas investment projects and earn income from production and business in foreign countries, must declare and pay CIT according to the two-tier tax agreement between Vietnam and the country where that firm conducts investment projects (if any).
CIT required to be taxed and declared on overseas income is 25%, without incentives (if any) which Vietnam’s overseas investors enjoy according to current Law on CIT.
Source: Vietbiz24
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