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CORPORATE INCOME TAX

12 Months Ended

Dec. 31, 2023

CORPORATE INCOME TAX

CORPORATE INCOME TAX

18.CORPORATE INCOME TAX

The tax report filed by the entities under the Group is subject to examination by the tax authorities. As the application of tax laws and regulations is susceptible to varying interpretations, the amounts reported in the consolidated financial statements are more-likely-than-not and could change based on the interpretation of tax law by the relevant legal authorities.

The major components of tax expense for the years ended December 31, 2023, 2022 and 2021 were:

​

​	​	​	​	​	​	​	​	​
​	​	For the year ended December 31,
​		2021		2022	​	2023		2023
​	​	VND million	​	VND million	​	VND million	​	USD
Income taxes					​	​
Current income tax expense		58,701		—	​	111,426		4,668,859
Deferred income tax expense/(income)		150,536		946,738	​	(22,294)		(934,174)
Income tax expense reported in the consolidated statement of operations		209,237		946,738	​	89,132		3,734,685

​

​

18.CORPORATE INCOME TAX (continued)

The reconciliation of tax computed by applying the Vietnam’s statutory tax rate of 20% to the Group’s income tax expense of the years presented are as follows:

​

​	​	​	​	​	​	​	​	​
​	​	For the year ended December 31,
​		2021		2022	​	2023		2023
​	​	VND million	​	VND million	​	VND million	​	USD
Loss before tax expense		(32,009,724)		(48,902,132)	​	(57,382,539)		(2,404,363,492)
Income tax benefit computed at the Vietnam statutory tax rate of 20%		(6,401,985)		(9,780,426)	​	(11,476,508)		(480,872,691)
Effect of preferential tax rates		3,086,200		4,397,659	​	5,189,246		217,432,638
Foreign tax rates differential		(128,853)		(232,379)	​	(341,129)		(14,293,538)
Non-deductible expenses		181,983		684,104	​	2,411,043		101,024,110
Change in valuation allowance		3,471,892		5,877,780	​	4,306,480		180,444,166
Estimated income tax expense		209,237		946,738	​	89,132		3,734,685

​

The Vietnam statutory income tax rate was used because the majority of the Group’s operations are based in Vietnam.

18.1 Current corporate income tax

Singapore

The Company incorporated in Singapore is subject to the Singapore Corporate Tax rate of 17% for the years ended December 31, 2023.

Vietnam

The statutory corporate income tax rate applied for subsidiaries in Vietnam is 20% of taxable income. For VinFast Vietnam, the entity was granted an incentive generated from investment project with the tax rate of 10% in the first consecutively 15 years commencing from the first year (2018) in which income from investment project is generated. VinFast Vietnam is entitled to an exemption from CIT for investment project for 4 years commencing from the first year (2021) in which a taxable income from investment project is earned, and a 50% reduction of CIT for the subsequent 9 years. Accordingly, for fiscal year 2023, VinFast Vietnam is entitled to a preferential tax rate of 10% and CIT exemption, leading to the effective tax rate of 0%.

Others

The CIT rates applicable to subsidiaries established in countries other than Singapore and Vietnam vary depending on the regulations of the local tax authorities.

​

18.CORPORATE INCOME TAX (continued)

18.2 Deferred tax

​

​	​	​	​	​	​	​	​	​
​	​	For the year ended December 31,
​		2021		2022	​	2023		2023
​	​	VND million	​	VND million	​	VND million	​	USD
Deferred tax assets					​	​
Unrecognised tax loss carried forward		1,745,182		3,238,531	​	5,051,815		211,674,139
Deferred tax assets from lease back transaction		—		2,806,243	​	3,159,925		132,402,791
Written-off R&D expenses		118,549		877,778	​	2,136,302		89,512,361
Lease liabilities		384,044		904,451	​	1,063,152		44,546,719
Exceeding-deductible-cap interest expense carried forward		430,351		728,237	​	1,119,351		46,901,492
Start-up costs		—		704,720	​	794,479		33,289,156
Provision for net realizable value of inventory		11,281		192,142	​	443,048		18,563,982
Impairment of lease assets		—		122,954	​	44,663		1,871,407
Others		534,947		173,872	​	732,297		30,683,692
Total deferred tax assets		3,224,354		9,748,928	​	14,545,032		609,445,739
Less valuation allowance		(2,840,310)		(7,570,934)	​	(12,046,066)		(504,737,535)
Total deferred tax assets, net amount		384,044		2,177,994	​	2,498,966		104,708,204
Deferred tax liabilities					​	​
Deferred tax liabilities from lease back transaction		—		(2,115,120)	​	(2,202,528)		(92,287,271)
Right-of-use assets		(384,044)		(904,451)	​	(1,063,152)		(44,546,719)
Others		(1,243)		(106,404)	​	(158,973)		(6,661,066)
Total deferred tax liabilities		(385,287)		(3,125,975)	​	(3,424,653)		(143,495,056)
Net deferred tax liabilities		(1,243)		(947,981)	​	(925,687)		(38,786,852)
Reflected in the consolidated balance sheet as follows:					​	​
Deferred tax assets		50,219		—	​	—		—
Deferred tax liabilities		(51,462)		(947,981)	​	(925,687)		(38,786,852)
Deferred tax liabilities, net		(1,243)		(947,981)	​	(925,687)		(38,786,852)

