How to calculate the latest corporate income tax

Corporate income tax (CIT) is a tax that every business must declare and pay to the state. The way to calculate corporate income tax is based on taxable income and tax rate.

CIT is a type of tax levied directly on the taxable income of an enterprise (direct tax), including: Income from production and trading activities of goods or services, and other incomes as prescribed by law. law. Currently, corporate income tax is determined by the enterprise itself, is temporarily calculated quarterly and paid according to the provisional amount. Every business needs to accurately calculate the taxes to be paid to avoid underpayment of taxes and penalties for violations. The following article will guide you on how to calculate corporate income tax according to the latest regulations (Updated 2023).

What is corporate income tax?

Corporate income tax (CIT) is calculated by the business every quarter and paid according to that provisional figure. At the end of the year, the enterprise makes a declaration to finalize CIT. We can simply understand this is a direct tax, levied on the taxable income of an enterprise, including income from all production and trading activities of goods, services and other incomes under the provisions of law. law.

Enterprises that must pay CIT include:

– The enterprise is established in accordance with the law of Vietnam.

– Enterprises established in accordance with foreign laws (hereinafter referred to as foreign enterprises) with or without a permanent establishment in Vietnam;

– Organizations established under the Law on Cooperatives;

– Non-business units established in accordance with Vietnamese law;

– Other organizations with income-generating production and business activities.

How to calculate corporate income tax in detail

Corporate income tax is equal to taxable income multiplied by tax rate. The formula for calculating CIT is specified in Article 1 of Circular 96/2015/TT-BTC of the Ministry of Finance (Amendments, amendments and supplements to Circular 78). As follows:

CIT payable

=

Taxable income

X

CIT rate

If an enterprise has set aside a fund for science and technology development, the calculation shall be as follows:

CIT payable

=

[Taxable income

–

S&T fund appropriation]

X

CIT rate

In there:

– The deduction for setting up the science and technology fund: can deduct up to 10% of the annual taxable income.

– Taxable income : Taxable income is calculated according to the following formula:

Taxable income

=

Income taxes

–

Tax-free income

+

Losses are carried forward in accordance with regulations

In there:

Taxable income: is income from production and trading of goods and services and other incomes.

– Tax-free income: These types of income are rare and for a few quite special businesses.

– Losses are carried forward in accordance with regulations: Loss incurred in the tax period is the negative difference in taxable income. Do not include losses carried forward from previous years. If an enterprise suffers a loss after tax finalization for the whole year, it must transfer all and continuously the loss into the taxable income of the following years. The period of loss transfer shall not exceed 5 years continuously. From the year following the year in which the loss is incurred.