Foreign-invested companies established under Vietnamese law also have similar tax obligations as those established by Vietnamese enterprises. The law of Vietnam regulates equal and balanced obligations to pay taxes among the above-mentioned taxpayers to State agencies.
In this article, we only mention some basic taxes and fees applicable to companies with common business lines and conditions.
The following are some of the main taxes and fees paid by foreign-invested companies in accordance with the laws of Vietnam:
I. LICENSE TAX
The license tax is an annual fee and usually based on the charter capital on the Enterprise Registration Certificate/other equivalent license that enterprises must pay the State agency according to the Decree No. 139/2016/ND-CP on license tax.
The license tax paid by foreign-invested enterprises is determined based on the registered capital on the Enterprise Registration Certificate/ other Establishment License issued by the competent authority, which is according to the table below:
|Registered capital||Annual License tax|
|Over VND 10,000,000,000||VND 3,000,000|
|Less than VND 10,000,000||VND 2,000,000|
|Branches, representative offices, business |
locations, non-business units, other economic organizations
II. CORPORATE INCOME TAX (“CIT”)
Corporate income tax is a direct tax on income from production, business activities and other incomes of enterprises.
CIT is specified in the Circular No. 96/2015/TT-BTC and in another Circular No. 78/2014/TT-BTC guiding the implementation of corporate income tax and other relevant documents.
• “Corporate income tax payable = ((Assessable income – (Tax-free incomes + Losses carried forward under regulations) × Tax rate)”.
• “Assessable income = (Revenue – Expenses deducted) + other incomes”.
The CIT rate is 20%, effective from January 1st, 2016.
III. VALUE ADDED TAX (“VAT”)
Value-added tax, which is an indirect one, is imposed on the added value of goods and services during the process of production, circulation and distribution. However, not all goods and services are subject to tax payment.
VAT payment obligation is specified in the 2008 Value Added Tax Law, amended in 2013 and in other relevant documents.
Depending on different subjects, different methods of VAT calculation will be applied. According to the current regulations, VAT is calculated to pay by 02 methods: method of deduction and tax calculation directly based on added value.
• Deduction method:
“Payable VAT amount = Output VAT – Input VAT deductible”
• Direct calculation method
“Payable VAT amount = Taxable price of goods or services sold × VAT rate of goods and services”
The amount of VAT that businesses have to pay depends on the group of goods or services produced or provided (there are many different VAT rates applicable to groups of goods/services).
IV. PERSONAL INCOME TAX (“PIT”)
To ensure normal business operations, companies may recruit many workers to meet their needs. The law stipulates that enterprises must be responsible for withholding PIT (if employees’ salary or other incomes are subject to PIT) before paying them. In addition, companies must declare the above PIT amounts and submit them to the government.
Taxpayers, tax rates, tax calculation methods are specified in the Circular No. 111/2013/TT-BTC dated August 15th, 2013 and the Circular No. 92/2015 /TT-BTC dated June 15th, 2015 and in relevant legal documents.
V. OTHER TYPES OF TAX
Enterprises manufacturing or doing business in some business lines and sectors with special conditions may be subject to other taxes such as: environment protection tax; natural resources tax; special consumption tax, …
The above-mentioned taxes are prescribed in specialized legal documents. Subjects of tax payment, tax rates and payable tax amount depend on goods /services of each enterprise.
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