How Comprehensive are Vietnam Taxing Laws?

All companies that have established operations in Vietnam are required to comply with all applicable business regulations including tax reporting. All companies are required to register their financial invoices with the tax office in Vietnam. It’s also imperative that businesses obtain Red Invoices (VAT Invoices) in order for them to market their products and services to their customers. These invoices must be purchased in stock under the supervision, registration, and oversight of the appropriate government bodies. Companies with operations in Vietnam are required to submit tax statements to the tax offices in which they are registered.

How Do You Go About the Tax Payment Process?

Tax payments can be carried out online as per the Circular No. 110/2015/TT-BTC that was issued by the Ministry of Finance which came into effect in September 2015. According to the Law on Tax Administration, all enterprises and businesses in Vietnam are mandated to perform electronic tax procedures with local tax agencies such as tax registration, filing, and payments.

Which Government Bodies are in Charge of Remittances?

When it comes to remittances and other general taxation restrictions, businesses should look to the Ministry of Finance (MOF) and the State Bank of Vietnam (SBV). The MOF is in charge of adjusting tax rates and regulating remittances while the SBV handles the regulation of banking and foreign exchange within the country. This means that SBV oversees the licensing of banks to establish operations within Vietnam and set standards when it comes to the requirements needed to open bank accounts. The SBV also oversees the issuing of the official exchange rate between the VND and other international currencies.

What are the Most Important Taxes to Be Paid in Vietnam?

There are four important taxes that companies in Vietnam need to pay attention to: Value Added Tax (VAT), Corporate Income Tax (CIT), Personal Income Tax (paid on behalf of the employee), and the Business License Tax. The CIT is set at 20% for most enterprises and is most often the biggest tax expense for businesses in Vietnam. Individuals are mandated to pay their personal income tax directly to tax government agencies or indirectly through the withholding of their employer.

How Much is the Penalty for Missing Tax Deadlines?

Any Vietnamese taxpayer who fails to pay taxes before the deadline is subject to certain fines. They are expected to pay any outstanding tax liabilities plus a fine that equals to 0.05% of dues for every day that the payment is late.

What are the Common Mistakes When Finalizing Taxes?

One common mistake that companies make is when they use cash when paying for invoices that amount to more than VND 20 million. That’s because transactions that exceed VND 20 million are prohibited from being paid in cash and can leave companies liable to the appropriate penalties and fees. Another common mistake among companies is a failure to balance expenditures and revenues within the same time period. For companies that engage in international related-party transactions, many of them often fail to account for the transfer pricing documentation that needs to be compiled.

What is the Easiest Way to Fulfill Tax Duties in Vietnam?

As Vietnam attracts more investors, from both inside and outside the country, the government will continue enhance its tax laws in order to further stimulate the local economy. As such, it may be difficult for business owners and entrepreneurs to keep track of any changing laws and regulations surrounding taxation in the country. The best way that companies are able to ease their tax burdens would be to avail of the services of a professional tax consulting and accounting company. These are dedicated companies with a team of experts who have systemized strategies in helping organizations fulfill all of their tax duties in accordance to the law.

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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

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

1. How comprehensive are Vietnam's tax laws?

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.

2. How do you pay taxes in Vietnam?

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.

3. Which bodies oversee taxation and remittances?

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.

4. What are the key taxes in Vietnam?

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.

5. What are the penalties for missing tax deadlines?

Late tax payments incur a penalty of 0.05% of the outstanding amount per day of delay.

6. What are the most common tax filing mistakes?

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.

7. How can you simplify tax compliance in Vietnam?

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.

Taxation Services

Primary Taxes for Foreign Companies Operating in Vietnam

Corporate Income Tax

Value-Added Tax

Personal Income Tax

Business License Tax