Last modified: 13/06/2024 04:02

Corporate taxation

	Rate
Corporate income tax rate	20% or (1)
Branch tax rate	20%
Capital gains tax rate	20%

(1) The corporate income tax rate applicable to the prospecting, exploration and exploitation of oil, gas and other rare and precious resources in Vietnam ranges from 32% to 50%, suitable for each project and each business establishment.

Residence: Vietnamese enterprise means an enterprise established or registered for establishment in accordance with Vietnamese law and having its head office in Vietnam.

Basis: Organizations engaged in production and trading of goods and services have income subject to corporate income tax, including: a) The enterprise is established in accordance with the law of Vietnam b) Enterprises established in accordance with foreign laws (hereinafter referred to as foreign enterprises) with or without a permanent establishment in Vietnam c) Organizations established under the Law on Cooperatives d) Non-business units established in accordance with Vietnamese law e) other organizations have income-generating production and business activities.

Taxable income: 1. Taxable income includes income from production and trading of goods and services and other income. 2. Other income includes: income from transfer of capital, transfer of the right to contribute capital; income from transfer of real estate, transfer of investment projects, transfer of the right to participate in investment projects, transfer of the right to explore, exploit and process minerals; income from property use rights, property ownership, including income from intellectual property rights as prescribed by law; incomes from the transfer, lease or liquidation of assets, including valuable papers; income from interest on deposits, loans and foreign currency sales; receivables from bad debts that have been written off and are now recoverable; receivables from liabilities whose owners cannot be identified; omitted business income of previous years and other income.

Significant local taxes on income: The same is 20%.

Alternative minimum tax: N/A.

Taxation of dividends: In case the investor is a foreign organization, the company does not have to pay tax on repatriation of profits when dividing profits.

Capital gains: . Income from the transfer of part or the whole of the capital, including the case of sale of the enterprise, the sale of securities, the transfer of the right to participate in capital contribution. . Income from the transfer of investment projects, the transfer of the right to participate in investment projects, the right to transfer mineral exploration, mining and processing, and income from the transfer of real estate. . Income from property ownership, right to use property, including intellectual property rights, income from technology transfer. . Income from leasing and liquidation of contracts and assets, including other valuable papers.

Losses: Enterprises with losses may carry forward their losses to the following year; This loss is deducted from taxable income. The time for loss transfer shall not exceed five years, counting from the year following the year when the loss is incurred. Enterprises have losses from real estate transfer, investment projects, transfer of rights to participate in investment projects after clearing as prescribed if there are still losses and enterprises have losses from such activities. transfer of the right to explore and exploit minerals may carry forward the loss to the following year into the taxable income of such activity.

Foreign tax relief: If Vietnamese enterprises investing in foreign countries transfer their incomes after paying corporate income tax abroad to Vietnam, for countries with which Vietnam has signed Agreements on avoidance of double taxation, they shall do so comply with the provisions of the Agreement; For countries to which Vietnam has not signed an Agreement on the avoidance of double taxation, in the case of corporate income tax in the countries to which the enterprise moves back, the corporate income tax rate is lower, the difference shall be collected. Corporate income tax amount calculated according to the Law on Corporate Income Tax of Vietnam.

Participation exemption: See above under “Taxation of dividends” and “Capital gains”.

Holding-company regime: There is no holding company regime.

Tax-based incentives: + Tax rate incentives:

1. The tax rate of 10% for a period of fifteen years shall be applied to: a) Income of enterprises from implementing new investment projects in areas with extremely difficult socio-economic conditions, economic zones, and high-tech zones b) Income of hi-tech enterprises and hi-tech agricultural enterprises according to the provisions of the Law on High Technology c) Income of the enterprise from the implementation of new investment projects in the field of production d) Income of enterprises from implementing new investment projects to produce products on the list of supporting industry products prioritized for development.

2. The 10% tax rate applies to: a) Income of enterprises from performing socialization activities in the fields of education – training, vocational training, health, culture, sports and environment b) Income of enterprises from implementing investment projects – social housing business for sale, lease, lease purchase for the subjects specified in Article 53 of the Law on Housing c) Income of press agencies from printing press activities, including advertising on printed newspapers according to the provisions of the Press Law; incomes of publishing agencies from publishing activities in accordance with the Law on Publishing d) Income of the enterprise from: planting, tending and protecting forests; farming and processing agricultural and aquatic products in areas with difficult socio-economic conditions e) Income of cooperatives operating in the fields of agriculture, forestry, fishery and salt production not in areas with difficult socio-economic conditions or areas with special socio-economic conditions particularly difficult

3. The tax rate of 17% for a period of ten years shall be applied to: a) Income of enterprises from implementing new investment projects in areas with difficult socio-economic conditions b) Income of enterprises from the implementation of new investment projects, including production of high-grade steel; produce energy-saving products; production of machinery and equipment for agriculture, forestry, fishery and salt production; production of irrigation equipment; producing and refining animal, poultry and aquatic feed; traditional industry development. 4. The tax rate of 17% shall be applied to incomes of people’s credit funds and microfinance institutions. + Incentives on tax exemption and reduction time: Tax exemption for no more than two years (or four years) and a 50% reduction of the payable tax amount for a maximum of no more than four subsequent years (or nine years) as the case may be.

