Preferential Corporate income tax rates in Vietnam and China are applicable for listed investment sectors and geographical areas.  A new investment project in a business line or a domain of the list for (special) investment incentives and (great) economic and social impact may enjoy preferential tax rate of 10%, 15% or 20%.

● List of Domains Entitled to Special Investm. Preferences (10% corporate income tax)

Production of composite materials, light construction materials, precious and rare materials, high-quality steel, alloys, special metal and steel billet;

Investment in the construction of establishments using solar energy, wind energy, biogas, geothermic and tidal energy;

Production of medical equipment for analytical and extractive technology in the medical sector; specialized vehicles and equipment for the disabled;

Application of advanced technology, bio-technology for production of medicines for human use up to international GMP standard;

TProduction of computer, telecommunication and communication, internet equipment, key information technology product, semi-conductors and hi-tech electronic components; production of software product, digital information, technology research, training of IT human resource;

Investment in manufacturing of precision mechanical engineering equipment, equipment and machines for examination and control of industrial manufacturing safety; industrial robots;

7.  Projects employing 5,000 or more employees;

Investment in the construction and operation of infrastructures of industrial parks, export processing zones, hi-tech parks and economic zones;

Investment in the construction of apartment building for workers working in industrial parks, export processing zones, hi-tech parks, and economic zones; of dormitories for students and of residential houses for social policy beneficiaries.

● List of Domains Entitled to Investment Preferences (15-20% corporate income tax)

01. Production of soundproof, electricity insulated or high heat-insulated materials;

02. Synthetic materials used as a substitute for wood; fire-proof materials; construction plastics; glass fiber;

03. Production of special-use cement, non-ferrous metal;

04. Production of molds and prototypes for metal and non-metal products . Construction of new power plants , in power

distribution and transmission, production of medical equipment;

05. Development of petrochemical industry, coke and active coal;

06. Production of plant protection drugs, pesticides, and curative drugs for animals, aquatic creatures;

07. Materials for production of medicines; biological products; eastern medicines;

08. Production of electronic, middle and high-voltage equipment, investm. in production of large generators, and diesel engine;

09. Investment in the repair or building of ships ; equipment and spare parts for transportation ships and fishing ships ; dynamic

and hydraulic machinery and spare parts and compressing machines.

10. Production of machines for: oil and gas exploitation, energy and cement; large-sized lifting equipment;

12. Metal processing, metallurgy equipment production;

13. Production equipment, vehicles for construction, technica equipment for the transportation sector;

14. Breeding, rearing, growing and processing of agricultural, forest and aquaculture products;

15. Engaged in textile, garment industry, leather industry, children's toys;

16. Weaving and fashioning of textile products, production of silk and fibers of all types;

17. Investment project with 500-5,000 employees;

18. Development of mass transit including: transportation by ships, aircraft, railway;

19. Establishment of national tourist sites, culture parks, development of traditional culture products and handicraft goods;

Computations of Vietnam coporate income tax are as followings:

1. Basic caculating formula      Tax payable = taxable income × tax rate

2. Computations of taxable income      A. Taxable income = turnover - deductible expenses - other expenses;

B. Turnover = sale of goods + processing income + service provision income

According to law No. 24/2007/ND-CP, the deductible expenses include:

1. Depreciation of assets used for production/service;   2. Cost for raw material, material, fuel, energy;   
3. Salary paid subjects to the Labor Contract ;    4. Allowances for business trips, meals ;    5. Research fee, electricity and water expenses ;    6. Telephone expenses, repair and rent paid for the fixed assets;    7. Payment of interests on loans for goods production and trading and / or service provision to banks ;    8. Expenses for the sale of goods and / or services ;    

9. Expenses for advertisement, marketing and trade promotion directly related to goods production and trading and service provision activities.

1. Fiscal year: Jan1st to Dec 31st.    2. Every year, business establishments shall base themselves on the results of goods production and trading and/or service provision of the previous year and the result projection for the subsequent year to declare their turnovers, expenses and taxable incomes as well as the whole year's payable tax amounts divided for each quarter, according to the form set by the tax offices and submit the declarations to the tax offices directly managing them on January 25 at the latest; in case of big changes in the production and business situation during the year, the business establishments shall have to report such to their managing tax offices for adjustment of the tax amounts to be temporarily paid for the whole year and each quarter.    

Business establishments shall temporarily pay fully and on time into the State budget the quarterly tax amounts according to their declarations or tax amounts fixed by tax offices. The deadline for the quarterly tax payment shall be the last day of the quarter.    

Tax settlement
Business establishments shall have to make annual tax settlements with the tax offices. A tax settlement must reflect fully and accurately the following:  a.Turnover;  b. Reasonable expenses;  c. Taxable income;  d. Payable income tax amount;   e. Income tax amount already temporarily paid in the year;  f. Income tax amount already paid abroad for incomes received therefrom;  g. Underpaid or overpaid income tax amount.

The tax-settlement year is calculated according to the solar year. In cases where business establishments are allowed to apply a fiscal year other than the solar year, the tax settlement shall be made according to that fiscal year. Within 90 days as from the end of a solar year or a fiscal year, business establishments shall have to submit their tax settlement reports to the tax offices, and fully pay the outstanding tax amounts into the State budget within 10 days thereafter. Overpaid tax amounts shall be cleared against the payable tax amounts of the subsequent period.