At present, there are no provisions for valuing inventories or determining inventory flows. There is a separate tax guidance for making provision for inventories and certain other provisions.
Gains from the revaluation of assets for the purposes of capital contribution or transfer upon division, de-merger, consolidation, merger, or conversion of business are subject to the standard CIT rate.
Gains made by a foreign investor on the transfer of an interest (as opposed to shares) in a limited liability company are subject to the standard CIT rate. The assignee is required to withhold the tax due from the payment to the foreign assignor and account for this to the tax authorities. Where both the assignor and the assignee are foreign entities, the Vietnamese company in which the capital interest is transferred is responsible for the above administration.
Gains earned by a foreign investor from selling securities (i.e. bonds, shares of public joint-stock companies, irrespective of whether they are listed or non-listed) are subject to CIT at a deemed rate of 0.1% of the sales proceeds. The standard CIT rate will apply to any gains earned by a foreign company (not incorporated in Vietnam) upon a sale of shares in a non-public, joint-stock company.
Dividends received from investments in other companies in Vietnam are from after tax profits and are not subject to CIT.
Certain types of interest income are entitled to tax incentives granted to the investment project, depending on the conditions on which tax incentives are granted.
Currently, royalty income is subject to tax at the standard CIT rate.
Other significant items
Tax incentives that are available for investment in encouraged sectors do not apply to other income (except for income that directly relates to the incentivised activities, such as disposal of scrap), which is broadly defined.
The following income items are subject to the standard CIT rate and are not entitled to tax incentives (including preferential tax rate and exemption/reduction):
- Income from transfer of the right to make capital contribution; income from transfer of immovable property (except for income from investment in social houses); income from transfer of investment projects, transfer of the right to take part in investment projects, and transfer of the right to exploration and exploitation of minerals.
- Income from activities of prospecting for, exploration of, and exploitation of oil, gas, and other rare and precious resources; income from activities of exploiting minerals.
- Income from providing services subject to SST in accordance with the provisions of the law on SST.
Foreign income, under the domestic tax law, is subject to the standard CIT rate with tax credits available (see Foreign tax credit in the Tax credits and incentives section).
Foreign income shall be taxed when earned. There are no provisions for tax deferral or preferential tax rates for foreign income.