Can businesses allocate corporate income tax to areas with representative offices that only have trade promotion functions?
What is tax liability allocation?
According to the provisions of Clause 4, Article 3 of Circular 80/2021/TT-BTC:
Tax liability allocation is the taxpayer's tax declaration at the directly managing tax agency or the tax agency managing state budget revenues and determining the tax amount payable for each province where the state budget revenue is received. country (area receiving allocation) according to the provisions of law.
In particular, according to the provisions of Clause 5, Article 3 of Circular 80/2021/TT-BTC, direct tax authorities include:
(1) The tax authority manages the taxpayer's head office, except as specified in (3);
(2) The tax authority managing the area where the taxpayer has a dependent unit is different from the province where the taxpayer has its headquarters but the dependent unit directly declares tax to the tax authority in the area;
(3) The Large Enterprise Tax Department under the General Department of Taxation was established according to the provisions of Decision 15/2021/QD-TTg in 2021;
(4) For individuals with income from salaries and wages, the directly managing tax agency is the tax agency that issues the tax code and is changed according to the tax agency that performs tax finalization for the individual according to regulations. determination;
(5) For individuals who receive inheritances or gifts of securities or capital contributions in economic organizations or business establishments in Vietnam and are subject to direct tax declaration to the tax authority, the tax authority shall manage The direct manager is the tax agency that manages the issuing unit; In case there are many tax authorities managing many issuing units, the tax authority directly managing is the tax authority where the individual receiving the inheritance or gift resides.
The direct management tax agency can be recorded on the Tax Registration Certificate or Notice of tax code or Notice of management tax agency or Notice of assignment of management tax agency when granting business code or tax code. cooperative number, tax code or when changing registration information or when reassigning a tax management agency according to the provisions of law.
Can businesses allocate corporate income tax to areas with representative offices that only have trade promotion functions?
Pursuant to Article 17 of Circular 80/2021/TT-BTC on tax declaration, tax calculation, tax settlement, distribution and payment of corporate income tax:
Tax declaration, tax calculation, tax finalization, distribution and payment of corporate income tax
1. Allocated cases:
a) Computer lottery business activities;
b) Real estate transfer activities;
c) Dependent unit, business location is a production facility;
d) Hydroelectric plants are located in many provinces.
...
Thus, businesses are allocated corporate income tax to dependent units, the business location is a production facility.
Therefore, if the representative office only has the function of promoting trade, the enterprise will not be allocated corporate income tax.
In particular, according to the provisions of Clause 2, Article 44 of the Enterprise Law 2020:
A representative office is a dependent unit of an enterprise, with the task of representing, according to authorization, the interests of the enterprise and protecting those interests. Representative offices do not perform business functions of the enterprise.
What is the method for allocating corporate income tax payable for taxpayers whose dependent units are production establishments?
Compare with the provisions at Point c, Clause 2, Article 17 of Circular 80/2021/TT-BTC on tax declaration, tax calculation, tax finalization, distribution and payment of corporate income tax:
Accordingly, the allocation of corporate income tax payable for taxpayers with dependent units whose business location is a production facility is as follows:
The amount of corporate income tax payable in each province where the production facility is located is equal to (=) the amount of corporate income tax payable for production and business activities multiplied by (x) the ratio (%) of the company's costs. each production facility at the taxpayer's total cost (excluding costs of activities eligible for corporate income tax incentives).
Note: The costs to determine the allocation rate are the actual costs incurred in the tax period.
The amount of corporate income tax payable for production and business activities does not include the amount of corporate income tax payable for activities eligible for corporate income tax incentives.
The amount of corporate income tax payable for preferential activities is determined according to the production and business results of the preferential activities and the incentive level.