Question:
My company operates in the field of education, specifically an English language teaching center. The company was established in March 2019, located in Binh Tan District, Ho Chi Minh City. Can you please advise on how my company should declare VAT for each quarter and what are the tax incentives for CIT? What are the applicable tax rates for VAT and CIT?
Answer:
Based on Article 13, Article 4 of Circular No. 219/2013/TT-BTC dated December 31, 2013, issued by the Ministry of Finance, which provides guidance on VAT, it specifies entities exempt from VAT.
Based on Circular No. 78/2014/TT-BTC dated June 18, 2014, issued by the Ministry of Finance, which provides guidance on CIT.
According to the above regulations, in the case of a newly established company operating in the field of education and training in compliance with the legal provisions on education and training, the following applies:
• Regarding VAT: The company falls under the category of entities exempt from VAT.
• Regarding CIT: If the company meets the criteria, scale, and standards for socialization in the field of education and training as stipulated in Section II of the detailed list of types, criteria, scale, and standards for socialization of facilities in the fields of education and training, vocational training, healthcare, culture, sports, and environmental protection, issued together with Decision No. 1470/QD-TTg dated July 22, 2016, by the Prime Minister, then the company is exempt from CIT for 4 years from the year when it has taxable income subject to CIT. Afterward, the company will enjoy a 50% reduction in CIT for the next 5 years and will be subject to a CIT rate of 10% during its entire operation.
If the company does not meet the specified conditions, it will not be eligible for CIT reduction or exemption and must pay CIT at the regular tax rate.