Group relief/fiscal unity: Assets may be transferred intra-company (not intra-group) at no gain/no loss provided they form a business unit.

Small company/alternative tax regimes: N/A.

Corporate taxation: compliance

Tax year: The corporate income tax period is determined according to the calendar year or fiscal year. The corporate income tax period for each time an income is generated is applicable to a foreign enterprise with a permanent establishment in Vietnam that pays tax on taxable income arising in Vietnam which is not related to the operation of the permanent establishment, and to a foreign enterprise without permanent establishment in Vietnam shall pay tax on taxable incomes arising in Vietnam.

Consolidated returns: No.

Filing and payment: + Finalize CIT by year and pay tax within 90 days from the end of calendar year or fiscal year. + For real estate transfer, capital transfer, tax declaration shall be made for each time it is incurred and tax is paid within 10 days from the date of arising.

Penalties: Penalties for late submission of tax declaration dossiers compared with the prescribed time limit, and penalties for late payment of arising corporate income tax.

Rulings: Rulings may be obtained from the tax authorities on various Vietnam tax matters.

Taxation of individuals

	Rate
	Federal Income Tax
Income from business, salary & wage:	Partial progressive tariff
Up to 60 million VND/year	5%
Over 60 million to … and over 960 million VND/year	From 10% to 35% (6 levels)
Other income	Full tariff
Capital investment / Royalties, Franchise	5%
Capital transfer	20%
Real estate transfer	2%
Prize winning / Inheritance, Gift	10%

Residence: Tax residents are individuals who meet one of the following conditions: + Reside in Vietnam for 183 days or more in a tax year; + Have a regular place of residence in Vietnam (including a place of residence registered on a permanent/temporary residence card or a rented house to stay in Vietnam for a period of 183 days or more in the tax year) and cannot prove to be a tax resident in another country.

Basis: Tax resident subject to PIT includes all taxable income arising within and outside the borders of Vietnam, without distinction between the place of payment or receipt of income: + With salary/wage income, tax calculation is based on the partial accrual tax schedule + For other types of income, the calculation depends on different tax rates Non-residents are individuals who do not meet the conditions to become resident. + With income from salary/wages, the tax rate is 20% + For other types of income, the calculation depends on different tax rates. However, the taxation of these types of income should be referenced with the provisions of the Agreement on the avoidance of double taxation with Vietnam.

Taxable income: PIT is calculated based on the taxpayer’s income after deducting tax-free income and family deductions in accordance with the Law on Personal Income Tax with relevant documents and instructions.

Capital gains: Income from capital investment: a) Interest received from lending b) Dividends received from capital contribution to buy shares. c) Income received from capital contribution to a limited liability company d) An increase in the value of contributed capital received upon dissolution of the enterprise, transformation of operation model, division, separation, merger or consolidation of the enterprise or upon capital withdrawal. e) Income received from interest on bonds, bills and other valuable papers issued by domestic organizations f) Income received from capital investment in other forms, including capital contribution in kind, by reputation, by land use rights, by inventions or inventions. g) Income from dividends paid in shares, income from capital gains recorded. Income from capital transfer: a) Income from transfer of contributed capital in a limited liability company b) Income from securities transfer Income from real estate transfer: a) Income from the transfer of land use rights. b) Income from the transfer of land use rights and properties attached to land. Assets attached to land include: c) Other income received from real estate transfer in any form.

Deductions and allowances: Deductions are amounts deducted from an individual’s taxable income before determining taxable income from salaries, wages, and business. 1. Family circumstances deduction a) Family circumstance deduction is the amount deducted from taxable income before tax calculation for income from business, income from salary and wages of taxpayers being resident individuals. b) Family circumstances deduction b.1) For taxpayers, it is 11 million VND/month. b.2) For each dependent, it is 4.4 million VND/month. 2. Deductions for premiums, Voluntary retirement fund 3. Deductions for charitable, humanitarian, and study promotion contributions

Foreign tax relief: + Income from remittances is exempt from tax + Income from salaries and wages of individuals being Vietnamese seafarers who are working for foreign shipping lines or Vietnamese shipping lines engaged in international transportation activities.

Taxation of individuals: compliance

Tax year: 1. Tax period for resident individuals is prescribed as follows: a) Tax period by year applicable to income from business; income from salary and wages; b) The tax period for each time an income is generated applies to other income 2. Tax period for non-resident individuals is calculated according to each time of income generation, applicable to all taxable income.

Filing and payment: + Organizations paying income for individuals: monthly or quarterly declaration; settlement by year. + Individuals with income shall self-declare quarterly; settlement by year. + For other income, individuals shall declare each time they arise.

Penalties: Penalties apply for late filing or failure to file.

Rulings: Rulings may be obtained from the tax authorities on various Vietnam tax matters.

