How to calculate profit after CIT in Vietnam

In business activities, accurately determining profit after corporate income tax is a key factor to help businesses evaluate operational efficiency and build sustainable development strategies. Profit after tax not only reflects the actual business results after fulfilling tax obligations to the State, but also serves as a basis for profit distribution, reinvestment or capital accumulation. However, not everyone understands the process and how to calculate profit after CIT correctly. This article by Viet An Tax Agent will help you grasp the formula for calculating profit after tax, influencing factors as well as important notes in the accounting process.

What is profit after tax?

Profit after tax, also known as net profit, is a familiar concept in the field of corporate finance and accounting. Although this is an important indicator in evaluating business performance, the law currently does not have specific and uniform regulations on how to calculate after-tax profit.

In essence, profit after tax is the remaining income of the enterprise after deducting all expenses related to production and business activities, including corporate income tax. On financial statements, this indicator is often expressed as “net profit” and serves as the main measure of the final financial performance of the business in an accounting period.

A higher profit after tax indicates that the business is operating efficiently and is able to create real value after completing its tax obligations.

In addition, in financial analysis, people often use the Net Profit Margin index – which is calculated as a percentage between net profit and net revenue. This is an important tool to help assess the profitability per dollar of revenue, thereby reflecting the ability to control costs and business efficiency of enterprises.

Latest after-tax profit calculation formula 2025

To determine profit after tax, most businesses today apply the following basic formula:

Profit after tax = Total revenue – Total expenses – Corporate income tax

In which:

In addition to the above formula, according to Form B02-DN – Report on business results issued together with Circular 200/2014/TT-BTC, profit after tax is also calculated according to the formula:

Profit after CIT = Accounting profit before tax – (Current CIT expense + Deferred CIT expense)

This indicator reflects the entire net profit (or loss) of the enterprise after fulfilling its tax obligations in the reporting period.

Higher profit after tax not only shows that the business is operating efficiently but also a positive signal about profitability, investment expansion and value increase for shareholders.

Income exempt from CIT according to current regulations in Vietnam

Pursuant to Article 4 of the Law on Corporate Income Tax 2008 (amended and supplemented by Clause 3, Article 1 of the Law on Corporate Income Tax amended in 2013 and Clause 2, Article 1 of the Law on Amendments to Tax Laws 2014), the incomes exempt from CIT include:

• Incomes from activities in the fields of agriculture, fishery and salt, including:

• Income from the provision of technical services directly in service of agricultural production.
• Incomes from scientific research and technological development contracts, including:
  • The product is in the trial production period
  • Products created from new technology applied for the first time in Vietnam
• Income of enterprises with a specific labor ratio, specifically:
  • Enterprises have 30% or more of the average number of employees in a year who are people with disabilities, people after detoxification, people infected with HIV/AIDS.
  • At the same time, there is an average total number of employees in the year of 20 people or more
  • Not applicable to businesses operating in the financial sector or real estate business.
• Income from vocational training activities is reserved for disadvantaged subjects such as ethnic minorities, people with disabilities, children in extremely difficult circumstances and subjects subject to social evils.
• Income is divided from capital contribution, joint ventures, associations with domestic enterprises, after the capital recipient has paid CIT as prescribed.
• Grants received, if used for non-profit purposes in Vietnam such as education, scientific research, culture, art, charity, charity and other social activities.
• Income from the transfer of emission reduction certificates (CERs) of enterprises that have been granted certificates according to regulations.
• Some incomes from the performance of tasks assigned by the State, including:
  • Vietnam Development Bank in development investment credit and export credit activities
  • Bank for Social Policies in credit activities for the poor and policy beneficiaries
  • State financial funds and other funds managed by the State, which do not operate for profit purposes
  • Organizations with 100% charter capital are owned by the State, established by the Government to handle bad debts in the credit system.
• Undivided income of:
  • Socialized establishments in the fields of education and training, health and other socialized fields, if retained for reinvestment according to the provisions of specialized laws
  • Cooperatives are established and operate under the Law on Cooperatives, when this income is used to form undivided assets
• Incomes from technology transfer activities, if they belong to priority sectors and are transferred to organizations and individuals in localities with extremely difficult socio-economic conditions.

If you have any difficulties or questions related to how to calculate profit after CIT, please contact Viet An Tax Agent for the most specific advice.