Vietnam – Increasing Charter Capital From Profits After-Tax.

29 September 2021
 

On 17 September 2021, Bac Giang Tax Department issued Official Letter No. 4396/CTBGI-TTHT on tax policies, increasing charter capital from profits after-tax with the following contents:

 

• In principle, taxpayers shall declare tax declaration, lists, and appendices (if any) according to the form prescribed by the Ministry of Finance and take responsibility before law for the accuracy, truthfulness, and completeness of their tax declaration dossiers according to regulations with tax administration authority.

 

• The amount of CIT temporarily paid quarterly, the enterprise shall base on the CIT amount of the previous year and expected business results in the year to determine the amount of CIT temporarily paid quarterly. However, the total temporarily paid CIT amount of the first 3 quarters of the tax year shall not be lower than 75% of the payable CIT amount according to the annual finalization. The deadline for paying CIT is the 30th day of the quarter following the quarter in which the tax liability arises. The temporarily paid CIT amount quarterly is deducted from the temporarily paid tax amount and the payable tax amount according to the annual tax finalization. 

 

• In case the taxpayer proposes to voluntarily declare a quarterly CIT declaration temporarily and submit it to the tax authority. In this regard, there is no provision in the current tax law.

 

• Taxpayers shall determine the business results (profit/loss) for the accounting period in the financial statements prepared at the end of the annual accounting period unless the taxpayer has been approved by the competent authority to prepare financial statements for another accounting period. 

 

• The owner (investor) has the right to decide to use the profit after-tax after fulfilling the tax and other financial obligations of the enterprise.

 

• In case the investor wants to use the after-tax profit after fulfilling the tax obligations and other obligations of the enterprise to increase the charter capital to invest in the subsidiary, the enterprise must contact the competent authorities for specific instructions on the procedures for adjusting the Investment Registration Certificate and the Enterprise Registration according to regulations.