The Ministry of Finance has just officially issued Circular
123/2012/TT-BTC dated 27 July 2012 on Corporate Income
Tax, replacing previous Circulars 130/2008, 177/2009,
Notable changes under Circular 123 include:
• An enterprise is required to separately account for profits and losses derived from the transfer of a project;
transfer of rights of project implementation; transfer of rights to explore, exploit and process minerals as they
are neither entitled to CIT incentives nor allowed to offset against those of other business activities carried on
by the enterprise.
• Prepaid revenues from leasing assets can be either allocated over the lease term or recognised in full in one
tax year for CIT purposes. However, the revenue entitled to tax incentive business in a tax year shall be the one
allocated over the lease term.
• Gains from revaluation of assets (excluding land use rights) used for capital contribution shall be treated as
other income in the tax period for CIT purposes.
• Gains from revaluation of land use rights for capital contribution shall be treated as other income as
» In case capital contribution is for housing construction project for sales, the gains shall be wholly
attributed to the taxable income of the current tax year of the enterprise having the land use right
» In case the capital contribution is for business operation purposes, the gains shall be allocated
over no more than 10 years from the year making the capital contribution. The number of years for
the allocation of such gains must be notified with local tax office.
• Income derived from share swaps as part of corporate restructuring is now formally subject to CIT.
• Income from transfer of certificates of emission reduction (CERs) with the maximum exemption period of 1
year from the issuing date of the CERs.
• Share premium upon the issue of shares.
• Costs of goods damaged due to expiry or natural worn-out appears fully deductible, provided that the re-
quired documentation stated under Circular 123 is in place.
• Depreciation expenses of vehicles for employees commuting and interior furniture (qualified as fixed assets)
attached to construction fixtures for employee welfare purposes such as mid-shift rest house, canteen, and the
• Expenses for purchase of life insurance for employees provided that entitlement conditions and beneficial
amounts are stated in required supporting documents.
• Costs of purchasing air tickets online for business purposes must be substantiated with the e-ticket itself,
boarding pass and evidence of payment.
• Costs of tools and equipment less than the standards of recognized fixed assets can be allocated into expenses
over 2 years maximum.
• Commissions paid to distributors of multi-level marketing companies are not subject to the statutory cap on
advertising and promotion expenses.
(Souce: KPMG)
Taxable income
Exempted income
Deductible expenses
1,2,3,4,5,6,7,8 10