How to declare, pay CIT for dependent-accounting branch

By KPMG
Tue, October 25, 2022 | 4:35 pm GMT+7

1. Our company is headquartered in Bac Ninh province. In 2022, we set up a dependent-accounting branch in Hai Phong, whose accounting record is centralized at our headquarters. The dependent-accounting branch is authorized to carry out some trading activities and consultancy services. Do we have to declare and pay corporate income tax (CIT) for such a dependent-accounting branch in Hai Phong?

Under the provision of Decree 126/2020/ND-CP, in case the company adopts a central accounting regime and the dependent branch in Hai Phong is not involved in production activities, the branch is neither required to separately file nor allocate CIT payable to Hai Phong Tax Department. All CIT declarations and payments should be centrally reported to Bac Ninh Tax Department.

Photo courtesy of nshcorp.com.my.

Photo courtesy of nshcorp.com.my.

2. We are a manufacturing company established and located in Dai An Industrial Park of Hai Duong province since July 2021. In January 2022, we set up a dependent-accounting branch in Yen Phong Industrial Park of Bac Ninh province. The branch generated taxable income from July 2022. How should we declare CIT for the branch in Bac Ninh in FY22?

Under current CIT regulations, the branch in Bac Ninh may enjoy a CIT incentive package of (i) two years of CIT exemption, and (ii) 50% CIT reduction within a subsequent four years. Meanwhile, as Hai Duong city is classified as a first grade city, the investment project located in Dai An industrial park is not qualified to enjoy CIT incentives based on location.

Thus, for CIT finalization, the company needs to prepare one single CIT finalization return for both its headquarters and branch, but the CIT payable for the Bac Ninh branch must be separately calculated and remitted to Bac Ninh Tax Department based on its taxable income and corresponding CIT rate (i.e. 0% CIT in the first two years and 50% CIT reduction in the subsequent four years).

After the CIT incentive period, the CIT payment of the branch to be settled to Bac Ninh Tax Department would be allocated based on the expense ratio as regulated under the Circular 80/2021/TT-BTC

3. Ours is a wholesale trading company that sells goods to tier-1 distributors. In order to push sales, our company would make some support payments to tier-2 distributors who do not have a direct sales agreement with us. Could we claim CIT deduction for the support payment made to tier-2 distributors?

Following recent private rulings, tax authorities opined that as tier-2 distributors do not have a direct sales agreement with the company, it is likely that the support payment made by the company should not be deductible for CIT purposes.

Comments (0)
  • Read More
Makara Capital Partners wants to mobilize $5-7 bln for investments in Vietnam: exec

Makara Capital Partners wants to mobilize $5-7 bln for investments in Vietnam: exec

Singapore's Makara Capital Partners is eyeing investment opportunities in Vietnam, including those in the biological and pharmaceutical industries and the International Financial Center project.

Economy - Thu, July 3, 2025 | 12:52 am GMT+7

Vietnam, US reach agreement on landmark trade deal framework

Vietnam, US reach agreement on landmark trade deal framework

Vietnam's Party chief To Lam and U.S. President Donald Trump on Wednesday stated that they welcome the agreement reached by the two countries' negotiating teams on the Joint Vietnam-United States Statement on a Fair, Balanced, and Reciprocal Trade Agreement Framework.

Economy - Wed, July 2, 2025 | 11:28 pm GMT+7

Vietnam's ACV expects 17% profit drop, plans $1.52 bln investment in Long Thanh airport this year

Vietnam's ACV expects 17% profit drop, plans $1.52 bln investment in Long Thanh airport this year

State-owned Airports Corporation of Vietnam (ACV), which operates 22 airports nationwide, expects its 2025 pre-tax profit to decline 17% year-on-year to VND10.53 trillion ($402.56 million) due to foreign exchange losses.

Companies - Wed, July 2, 2025 | 4:08 pm GMT+7

Two mega urban area projects in central Vietnam get greenlight

Two mega urban area projects in central Vietnam get greenlight

Two major urban projects in Quang Ngai province's Dung Quat Economic Zone, with a total investment of over VND54 trillion ($2.06 billion), have received in-principle approvals from Deputy Prime Minister Tran Hong Ha.

Real Estate - Wed, July 2, 2025 | 4:02 pm GMT+7

Roadmap for cleaner fuel transition launched for Vietnam’s first oil refinery Dung Quat

Roadmap for cleaner fuel transition launched for Vietnam’s first oil refinery Dung Quat

Binh Son Refining and Petrochemical JSC (BSR) and PV Gas D, a subsidiary of PV Gas, have signed an MoU on LNG trading principles, marking a significant step in BSR’s roadmap to transition from traditional fuels to cleaner alternatives at Dung Quat Oil Refinery.