Withholding taxes

Branch remittance tax: No such tax.

Anti-avoidance legislation

Transfer pricing: There is a Decree stipulating principles, methods and procedures for determining the factors forming the associated transaction price; rights and obligations of taxpayers in determining transfer pricing, declaration procedures; stipulate the preparation of transfer pricing documentation. Related party transactions have to be carried out at arm’s length terms.

Interest restriction: The interest rate of the loan shall be agreed upon by the parties. In case the parties have an agreement on the interest rate, the agreed interest rate must not exceed 20%/year of the loan amount.

Controlled foreign companies: + A public company may raise the foreign ownership ratio to a maximum of 100% if the company does not operate in a business line that is restricted to foreign investors. + In case of restricted access or conditional market access in an industry or trade, the maximum foreign ownership ratio in a public company is 50% of the charter capital.

Hybrid mismatches: N/A

Disclosure requirements: Taxpayers engaged in related-party transactions are responsible for declaring and determining the associated transaction prices. Taxpayers are responsible for demonstrating the analysis, comparison and selection of transfer pricing methods at the request of the competent authority. Taxpayers are responsible for keeping and providing associated transaction price determination dossiers, which are information, documents, figures and vouchers.

Exit taxes: N/A

General anti-avoidance rule: Tax administration law regulates tax evasion practices.

Digital services tax and Other significant anti-avoidance legislation: Digital service tax: there are regulations on the registration, declaration and payment of tax of foreign suppliers.

Value-added tax/Goods and services tax

Type of tax: VAT is a tax calculated based on the additional/difference arising from goods and services from production/circulation to consumers. Taxpayer is an organization or individual that imports or produces or trades in goods and services subject to VAT.

Standard rate: 0%, 5%, 10%.

Reduced rates: The reduction from 10% to 8% comes during the time of the covid outbreak for some cases.

Registration: When declaring VAT, enterprises have two methods including declaring by the direct method or by the deduction method.

Filing and payment: Deadline for filing a tax return: (i) Monthly tax return, the deadline is the 20th of the following month; (ii) Quarterly tax returns are due on Day 30 of the first month of the following quarter; (iii) Tax returns according to each occurrence, the deadline is the 10th day from the date of arising, the enterprise must submit a tax return. Tax payment deadline: the same as the deadline for filing a tax return.

Social security contributions

	Employer	Employee
	Rate (%)	Rate (%)
Social insurance	17,5	8
Health insurance	3	1,5
Unemployment insurance	1	1

Self-employed

6% of the base salary for voluntary health insurance. 22% of the base salary for voluntary social insurance.

Other taxes

Capital duty: N/A

Immovable property taxes: Land use tax is a tax that land users must pay during the use of land. This is an indirect tax imposed on land use rights. Taxpayers are organizations and individuals that have land use rights and are assigned land use rights by the State. Registration fee: This is a fee that applies to a title transfer, title registration, or transfer of land, vehicle, or other property and is based on the value of the property specified. House, land: The registration fee is 0.5%.

Transfer tax: + Securities transfer: CIT payable = Taxable income from securities transfer * CIT rate (20%) Taxable income from securities transfer = Selling price of securities – Purchased price of transferred securities – Cost of transfer of securities. In case the shareholder is an individual, when transferring individuals, they must declare and pay PIT on income from securities transfer = the transfer price of securities * tax rate of 0.1%. + Real estate transfer: PIT on real estate transfer = the transfer price * 2%

Stamp duty: None.

Net wealth/worth tax: N/A.

Inheritance/gift taxes: PIT payable = Taxable income * 10% tax rate Taxable income is the value of inherited assets and gifts exceeding VND 10 million per receipt.

Other: + The special consumption tax (SCT) is applied to the enterprise that has business activities and is subject to tax according to regulations. Special consumption tax is an indirect tax levied on a number of luxury goods and services in order to balance and regulate the level of production and consumption in the market. + Import and export tax: This is a direct tax, applied to individuals/organizations with tax rates based on the value of imported and exported goods. + Natural resource tax is a revenue from a resource-exploiting enterprise, based on the output of the taxed resource, the tax rate, and the taxable price. + Environmental protection tax is an indirect tax, collected on products and goods (hereinafter referred to as goods) when used, causing adverse impacts on the environment. + License tax (or license fee) is a type of direct tax paid annually by individuals, business households, and organizations that produce and trade in goods and services, on the basis of investment capital. or charter capital, revenue for the tax administration agency directly.

Tax treaties

Vietnam has signed an Agreement to avoid double taxation and prevent tax evasion on income with 80 countries/territories around the world. The Agreement applies only to subjects who are residents of Vietnam or residents of the Contracting State to an Agreement concluded with Vietnam or are concurrently residents of Vietnam and the Contracting State to the Agreement. with Vietnam. The taxes applied in the Tax Agreements are taxes on income and property specified in each Agreement. In the case of Vietnam, the taxes covered by the Agreement are: – Corporate income tax; and – Personal income tax.