The CIT calculation period is the period in which corporate income is determined.
- Enterprises can choose the tax period according to the calendar year or the financial year but must notify the tax authority before doing so.
- This notification will be made by the enterprise when carrying out the procedures for first registration of business establishment with the Business Registration Office (the content of the notice is shown in the “Tax registration information” section of the application for registration). business registration).
- In case the enterprise applies a fiscal year different from the calendar year, the tax period shall be determined according to the applicable fiscal year. The financial year here is understood as the accounting and reporting period of the enterprise;
- It can be a calendar year starting on January 1 and ending on December 31 every year or a year 12 months other than the calendar year in which the Ministry of Finance allows enterprises to apply.
When determining the CIT calculation period, enterprises should pay attention to the following cases:
I. In the case of the first year tax period of a newly established enterprise (since the enterprise registration certificate or investment certificate is granted) and the last tax period of the converted enterprise, Enterprise form, ownership transformation, consolidation, merger, division, separation, dissolution, bankruptcy with a period of less than 3 months, then:
- For newly established enterprises: a tax period shorter than 3 months will be added to the tax period of the following year.
Example 1: Enterprise A was established on November 1, 2015, A has been in production and business for 2 months: November and December, and calculates tax according to the calendar year. Thus, the tax period of 2015 (from November 1, 2015 to December 31, 2015) of the enterprise is shorter than 03 months, so it will be added to the 2016 tax period (from January 1, 2016 to January 31, 2015). December 2016).
- For an enterprise that converts its form of enterprise, transforms its ownership form, merges, merges, divides, separates, dissolves, or goes bankrupt: a tax period shorter than 3 months will be added to the calculation period. tax for the previous year.
Example 2: In the same example above, Enterprise A operates until February 28, 2020, then merges with enterprise B. Thus, the tax period of 2020 of enterprise A (from January 1, 2020 to January 28, 2020). February 2020) is 02 months, so this tax period will be added to the 2019 tax period (January 1, 2019 – December 31, 2019).
- The first year’s corporate income tax period or the last year’s corporate income tax period must not exceed 15 months.
II. In case the enterprise converts the CIT period (including the conversion of the tax period from the calendar year to the fiscal year or vice versa), then:
- The CIT calculation period of the year of conversion does not exceed 12 months. When converting, enterprises must carry out procedures for changing tax registration contents with the business registration agency.
- Enterprises that are in the period of enjoying CIT incentives but change the tax period, they may choose:
+ Incentives in the year of tax period conversion;
+ Or pay tax at the tax rate that is not entitled to incentives of the year of tax period conversion and enjoy tax incentives to the next year.
Example 3: Enterprise C for the 2013 CIT calculation period applies according to the calendar year, at the beginning of 2014 chooses to convert to the fiscal year from April 1 of this year to March 31 of the following year. Enterprise C is entitled to CIT incentives (2 years tax exemption, 50% CIT reduction for the next 4 years), and will begin to enjoy tax exemption in 2012. Then:
- The CIT calculation period of the year of conversion (conversion year 2014): is calculated from January 1, 2014 to the end of March 31, 2014 (3 months).
According to the above, Enterprise C will enjoy the following tax incentives: tax exemption in 2012, 2013; 50% tax reduction in 2014, 2015, 2016, 2017.
- In case an enterprise chooses to reduce 50% of tax according to the tax period of the 2014 conversion year, then:
Enterprise C continues to reduce 50% of CIT for the next 3 tax years from the fiscal year 2014 (from April 1, 2014 to March 31, 2015) to the end of fiscal year 2016.
- In case an enterprise chooses not to enjoy the incentive to reduce 50% of CIT for the CIT period of the year of 2014 conversion (tax period of the year of conversion 2014 and declare and pay tax at the tax rate not entitled to the incentives), then:
Enterprises are entitled to 50% CIT reduction from the fiscal year 2014 (from April 1, 2014 to March 31, 2015) to the end of fiscal year 2017.
Note: The first tax period for newly established enterprises and the last tax period for enterprises that change the form of enterprise, change the form of ownership, merge, split, split, dissolve, break up assets are determined in accordance with the accounting period in accordance with the law on accounting.
