Taxpayers need a current guide, such as the Worldwide Corporate Tax Guide, in such a shifting tax landscape, especially if they are contemplating new markets. Tax rate for enterprises operating in the oil and gas and other precious natural resources sectors ranges from 32% to 50%, depending on the project. Decree 114 took effect on 3rd August 2020 and applies to the tax year 2020. This category includes the following: There are stipulated categories of VAT exemptions, including certain agricultural products; goods/services provided by individuals having annual revenue of 100 million Vietnamese dong (VND) or below; imported or leased drilling rigs, aeroplanes, and ships of a type that cannot be produced in Vietnam; transfer of land use rights (LUR) (detailed guidance is provided to specific cases); various financial services; various securities activities including fund management; capital assignments; foreign currency trading; debt factoring; certain types of insurance; medical services and elderly/disabled people care service; education, printing/publishing, public transportation, export of unprocessed natural resources, etc. At the exit, a VC (or any private equity fund) in particular or any foreign investors in general would have several liquidity considerations including IPO, share redemption and, most commonly, M&A. There are several rates at which the corporate tax is levied in Vietnam, however the tax authorities impose a standard tax rate of 20%. In addition, Circular 68/2019/TT-BTC guiding the implementation of Decree 119 on e-invoicing was released (Circular 68) in October 2019 and took effect from 14 November 2019. If the enterprises transfer data directly to the tax authorities’ portal, certain technical conditions for connection with the tax authorities’ portal must be satisfied. Foreign investors generally pay rental fees for land use rights. Please see www.pwc.com/structure for further details. Vietnam business registration summary. VAT applies to goods and services used for production, trading, and consumption in Vietnam (including goods and services purchased from non-residents), with certain exemptions. Vietnam to cut corporate tax in bid to boost business Prime Minister Nguyen Xuan Phuc announced that Vietnam is planning to slash corporate income tax rates from the current 20-22% to 15-17% in an effort to make the country one of the most competitive economies in the … The Vietnam joint venture company (partly foreign-owned LLC) A Vietnam joint venture company is commonly a standard Vietnam limited liability company incorporated by i) 1 foreigner (our Client) and ii) 1 Vietnamese shareholder. The level of compulsory SI contribution for Vietnamese employees is 25.5% of total salary, of which 17.5% is the employers’ obligation and the remaining 8% is the employees’ obligation. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Tax rate for enterprises operating in the oil and gas and other precious natural resources sectors ranges from 32% to 50%, depending on the project. Vietnam is planning to slash corporate income tax rates from the current 20-22% to 15-17% in an effort to make the country one of the most competitive economies in … Each member firm of Crowe Global is a separate and independent legal entity. Goods exported and then re-imported back to Vietnam due to sales returns by overseas customers. Compulsory HI contributions are applicable to both Vietnamese individuals and expatriates, except those transferred from their mother companies abroad to subsidiary firms in Vietnam (i.e. For this reason, we have put together this article to highlight the key things a foreign investor needs to know about corporate compliance and tax reporting in Vietnam.. Therefore, salary earned from working abroad is taxable in Vietnam. The 0.4 percent tax has been proposed by the Ministry of Finance, which claims it will bring in VND31 trillion ($1.3 billion) per year and help Vietnam “get in line with regulations on property tax rates in other countries.” However, experts have expressed their … Tax Law in Vietnam Tax Administration Corporate Income Tax International Tax Withholding Tax International Tax Agreements Foreign Contractor Tax Controlled Foreign Companies Transfer Pricing Non-Resident Capital Gains Indirect Taxes Value Added Tax Special Sales Tax Import/Export Duties Employment Taxes Social, Health and Unemployment Insurance These individual taxpayers in Vietnam are eligible for tax refunds on the personal income tax. The following corporate tax rates apply to these companies: Change of business location more than two times within 12 months without any notification or any tax declaration at the new location. Payments to foreign contractors are subject to Foreign Contractor Tax (FCT), which consists of value-added tax (VAT) and CIT elements. Keeping your tax reports in compliance is a time-consuming yet crucial part of doing business, especially when operating in a foreign market. Corporate tax rates in Vietnam. Navigate the tax, legal, and economic measures in response to COVID-19. the Comprehensive and Progressive Trans-Pacific Partnership agreement among Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam); The FTA between Vietnam and EU (i.e. Pure supply of goods, services performed and consumed outside Vietnam, and various other services performed wholly outside Vietnam (e.g. In terms of corporate tax reporting and compliance, your company should submit tax statements on a monthly, quarterly and annual basis, regardless of whether you conduct any business activities and have any tax liabilities or not. The concept of residency is not in use for companies in Vietnam.Domestic companiesoperating under Vietnamese law will be taxed on local and foreign profits, though corporate income taxes paid abroad can be deductible from the Vietnamese one. Taxable income for CIT calculated based on