COMMON TAXES APPLIED TO FOREIGN-INVESTED COMPANY IN VIETNAM

The foreign-invested enterprises in Vietnam are subject to taxation in the same way as the local enterprises. When establishing an enterprise in Vietnam, foreign investors should pay attention to several taxes and fees as follows:

1. License fee

Enterprises engaged in producing, trading of goods, providing service with a charter capital or investment capital of more than VND 10 billion are subject to a license fee of VND 3 million per year; the license fee of VND 2 million shall applied to enterprises with charter capital or investment capital of VND 10 billion or less. Enterprises are exempt from the license fee in the first year of establishment (from January 1 to December 31)[1].

2. Value-added tax

Value-added tax applies to goods and services at the rate of 10% and applies to most goods and services, except for those subject to the tax rate of 5% or 0% as follows[2]:

Tax rate

Types of goods and services

0%

Exported goods and services;

International transportation;

Goods and services not subject to VAT as provided in the Law on Value-added tax

5%

Clean water, pesticide, services for digging, embanking, dredging of canals, agricultural machinery and equipment, sugar and by-products, medical equipment, teaching aids, artistic, sports activities, etc.

 Value added tax will have to be declared monthly or quarterly, as the case may be[3]. Failure to submit or late submission of VAT returns as prescribed may result in administrative penalties.

 3. Corporate income tax

The corporate income tax rate shall be 20% of taxable income. This CIT rate applies to the most of enterprises, excepts for oil and gas activities and exploitation of rare and precious resources, which are subject to the CIT tax rate of 25-50%[4].

Foreign-invested enterprises doing business in the fields of investment incentives and operating in the areas eligible for investment incentives may enjoy investment incentives with the corporate income tax rate of 10% for a certain period as prescribed in the Law on Corporate Income Tax[5].

Corporate income tax must be finalized annually. The total amount of temporarily paid corporate income tax of four quarters must not be less than 80% of the payable corporate income tax according to the annual finalization[6].

4. Personal income tax (PIT)

Individual Japanese investors should pay attention to incomes subject to personal income tax, including[7]:

  • Incomes from salaries, wages and other similar nature amounts;
  • Incomes from business;
  • Incomes from capital investment;
  • Incomes from transfer of real estate;
  • Incomes from won prizes;
  • Incomes from copyright;
  • Incomes from commercial franchising;
  • Incomes from inheritances that are securities, capital holdings in economic organizations or business establishments, real estate and other assets subject to ownership or use registration; Incomes from gifts that are securities, capital holdings in economic organizations or business establishments, real estate and other assets subject to registration of ownership or use.

The PIT rate applicable to each case will be completely different depending on whether the Japanese Investor is a resident or non-resident individual. The Individual Japanese investors who (ii) have been in Vietnam for 183 days or more in a calendar year or 12 consecutive months from the first date of having been in Vietnam, or (ii) have a place of habitual residence in Vietnam, which is a registered place of permanent residence or rented house for dwelling in Vietnam under a lease contract with the term of 183 days or more in a taxable year, shall be considered residents. The others shall be non-residents[8].

 5. Import tax and Export tax

The enterprise whose goods exported and imported through Vietnam’s border and border checkpoints; Goods exported from the domestic market into free trade zones; goods imported from free trade zones into the domestic market; goods indirectly exported-imported; goods exported and imported by enterprises exercising their right to export, import, or distribute that subject to export/import tax[9].

Tax rates on exported goods will be specified in the partially progressive tariff. Tax rates on imported goods include preferential rates, special preferential rates, and ordinary rates

In addition, “Fixed duties” will be imposed depending on the actual quantity of exports or imports and the amount of duty per unit of goods at the times of tax calculation.


[1] Decree No. 139/2016/ND-CP on license fee, Article 4.1

[2] Law on Value-added Tax, Article 8

[3] Decree No. 126/2020/ND-CP on guidance of Law on Tax management, Article 9

[4] Law on Corporate Income Tax 2008, Article 10

[5] Law on Corporate Income Tax 2008 (amened in 2013), Article 13

[6] Decree No. 126/2020/ND-CP guiding the Law on Tax management, Article 8.6 (amended by Decree No. 91/2022/ND-CP)

[7] Circular 111/2013/TT-BTC guiding the Law on Personal income tax, Article 2

[8] Circular 111/2013/TT-BTC guiding the Law on Personal income tax, Article 1.1

[9] Law on Export tax and Import tax 2016, Article 2

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