A Vietnam-based enterprise that sold its assets shall obligate to declare and pay the value-added tax (“VAT”) and the corporate income tax (“CIT”) to State. However, the enterprise should take some notes of such tax obligations regarding the selling.
Through this article, BLawyers Vietnam would like to briefly raise 2 issues as below.
1. VAT imposed on asset selling of the enterprise
The enterprise must declare and pay VAT in case of selling the owned assets. Accordingly, the VAT amount shall equal to (=) value of assets multiplied (x) VAT rate which depends on the type of assets (i.e., the VAT rate is at 0%, 5%, and 10%).
Thus, the enterprise selling its owned assets must issue the VAT invoices in accordance with the law.
2. CIT for selling the enterprise’s assets
a. General rules
The enterprise must declare and pay the CIT amount from the income from selling the enterprise’s owned assets. Based on that, the enterprise’s income from selling the enterprise’s assets shall be added as a taxable income during the tax period. CIT amount is calculated in the formulas below:
CIT amount = Assessable income x CIT rate 20%
Assessable income = Taxable income – (exempted taxable income + carried forward losses)
Taxable income = (Revenue – Deductible expenses) + Other incomes
Of note, taxable income for the enterprise’s fixed assets which are under depreciation shall equal to (=) revenue obtained from selling assets minus (-) the remaining value of such assets at the time of sale and minus (-) deductible expenses relating to the sale of assets.
b. CIT in case of real estate transfer
When transferring real estate owned under the name of the enterprise, the enterprise must pay a CIT amount as follows :
CIT amount = [((Revenue – Expense for transferring real estate – The capital cost of real estate) + Other incomes) – Exempted taxable income – Carried forward loss] x 20%
In which, the revenue shall be determined according to the actual price of real estate transfer under the real estate purchase contract in accordance with law (including surcharges and additional charges if any).
In addition, income from real estate transfer activities must be accounted for separately for CIT payment and declaration.
For further information, please contact:
Minh Ngo Nhat, Partner, BLawyers
