Four cases in which corporate income tax is allocated

The allocation of taxable corporate income tax (CIT) has been stipulated in legal documents, but many accountants do not understand it, so it may not be done correctly. To help you learn more about the regulations, avoid making unfortunate mistakes, Faro Vietnam would like to introduce to you an article to share details of cases that need to be allocated, allocation methods, declaration and settlement of year-end corporate income tax, especially if your business has a production facility in another province. In today's article, we might investigate in which cases the corporate income tax is allocated, and how the corporate income tax distribution method works.

1. Cases in which corporate income tax is allocated

Cases in which corporate income tax is allocated according to Clause 1, Article 17 of Circular 80/2021/TT-BTC include:

• Electronic lottery business;
• Real estate transfer activities;
• The dependent unit, the place of business is the production establishment;
• Hydropower plants are located in many provinces.

Cases in which corporate income tax is allocated

>>>Read more: Obtaining work permit for expatriate

2. Method of corporate income tax distribution

According to Clause 2, Article 17 of Circular 80/2021/TT-BTC, the corporate income tax distribution method is as follows:

2.1 Allocation of payable corporate income tax for electronic lottery business

The payable enterprise income tax amount for each province where the electronic lottery business is located is equal to (=) the payable corporate income tax amount of the computerized lottery business multiplied (x) by the ratio (x) %) actual ticket sales from computerized lottery business in each province on the total actual ticket sales of taxpayers. Actual revenue from ticket sales from computerized lottery business is determined according to the provisions of Point a, Clause 2, Article 13 of Circular 80/2021/TT-BTC.

2.2 Allocation of payable corporate income tax for real estate transfer

The amount of corporate income tax payable to each province where the real estate transfer is temporarily paid quarterly and finalized is equal to (=) the taxable revenue of the real estate transfer in each province multiply (x) by 1%.

2.3 Allocation of payable corporate income tax to taxpayers whose dependent units and business locations are production establishments

The payable enterprise income tax amount in each province where the production establishment is located is equal to (=) the payable enterprise income tax amount of production and business activities multiplied by (x) by the rate (%) of the cost of the enterprise. each production facility on the total cost of the taxpayer (excluding the cost of activities entitled to corporate income tax incentives). The cost to determine the allocation ratio is the actual cost incurred in the tax period.

The payable enterprise income tax amount of production and business activities does not include the payable enterprise income tax amount for activities entitled to enterprise income tax incentives. The payable enterprise income tax amount of activities entitled to incentives is determined according to the production and business results of the activities entitled to incentives and the level of incentives.

Corporate income tax 2023: Calculation and payment rate

2.4 Distribution of payable corporate income tax for hydroelectric power plants located in many provinces

The payable enterprise income tax amount of the hydroelectric power plant is equal to (=) the payable enterprise income tax amount of the production activities. production and business multiply (x) by the ratio (%) of the cost of each hydroelectric power plant to the total cost of the taxpayer (excluding the cost of activities entitled to corporate income tax incentives).

The cost to determine the allocation ratio is the actual cost incurred in the tax period. The payable enterprise income tax amount of production and business activities does not include the payable enterprise income tax amount for activities entitled to enterprise income tax incentives.

After determining the payable enterprise income tax amount of the hydroelectric power plant, the payable enterprise income tax amount for each province is equal to (=) the payable enterprise income tax amount of the hydroelectric power plant multiplied by (x) with the ratio (%) of the investment value of the part of the hydropower plant located within the administrative boundaries of each province to the total investment value of the hydropower plant.

Here is the complete information regarding the allocation of Corporate Income Tax (CIT) for activities that need to be distributed to provinces other than the main headquarters. Faro Vietnam anticipates that this article will serve as a valuable resource for accountants, aiding them in managing such transactions and ensuring accurate CIT settlement.

The responsibility of tax accountants within enterprises revolves around executing tax-related tasks and ensuring the prompt and accurate payment of taxes to the State treasury. Achieving this demands a meticulous and cautious approach, along with a profound grasp of tax procedures. Recognizing this, Faro Vietnam's service is designed to assist clients in the realm of taxation, incorporating novel and essential functionalities during a phase where accounting practices are progressively adopting digital transformation trends. This ensures the sufficiency and accuracy of business tax services, consequently enhancing the efficacy of tax accounting procedures.

---------------------------------------------

Contact Faro Vietnam today for HR solution

Email: service.vn@farorecruitment.com

Hanoi Head Office

• Tel: + 84 24 3974 3091
• Add: Unit 701A, Tower A, Handi Resco Towers, 521 Kim Ma Street, Ba Dinh District, Hanoi, Vietnam

Ho Chi Minh City Office

• Tel: + 84 28 3821 4654
• Add: 6th Floor, Saigon Finance Center Tower, 9 Dinh Tien Hoang Street, Dakao Ward, District 1, Ho Chi Minh City, Vietnam

Grow your business with our trusted Human Resource Solutions!