Taxes on Companies in Vietnam
Companies registered in Vietnam are subject to enterprise income tax, value added tax and business license tax in general. Special sales tax will be imposed if production or import of specified goods, provision of specified services is involved. The following section of this article provides a brief introduction to enterprise income tax, value-added tax and business license tax in Vietnam.
- Enterprise Income Tax
Any income generated inside or outside of Vietnam by a company registered in Vietnam is subject to enterprise income tax. Enterprise income tax is levied on the profits earned by the company.
Tax losses of a company in Vietnam can be fully carried forward for up to five consecutive years after the year in which the losses are incurred. Carry-back of tax losses is not allowed.
Foreign invested and domestic enterprises in Vietnam adopt unified tax standards. The standard enterprise income tax rate for both foreign invested and domestic enterprises in Vietnam is 20%.
Quarterly filing of enterprise income tax returns is not required. However, quarterly payments of enterprise income tax based on estimates shall be made before the end of the following month after the end date of each quarter. Enterprise income tax finalization returns shall be submitted to the tax authorities within 90 days from the end of each fiscal year. The difference in excess of 20% between the sum of quarterly enterprise income tax payments and the fiscal year end’s enterprise income tax finalization amount shall be subject to late tax payment interest.
The standard fiscal year in Vietnam is from January 1st to December 31st. Companies in Vietnam may adopt a fiscal year that is different from the calendar year upon notification to tax authorities.
- Value Added Tax
Companies in Vietnam are subject to value added tax on the sales of goods or services. Value added tax in Vietnam is levied at three different rates, i.e., 0%, 5% and 10%. The applicable scopes of the three different rates are as follows:
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NO.
|
VAT Rate
|
Applicable Scope
|
|
1
|
0%
|
Export goods and services, international transportation
|
|
2
|
5%
|
For example, clean water, pesticide, agricultural machinery and equipment, medical equipment, teaching aids, artistic sports activities, etc.
|
|
3
|
10%
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Standard VAT rate, applicable to goods and services other than those mentioned above
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The taxpayer shall submit monthly valued added tax returns and settle tax payments on or before the 20th day of the following month, or submit quarterly value added tax returns on or before the 30th day of the following quarter.
Quarterly declaration or filing of value added tax is applicable to taxpayers with total turnover from sales of goods or services of the proceeding year not exceeding VND50 billion. A newly established company shall file value added tax quarterly. One year later, monthly filing shall be applied if its annual turnover of the previous year is more than VND50 billion.
- Business License Tax
Business license tax is imposed on all economic entities conducting business operation in Vietnam. A newly established company shall pay business license tax annually starting from the second year after its incorporation.
The amount of business license tax applicable to economic entities can be divided into three classes based on the amount of registered capital and the type of registration, which are specified in the following table:
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NO.
|
Class
|
Applicable Amount
|
|
1
|
Registered capital of more than VND10 billion
|
VND3 million per year
|
|
2
|
Registered capital of VND10 billion or less
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VND2 million per year
|
|
3
|
Branches, representative offices, other economic entities
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VND1 million per year
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- Summary
To sum up, under normal circumstances, the major taxes, tax rates and declaration time limits applicable to companies in Vietnam are as follows:
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No.
|
Tax Type
|
Tax Base
|
Tax Rate
|
Declaration Time Limit
|
|
1
|
Enterprise Income Tax
|
Profits
|
20% (standard rate)
|
By 90th day from fiscal year-end date
|
|
2
|
Value Added Tax
|
Value added amount of goods or services
|
0%; 5%; 10% (standard rate)
|
By the 20th day of the following month; or by the 30th day of the following quarter.
|
|
3
|
Business License Tax
|
Amount of registered capital
|
VND3 million if registered capital is over VND10 billion; VND2 million if registered capital is VND10 billion or less
|
Per year (by January 30 of the subsequent year)
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KAIZEN Group is equipped with experienced and highly qualified professional consultants and is therefore well positioned to provide professional advices and services in respect of the formation and registration of company, application for various business licences and permits, company compliance, tax planning, audit and accounting in China. Please call and talk to our professional consultants for details.
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