Newsletter

Corporate Income Tax (“CIT”)

On 22 August 2024, Binh Duong Tax Department issued Official Letter No. 23846/CTBDU-TTHT with following content:

In case a company has a plan to change its Branch in Binh Duong to a subsidiary and continue to conduct business lines and operate at the registered business location of the Branch, the subsidiary will inherit the CIT incentives of the Branch for the remaining period as prescribed in Clause 3, Article 10 of Circular No. 96/2015/TT-BTC dated 22 June 2015 of the Ministry of Finance, amending and supplementing Clause 5, Article 18 of Circular No. 78/2014/TT-BTC (amended and supplemented in Article 5 of Circular No. 151/2014/TT-BTC) in case it continues to meet the conditions for CIT incentives as prescribed.

Foreign Contractor Tax (“FCT”)

On 15 August 2024, the General Department of Taxation issued Official Letter No. 3602/TCT-CS with following content:

A company has signed a long-term loan contract with the parent company abroad since 2014, in which the contract stipulates that the principal and interest will be repaid in a lump sum after 10 years and the parent company is subject to FCT in Vietnam on income from loan interest.

In case the parent company writes off the loan interest debt and the company does not incur loan interest payment to the parent company, the company does not have to declare and pay FCT on behalf of the parent company. The written-off loan interest expense that the Company deducts annually corresponding to the loan interest must be recorded in other income to determine taxable income for CIT.