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8.1.1. Corporate Income Tax

The standard corporate tax ('CIT') rate for companies is 20%. However, a number of other rates apply as follows:

  • 10% on the net income of resident companies’ foreign branches;
  • 14% (increased to 20% effective 1 January 2019) for manufacturing companies. The increase in tax rate is phased in with a tax rate discount of 25% in 2019, 20% in 2020, 15% in 2021, 10% in 2022, and 5% in 2023 (for clothing and medicine manufacturers, the relief is 50%, 30%, 20%, 10%, and 5% for the respective years);
  • 10% for manufacturing companies operating in developing areas effective 1 January 2019 and further reduced to 5% if the local value added from their activities exceeds 30%;
  • 24% for telecommunication, insurance and reinsurance, financial intermediation (including exchange and finance leasing companies), and electricity companies, and companies that undertake mining raw material activities; and
  • 35% for banks.

Income from farming businesses is generally exempt. A withholding tax of 5% is generally due on payments by residents to listed residents (generally professionals such as doctors, lawyers, engineers, auditors, etc.) and commission, insurance, and shipping agents. The withholding tax is not a final tax for the recipients, but only a prepayment towards the final tax liability. Effective 1 January 2019, a withholding tax of 7% (previously 5%) is applicable on deposit interest and commission payments made by banks to companies.

National Contribution Tax

Effective 1 January 2019, a national contribution tax is applicable to companies in addition to corporate tax at the following rates:

  • 7% for companies that undertake mining raw material activities;
  • 4% for financial intermediation (including financial leasing) and brokerage companies;
  • 3% for banks and electricity generation/ distribution companies;
  • 2% for telecommunications, insurance, and reinsurance companies; and
  • 1% for all other sectors.

Alternate Minimum Tax

There is no minimum tax

The following table shows the effective corporate tax rates in the local country for the current year, past years and future years.