Corporate Income Tax Law Update 2024: Guide to Determining Taxable Revenue

This article provides a guide on determining taxable corporate income tax (CIT) revenue under the CIT Law 2023. It includes key changes in determining taxable revenue, step-by-step guide to determining taxable CIT revenue, CIT calculation method, and specific cases when determining taxable CIT revenue. The key changes include an expanded definition of taxable revenue and adjustment of revenue determination methods. The guide includes determining revenue, deductible expenses, calculating taxable revenue, and CIT calculation method. It also mentions specific cases such as revenue from capital transfer activities, investment income, and financial income. An example is given for calculating CIT payable for a furniture manufacturing and selling company. Summary. This article provides a detailed guide on how to determine taxable corporate income tax, CIT, revenue under the CIT Law 2023, amended and supplemented 2024. The content includes key changes in determining taxable revenue in the CIT Law 2024, step-by-step guide to determining taxable CIT revenue, CIT calculation method, specific cases when determining taxable CIT revenue. One, key changes in determining taxable revenue in the CIT Law 2024. Expanded definition of taxable revenue includes revenue from capital transfer activities, investment income, financial income, etc. Adjustment of revenue determination methods. Businesses can choose to apply one or more revenue determination methods that are suitable for their business activities, including deduction method applies to businesses selling goods and finished products. Direct method applies to businesses providing services or selling goods and finished products on a prepayment basis. Percentage method applies to businesses providing services with difficult to determine income. Detailed regulations on deductible income when calculating CIT includes production and business costs, management costs, financial costs, depreciation costs, etc. Raise CIT tax rates for some cases, specifically, the CIT tax rate for lottery and electronic gaming businesses with prizes is raised from 20% to 35%. Other new points. Regulations on the calculation period of CIT for income from capital transfer activities, investment income, and financial income. Regulations on deducting expenses before determining taxable revenue for some cases. Regulations on calculating CIT for businesses with business activities in many countries. Two, step-by-step guide to determining taxable CIT revenue. Step one, determine revenue. Revenue from the sale of goods and finished products. The actual amount collected from the sale of goods and finished products, including surcharges, additional charges, and VAT that the business is entitled to. Revenue from the provision of services. The actual amount collected from the provision of services, including surcharges, additional charges, and VAT that the business is entitled to. Revenue from other activities. Other income from the business activities of the business, including interest on bank deposits, interest on loans, income from investment activities, etc. Step two, determine deductible expenses when calculating tax. Production and business costs, including material costs, labor costs, depreciation costs, selling costs, management costs, etc. Financial costs, including interest expenses, foreign exchange market, insurance costs, etc. Depreciation costs, including depreciation of fixed assets, intangible assets, etc. Other deductions, according to the provisions of the CIT law. Step three, calculate taxable revenue. Taxable revenue equals revenue deductions when calculating CIT. Step four, CIT calculation method. CIT equals taxable revenue x tax rate. In which, taxable revenue, revenue after deducting exempt income and deductions when calculating CIT tax rate. 20% applies to most businesses. 32% to 50% applies to businesses exploiting minerals, oil, and gas. 10% applies to businesses dealing in social housing. Example, ABC Company is a business that manufactures and sells furniture. In 2024, ABC Company had revenue from the sale of goods and finished products of 100 billion dong. Production and business costs of 60 billion dong. Financial costs of 10 billion dong. And depreciation costs of 5 billion dong. Step one, determine revenue. Revenue equals 100 billion dong. Step two, determine deductible expenses when calculating tax. Total deductible expenses when calculating tax equals production and business costs plus financial costs plus depreciation costs equals 60 billion dong plus 10 billion dong plus 5 billion dong equals 75 billion dong. Step three, calculate taxable revenue. Taxable revenue equals revenue. Total deductible expenses when calculating tax equals 100 billion dong. 75 billion dong equals 25 billion dong. Step four, calculate CIT. CIT equals taxable revenue x tax rate equals 25 billion dong x 20% equals 5 billion dong. Conclusion, ABC Company CIT payable in 2024 is 5 billion dong. Three, specific cases when determining taxable CIT revenue. Revenue from capital transfer activities. Revenue from the transfer of ownership of assets including land, houses, vehicles, etc. Investment income. Income from investments in assets such as stocks, bonds, mutual funds, etc. Financial income. Income from activities such as lending, insurance, etc.