Taxation Services

Vietnam is emerging as a prime destination for business expansion and market penetration in Asia, thanks to its strategic location, skilled labor force, and relatively low cost of living. Positioned at the heart of Southeast Asia, Vietnam offers an advantageous logistics hub for neighboring countries, making it a compelling choice for investors. The country’s rich culture and promising economic prospects further enhance its appeal. Despite the challenges posed by the global pandemic in the past, Vietnam is showing strong signs of recovery, attracting entrepreneurs and foreign nationals eager to tap into its booming market.

The Vietnamese government is committed to fostering economic growth by simplifying the process for businesses to establish operations in the country. While there are certain regulatory standards and processes to follow, they are designed to be straightforward and efficient. A key aspect of operating in Vietnam is understanding its taxation system, which, while comprehensive, is structured to support compliance. This article will take a better look into the essential details companies need to know about Vietnam’s tax laws to ensure successful and compliant business operations.

Primary Taxes for Foreign Companies Operating in Vietnam

Corporate Income Tax

In Vietnam, foreign companies are subject to Corporate Income Tax (CIT), which varies based on the nature of the business and its location. The standard CIT rate is 20%, but this can be reduced to 0 to 17% for companies operating in incentivized sectors or locations. Conversely, businesses in restricted areas or industries may face higher rates, ranging from 32% to 50%. The CIT is assessed quarterly provision, and tax filings required on yearly basis.

Value-Added Tax

Value-Added Tax (VAT) applies to all companies operating in Vietnam, including foreign enterprises. The standard VAT rate is 10%, but certain sectors may benefit from reduced rates ranging from 0% to 5%, depending on the goods or services provided. VAT is assessed monthly or quarterly, with companies required to file VAT returns and make payments on a monthly or quarterly basis.

Personal Income Tax

Personal Income Tax (PIT) in Vietnam is applicable to all companies that have employees, including those with foreign operations. The PIT rates on income from salaries, wages applied for residents are progressive, ranging from 5% to 35%, depending on the income level of individuals. This tax is calculated on a monthly basis, with companies needing to file returns and make payments , monthly, quarterly and yearly finalization.

Business License Tax

Business License Tax is imposed on all companies operating in Vietnam, including foreign enterprises. This tax is calculated based on the company’s registered charter capital and ranges from VND 2,000,000 to VND 3,000,000. Companies are required to file and pay this tax annually. The Business License Tax is intended to cover the costs associated with the administrative regulation of business activities.

Upsides of Outsourcing Your Tax Compliance

Ensure comprehensive compliance with your statutory and tax obligations by implementing consistent and efficient processes. By outsourcing, you can maintain a lean statutory accounting and tax team with minimal local presence while effectively managing potential compliance risks. This approach also enhances data quality and provides full visibility into your statutory accounting and tax operations, ensuring you remain fully compliant and informed at all times.

VAT Obligations for Foreign Digital Service Providers in Vietnam

Foreign digital service providers engaging in B2C sales in Vietnam are required to register, charge, and remit a 5% VAT. Effective January 1, 2022, if these providers fail to fulfill this obligation, financial intermediaries, such as commercial banks and payment service companies, must withhold the VAT and remit it to the General Department of Taxation. For B2B transactions, if the foreign provider does not charge VAT, the VAT-registered taxpayer in Vietnam is responsible for withholding and remitting the VAT on behalf of the non-resident supplier to the tax authorities. These measures ensure compliance and proper tax collection in the digital economy.

Premia TNC’s Holistic Support

Tax Planning and Compliance Support

Premia TNC offers comprehensive tax advisory services to help businesses in Vietnam achieve tax efficiency. We advise on tax-efficient business models, provide tailored tax planning strategies, and keep clients informed about the latest tax regulations. Our team assists in preparing necessary documentation, calculating tax liabilities, and submitting tax compliance reports on a monthly, quarterly, and annual basis. We also guide clients on tax incentives and exemptions to reduce tax liability in compliance with Vietnam’s regulations.

Specialized Tax Services

To address specific needs, Premia TNC provides expert assistance in various tax-related areas. We offer VAT refund services for exporters, foreign tourists, and Vietnamese citizens residing abroad, ensuring a smooth and straightforward process. Our tax review services act as a "health check" for businesses, identifying potential tax risks and optimizing tax positions for long-term sustainability. Additionally, our tax health check services help clients proactively identify and mitigate potential tax risks, foster a positive relationship with tax authorities, and ensure compliance.

Perks of Partnering with Premia TNC

Choosing Premia TNC for your tax, accounting, and auditing needs in Vietnam offers significant advantages over building an in-house team. With ever-evolving Vietnamese tax laws, Premia TNC’s experts stay constantly updated on the latest regulations, ensuring your business remains compliant and avoids costly penalties. Additionally, you gain immediate access to a dedicated team of professionals who are on call to provide timely and accurate advice as your business scales. Premia TNC ensures a seamless process through direct meetings to clarify your specific requirements, targets, and concerns. Our experienced accounting team takes on the responsibility of liaising with tax authorities on your behalf, allowing you to focus on core business activities. We provide tailored action plans and strategies to effectively manage both domestic and international tax matters, ensuring optimal tax outcomes. Furthermore, we keep you informed about the latest tax incentives and policies, offering clear guidance on compliance and helping you make informed decisions.
By outsourcing to Premia TNC, you free up valuable resources, allowing you to focus on other critical areas of your business, ultimately fostering growth and efficiency.

Frequently Asked Questions

All companies in Vietnam must comply with tax regulations, including registering financial invoices with the tax office and obtaining red invoices (VAT invoices). These invoices are crucial for marketing products and services and must be purchased under government supervision. Companies are also required to submit tax statements to the relevant tax offices.
Tax payments in Vietnam can be made online, as mandated by Circular No. 110/2015/TT-BTC. The Law on Tax Administration requires all businesses to conduct electronic tax procedures, including registration, filing, and payments.
The Ministry of Finance (MOF) handles tax rate adjustments and remittances, while the State Bank of Vietnam (SBV) regulates banking, foreign exchange, and bank licensing.
Key taxes include value-added tax (VAT), corporate income tax (CIT), personal income tax, and business license tax. CIT is typically 20% and is often the largest tax burden for businesses.
Late tax payments incur a penalty of 0.05% of the outstanding amount per day of delay.
Mistakes include using cash for payments over VND 20 million, which is prohibited, and failing to balance expenditures and revenues within the same period. Companies also often overlook transfer pricing documentation for international related-party transactions.
To navigate complex and evolving tax laws, businesses are advised to seek assistance from professional tax consulting and accounting firms. These experts help ensure compliance and reduce tax burdens.