The Ministry of Finance published Circular No. 78/2014/T-BTC (Circular No. 78) on 18 June 2014, which provides additional execution guidance in respect of Decree No. 218/2013/ND-CP (Decree No. 218) which was issued on 26 December 2013. Decree 218, which came into effect on 15 February 2014 and apply to the tax year 2014 onwards and replace Decrees No. 124/2008 and No. 122/2011. However, Circular No. 78 is only available in the Vietnamese language.
The main points from both Decree and Circular are summarized below:
Corporate income tax rate:
The standard CIT rate of 22% applies from 1 January 2014. This means that enterprises whose financial year overlaps 2013 and 2014 will be required to apply the old rate of 25% until 31 December 2013 and the new rate of 22% from 1 January 2014 onwards.
Losses:
Losses arising from the transfer of real estate, investment projects or rights to participate in an investment project may be offset against business profits. Gains arising from the transfer of real estate, however, may not be used to offset business losses except in the case of liquidation.
Incentives:
Circular No. 78 also provides detailed guidance on the CIT incentives available for new investment projects and Business development.