Economy - Wed, July 2, 2025 | 3:52 pm GMT+7

EPC contracts signed for Vietnam’s offshore Block B - O Mon gas pipeline

EPC contracts signed for Vietnam’s offshore Block B - O Mon gas pipeline

Southwest Pipeline Operating Company (SWPOC), a subsidiary of Vietnam’s state-owned Petrovietnam, on Monday signed EPC contracts for two key packages (PC1 and PC2) of the Block B – O Mon gas pipeline project.

Economy - Wed, July 2, 2025 | 2:01 pm GMT+7

Major Vietnamese developer Sun Group proposes riverfront road, metro line projects in HCMC

Major Vietnamese developer Sun Group proposes riverfront road, metro line projects in HCMC

Sun Group, a leading real estate developer in Vietnam, is seeking Ho Chi Minh City authorities’ permission to invest in a riverfront road along the Saigon River and a 40-kilometer metro line under the build-transfer (BT) model in the former Cu Chi district.

Infrastructure - Wed, July 2, 2025 | 1:32 pm GMT+7

Vietnam stock market to enjoy favorable 'tailwinds' in H2: experts

Vietnam stock market to enjoy favorable 'tailwinds' in H2: experts

While external challenges are persistent, domestic economic stimulus policies will be a key driver helping Vietnam's stock market become more positive in the remaining six months of 2025, according to experts.

Finance - Wed, July 2, 2025 | 8:20 am GMT+7

Agro-forestry-fishery exports rise over 14% in H1

Agro-forestry-fishery exports rise over 14% in H1

Vietnam’s total agro-forestry-fishery trade in the first half of 2025 is estimated at $57 billion, with exports reaching $33.5 billion, up 14.3% year-on-year, according to the Ministry of Agriculture and Environment.

Companies - Tue, July 1, 2025 | 10:33 pm GMT+7

Banks end magnetic cards, require biometrics for firms from July 1

Banks end magnetic cards, require biometrics for firms from July 1

From July 1, banks across Vietnam have stopped using magnetic stripe cards and now require biometrics for company accounts to prevent fraud and improve security.

Banking - Tue, July 1, 2025 | 10:17 pm GMT+7

Data Law aims to protect data and unlock value

Data Law aims to protect data and unlock value

The 2024 Data Law, which aims to regulate the collection, sharing and commercial use of data, creating a trusted marketplace while enhancing personal data protection and cybersecurity, takes effect on Tuesday, July 1.

Companies - Tue, July 1, 2025 | 10:06 pm GMT+7

Thailand attracts large investment in data centers, digital services

Thailand attracts large investment in data centers, digital services

The Thailand Board of Investment (BOI) has approved investment applications worth a total of THB 28.6 billion (about $870 million) in digital infrastructure and travel sector projects, as well as incentives for the use of local content in the manufacturing of electric vehicles (EV) and hybrids, as well as electrical appliances (E&E).

Southeast Asia - Tue, July 1, 2025 | 9:55 pm GMT+7

Indonesia launches $5.9 bln EV battery ecosystem

Indonesia launches $5.9 bln EV battery ecosystem

Indonesia held a groundbreaking ceremony on Sunday for its integrated electric vehicle (EV) battery ecosystem in Karawang, West Java province.

Southeast Asia - Tue, July 1, 2025 | 9:49 pm GMT+7

Vietnam construction giant Vinaconex plans to divest 51% stake in northern Vietnam resort developer

Vietnam construction giant Vinaconex plans to divest 51% stake in northern Vietnam resort developer

Vietnam’s leading construction firm Vinaconex on Monday approved the transfer of its entire 51% stake in Vinaconex ITC, the developer of Cat Ba Amatina urban-tourism project in the northern city of Hai Phong, at a minimum price of VND48,000 per share ($1.84).

Real Estate - Tue, July 1, 2025 | 4:44 pm GMT+7

Gozo Express, Indel Petro launch Vietnam’s first integrated gas and logistics stations

Gozo Express, Indel Petro launch Vietnam’s first integrated gas and logistics stations

Gozo Express, a Vietnamese logistics startup, has partnered with Indel Petro to launch Gozo Station, Vietnam’s first integrated station that combines gas refueling with parcel drop-off and delivery services.

Companies - Tue, July 1, 2025 | 4:20 pm GMT+7

Vietnam’s state-own telecom MobiFone, Techcombank jointly launch digital payment firm

Vietnam’s state-own telecom MobiFone, Techcombank jointly launch digital payment firm

MobiFone, Vietnam’s third-largest telecom operator, has launched a new digital payment subsidiary in partnership with One Mount Group and Techcombank, according to recent corporate registration data.

Finance - Tue, July 1, 2025 | 4:03 pm GMT+7