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How is CIT computed?

 

CIT = Taxable Income * Tax rate

Taxable income in a period shall be determined as follows:

TI = TT - DE + OTI

TI - Taxable income

TT - Taxable turnover

DE - Deductible expenses

OTI - Other Taxable income

Tax rate varies, but the common one applicable to FDI Enterprises is 25% [currently].

FDI Enterprises may be entitled to preferential tax rates (i.e. 50%, 20%, or 10% of comment rate) and tax holidays which would be stated in the Investment Licence if certain investment conditions are satisfied (Articles 15, 16 of Decree No. 124/2008).

 
Which expenses are deductible for CIT purpose?

 

Generally, an expense which is not regulated as non-deductible expense in the Law, is reasonable and incurred in the course of generating income and supported by proper documents (i.e. invoices) will be deductible.

 

 
What are the reporting compliance requirements for CIT?

 

CIT is required provisionally pay on a quarterly basis and finalized at the end of the year.

At the beginning of the quarter, FDI Enterprises are required to estimate the taxable income of the previous quarter, and submit a report to the local tax authority on thirtieth day of the following quarter at the latest. This report must be prepared in compliance with designated form issued by the Ministry of Finance (MOF).

At the year end, FDI Enterprises must finalize the actual tax payable with the tax authorities. The tax documents must be prepared and submitted on 30th March at the latest. Technically, the finalized tax reports include:

* Audited financial statements;

* Annual CIT finalization report; and

* Appendixes.

All the above reports must be prepared in compliance with designated forms issued by the MOF.

 
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