Paying tax is a right and also an obligation of businesses and individuals doing business and investing in Vietnam. From the time of establishment to dissolution, foreign enterprises must fulfil their tax obligations to the State of Vietnam.
Below are taxes that foreign enterprises must pay when conducting business in Vietnam.
Business-license tax is a direct tax and is usually a quota levied on a company's business license. This tax is collected annually, and the amount of tax paid is based on the registered capital or the annual turnover of the enterprise.
Business-license tax is set out as follows:
Business registered capital is determined based on
- Charter capital of state-owned enterprises, limited companies, joint stock companies, cooperatives
- Investment capital of foreign-invested enterprises
Corporate income tax
Currently, there is no exact definition of corporate income tax in Vietnam, however, through the Law on Corporate Income Tax as well as circular decrees, it can be determined that corporate income tax is a direct tax levied on taxable income of enterprises including income from production and trading of goods and services, and other incomes as prescribed by law.
Tax rates for different fields of business will be different:
- Tax for search, exploration and exploitation of oil and gas in Vietnam is from 32% to 50%
- Tax for search, exploration and exploitation of rare and precious natural resources (including: platinum, gold, silver, tin, tungsten, antimony, precious stones, rare earth) is 50%.
- If rare and precious resources make up 70% or more of the allocated area in a region with extremely difficult socio-economic conditions on the list of areas eligible for corporate income tax incentives, the corporate income tax is 40%.
- Corporate income tax for companies operating in other fields is 20%
The value-added tax payable is calculated according to the method initially selected by the enterprise when it registers to establish.
There are two ways to pay VAT:
- Value-added tax deduction: Value-added tax payable is equal to the value of sold goods and services multiplied by the value-added tax rate, then minus the deductible input value-added tax amount. Depending on the goods and services, the value-added tax rate will be different: 0%, 5% and 10%.
- Value-added tax calculated directly on the added value: the value added tax payable is equal to the turnover multiplied by tax rate. The rate is calculated as follows:
- Distribution and supply of goods: 1%
- Construction services excluding raw materials: 5%
- Transportation, goods production services, construction with provision of raw materials: 3%
- Others: 2%
Import and export tax
In case of goods subject to certain tax rate (in percentage), the import and export tax payable is equal to the number of units of each item imported and exported multiplied by the taxable price and multiplied by the tax rate.
In case of goods subject to absolute tax, the import and export tax payable is equal to the number of units of each item imported and exported multiplied by the absolute tax rate multiplied by the taxable exchange rate.
Subjects of application are enterprises exploiting resources subject to tax. The resource tax payable is equal to the taxable natural resource output multiplied by the taxable price times the tax rate.
The excise tax is equal to the excise tax calculation price multiplied by the excise tax rate.
Land use tax
There are two types of land use tax that foreign enterprises must pay. They are tax on land used entirely for business purposes and tax on non-agricultural land used for business purposes, in which the area used for business purposes cannot be determined.