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FAQ

 The general corporate income tax rate in Vietnam is 25%.

Tax rate for enterprises operating in the oil and gas and other precious natural resources sectors ranges from 32% to 50%, depending on the project.

In 2009, small and medium sized enterprises (with charter capital of less than VND10 billion or fewer than 300 employees) were entitled to a reduction of 30% of their Corporate Income Tax. Other exemptions or reductions in Corporate Income Tax are as stipulated in the relevant legal documents.

Residence – "Residence" is not defined, but a corporation is generally understood to be resident if it is incorporated in Vietnam.

Tax Basis – Residents are taxed on worldwide income; nonresidents are taxed only on Vietnamese-source income. Foreign-source income derived by residents is subject to corporation tax in the same way as Vietnamese-source income.

Taxable income – Tax is imposed on a company's profits, to include the profits of affiliates and branches (dependent units). Taxable revenue includes income from the sale of products, the provision of services, the leasing or sale of assets, the transfer of shares, joint venture operations with other economic entities and financial operations.

Taxation of dividends – Dividends paid by a company in Vietnam to its corporate shareholders are not subject to tax.

Capital gains tax – There is no separate capital gains tax; gains are taxed at the standard corporate tax rate of 25%. The transfer value is based on the actual price according to the transfer contract. A deemed fair market value will be used if no contract price is available or if the price stated in the contract is deemed to be not at arm's length.

  • Losses – Losses may be carried forward for up to 5 years. Loss carryback is not permitted.
  • Surtax – No.
  • Alternative minimum tax – No

Foreign tax credit – Foreign tax paid may be credited against Vietnamese tax but must be determined based on pretax income. The credit is limited to the amount of Vietnamese tax payable on the foreign income.

Participation exemption – This is generally not available to capital gains derived by a Vietnamese resident holding company on the disposal of a substantial shareholding in a company located in a country that has  concluded a tax treaty with Vietnam.

Holding company regime – See under "Participation exemption".

Vietnam Tax Incentives – Preferential tax rates of 10% and 20% for 15 and 10 years, respectively, are available for taxpayers engaged in encouraged investment projects or in socioeconomically disadvantaged locations as stipulated by the government. Lower tax rates (e.g. 0%, 5% and 10%) generally apply in the early years of the tax incentive period.

Withholding tax:

  • Dividends – No tax is imposed on dividends remitted overseas unless paid to individuals, where a 5% withholding tax is imposed.
  • Interest – Interest paid to nonresidents is subject to a 10% withholding tax unless the rate is reduced under an applicable tax treaty.
  • Royalties – Royalties paid to nonresidents are subject to a 10% withholding tax unless the rate is reduced under an applicable tax treaty.
  • Branch remittance tax – No

Other taxes on corporations:

  • Capital duty – No
  • Payroll tax – No
  • Real property tax – The municipal authorities levy tax on the occupation of real property.
  • Stamp duty – A stamp duty of 0.5%-15% is levied on the transfer of property.
  • Transfer tax – No

Social security contributions – Employers are required to make social insurance (SI), health insurance (HI) and unemployment insurance (UI) contributions of 15%, 3% and 1%, respectively.

Other – Foreign Contractor Withholding Tax (FCWT) is imposed on income from the provision of goods and services from overseas organisations (except for pure trading transactions), which comprises corporate income tax and VAT at a total combined rate of 1% to 10%.

Anti-avoidance rules:

Transfer pricing – Transfer pricing rules introduced in 2005 are being implemented, with the tax authorities beginning audit activities in late 2008. Documentation is required. APAs are not available.

  • Thin capitalisation – No
  • Controlled foreign companies – No
  • Disclosure requirements – No

Vietnam Tax year – Vietnam  tax year is the fiscal year. A company must notify the tax authorities if its fiscal year differs from the calendar year and only a quarter end is allowed.

Consolidated tax returns – Consolidated tax returns are not permitted. Each company with independent legal status is required to file a separate tax return. There is no tax relief between independent entities in a group.

Tax Filing requirements – A company must file and pay provisional corporate income tax by the end of the month following the end of each quarter. An annual reconciliation and declaration/filing must be made within 90 days after the fiscal year-end date.

Penalties – Penalties apply for failure to file, late filing or the filing of a fraudulent return.

Rulings – Taxpayers can seek tax rulings from the local or the national tax authorities to clarify their specific tax concerns.

Special Sales Tax

Special Sales Tax is applicable to special goods and services (luxury). The basis for calculating Special Sales Tax shall be based on the quantity of taxable goods sold, their taxable value and the applicable tax rates. Taxable goods and their applicable tax rates are set out in the following schedule:

 

Type of Goods or Services / Tax rate %

I. Goods

1. Tobacco products

a) filtered cigarettes produced mainly from imported raw materials 65%

b) cigarettes without filters and cigars 25%

2. Spirits

a) over 40 degrees proof 75%

b) from 20 to 40 degrees proof 30%

c) under 20 degrees proof and fruit spirits 20%

d) medicinal spirits 15%

3. Beer

a) bottled beer, canned beer and fresh beer 75%

b) draught beer 30%

4. Automobiles

a) up to 5 seats 80%

b) between 6 and 15 seats 50%

c) between 16 and 24 seats 25%

 

5. Gasoline of various kinds, naphtha, reformed components and other compounds for mixing gasoline 10%

6. Air-conditioners with a capacity of 90,000 BTU or less 15%

7. Playing cards 40%

8. Votive paper and votive objects 70%

 

II. Services

  1. Discotheque, massage parlours and karaoke bars 30%
  2. Casino and reward games, including jackpot, slot and other similar machines 25%
  3. Betting business 25%
  4. Golf business, including sale of membership cards and golf game tickets 10%
  5. Lottery business 15%

Business License Tax

Business License Tax is a tax on the business capital of business establishments. The tax payment deadline is at the end of the first month of operations (for the new business establishments) and as at 31 January of each calendar year for business establishments already in operations. Business License Tax rate (annually) depends on the registered capital, as follows:

  • Over VND10 billion                                 VND3,000,000
  • From VND5 billion to VND10 billion          VND2,000,000
  • From VND2 billion to VND5 billion            VND1,500,000
  • Less than VND2 billion                           VND1,000,000

Export-import Tax

Export-import Tax is levied on the export or import of goods across the Vietnamese border or domestic goods brought into and out of customs free areas. The tax rate for each item is determined based on the tax rate schedule.

Natural resources tax

Natural resources tax is levied on organizations and individuals conducting the exploitation of natural resources in Vietnam. Natural resources tax is determined by the actual natural resources exploited, the unit price and the tax rate stipulated for the specific resources.

Source: Gov.vn


About GBS:

Global Business Service (GBS) Co., Ltd  is a leading commercial law firm in Vietnam providing business legal services, investment consulting, and other business support service (company formation, license arrangement, commercial agreements, mergers and acquisitions, shareholder arrangements and disputes, work permit, employment contracts,  tax, consulting and financial advisory and executive search services).

The GBS organization is focused on helping senior management and owners of mid-market organizations to reach their goals by providing practical, customized solutions and identifying and pursuing business opportunities in Vietnam.

Contact us today via email: This email address is being protected from spambots. You need JavaScript enabled to view it. or call: (+84-8) 35002828 for more information about our services or to request an estimate for your project. We would encourage you to view our practice areas and contact us to arrange your first free initial advice section with one of our specialists lawyers.

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