​

​

18.CORPORATE INCOME TAX (continued)

18.3 Valuation allowance for deferred tax assets

Full valuation allowances have been provided where, based on all available evidence, management determined that it is more likely than not that deferred tax assets will not be realizable in future tax years. Movement of valuation allowance is as follow:

​

​	​	​	​	​	​	​	​	​
​	​	For the year ended December 31,
​		2021		2022	​	2023		2023
​	​	VND million	​	VND million	​	VND million	​	USD
Balance at beginning of the year		1,721,902		2,840,310	​	7,570,934		317,226,766
Additions		1,118,408		4,730,624	​	4,475,132		187,510,769
Balance at end of the year		2,840,310		7,570,934	​	12,046,066		504,737,535

​

Tax losses carried forward

The tax losses carried forward mainly come from Vietnamese entities, which are entitled to carry tax losses forward to offset against taxable income arising within five years subsequent to the year in which the loss was incurred.

As of December 31, 2023, the Group had accumulated tax losses of VND70,951 billion (USD2,972.9 million) available for offset against future taxable profit. These are estimated accumulated tax losses as per the CIT declarations of the consolidated entities which have not been finalized by the local tax authorities as of the date of these consolidated financial statements.

No deferred tax assets have been recognized in respect of these accumulated tax losses because future taxable profit cannot be ascertained at this stage.

The Group has tax losses mainly arising in Vietnam that will expire in several years for deduction against future taxable profit:

​

​	​	​	​	​	​	​	​	​
​		​	​	​	​	​		Tax losses amount
​	​	​	​	Tax losses amount	​	Forfeited amount	​	after fortfeit
Originating year	​	Can be utilized up to	​	VND million	​	VND million	​	VND million
2018	​	2023	​	38,141	​	(38,141)	​	—
2019		2024	​	3,159,750	​	—		3,159,750
2020		2025	​	10,146,449	​	—		10,146,449
2021		2026	​	16,833,932	​	—		16,833,932
2022		2027	​	26,647,819	​	—		26,647,819
2023	​	2028	​	4,975,403	​	—	​	4,975,403
TOTAL		​	​	61,801,494	​	(38,141)		61,763,353

​

As of December 31, 2023, the Group has tax losses arising in subsidiaries other than Vietnam of VND9,187.3 billion (USD385 million) that will be carried for deduction against future taxable profit depending on the local tax regulations.

Interest expense exceeds the prescribed threshold

The Group is entitled to carry forward interest expense exceeding the prescribed threshold that have not been deducted when calculating CIT for the current year (“non-deductible interest expenses”) to the following year when determining the total deductible interest expenses of the following year. The subsequent period that the interest expense can be carried forward to will not exceed consecutive period of 5 years subsequent to the year in which the non-deductible interest expense incurred. No deferred tax assets were recognised in respect of the remaining non-deductible interest expense because of the uncertainty in predicting whether this non-deductible interest expense will be carried forward in the remaining time limit or not.

​

18.CORPORATE INCOME TAX (continued)

Uncertain tax position

The management takes into account the requirement of ASC 740 for all uncertainty over income tax treatments. In determining the treatment for uncertain tax positions, the management considers either the probability of whether the relevant taxation authority will accept the tax treatment under tax law or preparing its income tax filings and supporting tax treatments. Based on the reasonable estimates and prudent judgements of the management, it is more likely than not that the taxation authority will accept all uncertain tax treatments of the Group. Accordingly, the Group did not record any uncertain tax position as of December 31, 2023, 2022 and 2021.

Income tax returns are filed in multiple jurisdictions and are subject to examination by taxing authorities throughout the world. We have open tax years from 2020 to 2023 with various significant tax jurisdictions. Tax authorities may have the ability to review and adjust net operating loss or tax credit carryforwards that were generated prior to these periods if utilized in an open tax year. These open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, character, timing or inclusion of revenue and expenses or the sustainability of income tax credits for a given audit cycle.

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- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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