is revenues generated in their course of production less reasonable expenses in the relevant fiscal year. Taxable profit is the difference between total revenue, whether domestic or foreign sourced, and deductible expenses (see the Deductions section), plus other assessable income. The progressive tax rates for tax residents of Vietnam range from 5% to 35%. Collections on behalf of other parties that are not related to the provision of goods/services (e.g. The other rates are applicable to Vietnam companies operating in specific industries, such as oil and gas. Trending . Customs duties generally comprise import duty and import VAT. Vietnam corporate tax to probably be reduced by 30%. Special preferential rates are applicable to imported goods from countries that have a special preferential trade agreement (or Free Trade Agreement) with Vietnam. Vietnam to cut 30% corporate income tax in 2020. Prior to 1 December 2018, Social insurance (SI) contributions were applicable to Vietnamese individuals only. Corporate income tax will be completely exempted in the first four years and […] Decree 123 will take effect from 1 July 2022, but taxpayers that meet, technology infrastructure requirements are encouraged to, (i.e. This report assesses Vietnam's corporate governance policy framework. Current Vietnam Corporate Tax Rate is 38.10%. Vietnam implemented the New Penal Code in January 2018, under which corporations can be now held criminally responsible for numerous violations, including tax evasion. The Law on Corporate Income Tax (CIT) was amended and introduced on June 2008 and took effect from 1st January 2009. It does not cover the retirement and death fund, which will be started for contribution from January 2022. Of note, the most important factor is that the CIT reduction will apply to all businesses if their total revenue does not exceed the VND 200 billion (US$8.8 million) threshold in 2020. Enterprises (generally companies) are subject to the tax rates imposed under the CIT Law. Corporate Income Tax in Vietnam. The requirements for data transmission to the tax authorities and the use of e-invoices with a verification code under Clause 12, Article 5 of Decree 12/2015 is abolished. Vietnam imposes a standard corporate income tax (CIT) at a 20% flat rate. The tax is calculated as an absolute amount on the quantity of the goods. Salary/wage subject to SI contribution is capped at 20 times the minimum salary stipulated by the Government from time to time. Before using e-invoices (either with or without a verification code), enterprises must register and obtain approval from the tax authorities via the web portal of the General Department of Taxes (GDT). Skip to content. NRT is payable by industries exploiting Vietnam’s natural resources, including petroleum, minerals, natural gas, forest products, natural seafood, natural bird’s nests, and natural water. Preferential CIT rates of 10%, 15%, and 17% are available where certain criteria are met. Companies operating in the oil and gas industry are subject to CIT rates ranging from 32% to 50% depending on the location and specific project conditions. Compulsory UI contributions are applicable to Vietnamese individuals only. Hanoi, 1 January 2019 EY Vietnam and Mrs. Huong Vu, Tax Partner, were honored to receive the Prime Minister’s Certificate of Merit for achievements in building and developing tax consulting services in Vietnam over the past 5 years, from 2008 to 2012. The most significant change could be the scope of application; individuals who do business are not subject to the Law on CIT but the Law on Personal Income Tax.That is to say, the amended CIT Law only applies to taxpayers who operate in a corporate … From January 2016, companies in Vietnam are generally taxed at a standard flat Corporate Income Tax Rate of 20%. Error! Prior to transferring profits back to their home markets, foreign companies maintaining operations and taking in revenue in Vietnam must fulfill certain annual compliance requirements. However, since Vietnam's independence in 1945, it has largely been influenced by the ruling Communist Party.Currently, the main sources of corporate law are the Law on Enterprises, the Law on Securities and the Law on Investment. Industries where enterprises are allowed to use e-invoices without a verification code of the tax authorities will be determined based on the economic sectors as regulated. Projects eligible for free zone registration are usually eligible for tax benefits. A 5% rate applies generally to areas of the economy concerned with the provision of essential goods and services. Vietnam Tax & Accounting Updates, November 2020 and Other Recent Publications – Domicile Corporate Services 17 Nov 2020 This November 2020 publication of our Tax and Accounting Updates looks at a number of key Decrees that were released recently including Transfer Pricing, Tax Administration, E-Invoices and Company Establishment. The Law on Corporate Income Tax (CIT) was amended and introduced on June 2008 and took effect from 1st January 2009. Your message was not sent. Most goods imported into Vietnam are subject to import duty except and import VAT they qualify the conditions for exemption, such as goods imported for the production of subsequently exported goods under toll manufacturing or contract manufacturing arrangements, goods imported to form fixed assets of incentivised investment projects (in this case import VAT is not exempted), etc. Enterprises that have been penalised for breaches of the invoice regulations in the last year. Decree 114 took effect on 3rd August 2020 and applies to the tax year 2020. Decree 51/2010, Decree 04/2014 amending Decree 51/2010 and Decree 119/2018) still apply and enterprises can continue to use current invoices until receipt of a notification from the tax authorities. 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