Each finalisation season, accountants at small and medium-sized enterprises typically spend several weeks reviewing invoices, reconciling expenses and recalculating taxable income — and the risk of an oversight remains. An inaccurate corporate income tax (CIT) finalisation return does not only leave an enterprise underpaying tax; it also triggers late-payment interest, administrative penalties, and can even bring the enterprise onto the inspection list. This article sets out who must finalise, what dossier is required, the deadlines, and the most common errors in CIT finalisation, under the 2019 Law on Tax Administration and the current Law on Corporate Income Tax.
Scope and finalisation deadlines
Every organisation engaged in the production or trading of goods and services with taxable income under the Law on Corporate Income Tax must complete an annual CIT finalisation, regardless of whether any tax is payable. Enterprises operating at a loss, enterprises within a tax exemption or reduction period, and newly established enterprises with no revenue yet must still submit their finalisation dossier on time.
Under the 2019 Law on Tax Administration (Law No. 38/2019/QH14), the annual finalisation dossier must be filed no later than the last day of the third month after the end of the calendar year or financial year. For most enterprises in Vietnam, whose financial year coincides with the calendar year, this deadline falls at the end of March of the following year. Enterprises with a non-calendar financial year calculate the deadline from the end of their own financial year.
Where an enterprise ceases operations, or undergoes a division, split, consolidation, merger, conversion of enterprise type, change of ownership form or dissolution, the deadline for filing the finalisation dossier is considerably shorter than the standard deadline, and runs from the date of the relevant decision or triggering event. Enterprises should proactively track this deadline, as it is a situation that is easily overlooked in the standard tax filing calendar.
Late filing of the finalisation dossier triggers an administrative penalty that escalates with the number of days of delay, and may also give rise to late-payment interest on any additional tax payable. Enterprises anticipating complex data reconciliation — multiple branches, related-party transactions, tax incentives — should begin finalisation work from mid-January to allow enough time for reconciliation before the filing deadline.
Dossier to prepare
The CIT finalisation dossier comprises several components, not a single standalone return:
- The CIT finalisation return (Form No. 03/TNDN and its accompanying appendices) — setting out the full calculation of taxable income, assessable income and tax payable.
- Annual financial statements prepared under Vietnamese Accounting Standards, comprising the balance sheet, income statement, cash flow statement and notes to the financial statements.
- Appendices on tax incentives, if the enterprise is enjoying a CIT exemption or reduction by location, sector or investment project.
- The related-party transactions appendix under Decree 132/2020/ND-CP, applicable to enterprises whose transactions with related parties exceed the prescribed threshold.
- The fixed asset depreciation schedule, the prepaid expense allocation schedule, and the loss carry-forward appendix if losses are being carried forward from prior years.
Alongside the dossier filed with the tax authority, enterprises should retain complete input and output invoices, contracts, payment documents, payroll records and fixed asset records to substantiate their position if requested — under the Law on Accounting, accounting documents used for bookkeeping and preparing financial statements must be retained for a minimum of 10 years.
How to determine taxable income
The general principle under the Law on Corporate Income Tax is that taxable income equals revenue less deductible expenses from production and business activities, plus other income, including income received overseas. From taxable income, the enterprise further deducts tax-exempt income and losses carried forward as prescribed to arrive at assessable income — this is the figure multiplied by the tax rate.
The current standard tax rate is 20% of assessable income, applied to most enterprises except where a preferential rate applies by sector, investment location or specific field (oil and gas and rare natural resources are subject to separate rates). Enterprises should check their own specific incentive conditions against their investment certificate or incentive decision before applying a rate lower than the standard rate.
A point enterprises commonly confuse is equating accounting profit with assessable income. The two figures differ because of upward adjustments (expenses that are non-deductible for tax purposes but are still recorded as accounting expenses) and downward adjustments (tax-exempt income, income already taxed at another stage). Form 03/TNDN has a dedicated section for making these adjustments — omitting this adjustment step is a common cause of misstated tax payable.
Five errors that trigger arrears assessment or penalties
Recording expenses that do not meet the deductibility conditions
Expenses that lack a lawful invoice, invoices with incorrect name or tax code, or expenses of VND 5 million or more (including VAT, effective from 15 December 2025 under Point c, Clause 1, Article 9 of Decree 320/2025/ND-CP, replacing the previous VND 20 million threshold under Circulars 78/2014/TT-BTC and 96/2015/TT-BTC) without non-cash payment evidence are all disallowed when calculating CIT, even though they have been recorded as accounting expenses. This is the most common error found during tax audits and inspections.
Not reconciling tax incentives against actual conditions
An enterprise that applies a preferential or reduced tax rate but no longer meets the conditions — for example, the proportion of revenue from the incentivised activity has fallen below the threshold, or the incentive period under the investment project has expired — and continues to apply the incentive will be assessed for the full rate differential plus late-payment interest.
Omitting other income
Income from asset disposals, deposit interest, foreign exchange gains, and income from capital transfers must all be included in taxable income, but is often omitted if the accountant focuses only on revenue from the core sale of goods and services.
Misstating deductible interest expense
For enterprises with related-party transactions, interest expense is capped as a percentage of EBITDA under Decree 132/2020/ND-CP; the excess portion is non-deductible for tax purposes, but many enterprises fail to check this cap when preparing their return.
Carrying forward losses outside the permitted period or for the wrong activity
Losses arising in a tax period may be carried forward in full and continuously against taxable income of subsequent years, within the period prescribed by the Law on CIT. Enterprises that carry losses forward beyond the permitted period, carry forward losses from an activity that is not permitted to be offset, or miscalculate the loss carry-forward order will have those losses disallowed at finalisation, increasing the tax payable.
Frequently asked questions
Must a newly established enterprise with no revenue yet finalise CIT? Yes. The finalisation obligation arises regardless of whether there is revenue or tax payable; the enterprise must still file its finalisation return on time, even if the result is a loss or nil.
What happens if a CIT finalisation dossier is filed late? The enterprise is subject to an administrative penalty based on the number of days of delay, and late-payment interest may also apply to any additional tax payable. The specific penalty amount should be checked against the regulations on administrative penalties for tax violations in effect at the time of filing.
Can the finalisation return be amended after it has been filed? Yes, the enterprise may file a supplementary declaration if an error is discovered, provided this is done before the tax authority announces an inspection or audit decision at the enterprise's premises. After that point, adjustments to the figures are handled by the tax authority based on the inspection or audit findings.
How does an enterprise with multiple dependent-accounting branches finalise CIT? Finalisation is carried out centrally at the head office; dependent-accounting branches do not finalise separately, and their figures are consolidated into the enterprise's return, except where separate allocation by location is specifically required.
Book a consultation with TLA Consulting to review your CIT finalisation dossier before filing, reducing the risk of arrears assessment and penalties.
