Draft decree regulating implementation of the Law on Corporate Income Tax submitted

The Ministry of Finance has submitted a draft decree to the Government detailing several provisions of the Law on Corporate Income Tax, with a key proposal to use total annual revenue as the primary criterion for determining eligibility for preferential tax rates of 15% and 17%.

Under Clauses 2 and 3, Article 10 of the law: a 15% tax rate would apply to businesses with annual revenue not exceeding VND3 billion ($115,000); and a 17% tax rate to businesses with annual revenue between over VND3 billion and VND50 billion ($115,000 – 1.9 million).

The draft specifies that a company’s total revenue from the immediately preceding tax period will serve as the basis for determining its eligibility for these preferential rates.

According to Clause 4, Article 18 of the draft, these preferential rates will not apply to subsidiaries or affiliated companies if their related enterprise does not meet the conditions outlined in Clauses 2 and 3 of Article 10 of the law.

The ministry explained that this approach is intended to: ensure legal consistency and stability, build upon existing regulations for determining revenue thresholds for tax reductions; and maintain compatibility with the tax authority’s information management systems.

As such, the ministry has submitted detailed provisions on tax policy for small-scale enterprises, including applicable rates and revenue determination methods, as outlined in the draft decree.