Posted by ASEAN Briefing Written by Ayman Falak Medina Reading Time: 3 minutes
All taxes in Vietnam are imposed at the national level; there are no local, city, or provincial taxes. Enterprises should pay tax in localities where they are headquartered or have duly registered branches.
Most companies and foreign investors in Vietnam are subject to the following major taxes:
- Corporate income tax;
- Business license tax;
- Value-added tax;
- Special consumption tax; and
- Foreign contractor tax.
Corporate income tax
All income arising inside Vietnam is subject to CIT, no matter whether a foreign enterprise has a Vietnam-based subsidiary, or whether that subsidiary is considered a permanent establishment (PE).
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The CIT rate of 20 percent is a direct tax levied on the profits (gross revenue minus expenses) earned by companies or organizations. For companies operating in the oil and gas industries, the CIT rate is between 32 and 50 percent.
Business license tax
The business license tax (BLT), is an indirect tax imposed on entities conducting business activities in Vietnam, paid by enterprises annually for each calendar year that they do business in the country.All companies, organizations, or individuals (including branches, shops, and factories) and foreign investors operating businesses in Vietnam are subject to BLT.
The BLT ranges from ranging from VND 1 million (US$41) to VND 3 million (US$124) per year.
Value-added tax
Value-added tax (VAT) is imposed on the supply of goods and services at three different rates: 0, 5, and 10 percent, with the latter being the standard rate. All organizations and individuals producing and trading goods and services in Vietnam are liable to pay VAT, regardless of whether the organization has a Vietnam-based establishment.
Personal income tax
Individuals in Vietnam are subject to personal income tax based on their residency status. A tax resident in Vietnam must satisfy one of the following criteria:
- Resides in Vietnam for 183 days or more within 12 consecutive months from the first day of arrival;
- Holds a permanent or temporary residence card for Vietnam; or
- Leases a property for 183 days or more in Vietnam.
Personal Income Tax Rates
Monthly income | Tax rate (%) |
Up to 5,000,000 VND (S$209) | 5 |
Over 5,000,000 VND (S$209) up to 10,000,000 VND (US$419) | 10 |
Over 10,000,000 VND (US$419) up to 18,000,000 VND (US$755) | 15 |
Over 18,000,000 VND (US$755) up to 32,000,000 VND (US$1,343) | 20 |
Over 32,000,000 VND (US$1,343) up to 52,000,000 (US$2,183) | 25 |
Over 52,000,000 (US$2,183) up to 80,000,000 VND (US$3,358) | 30 |
Over 80,000,000 VND (US$3,358) | 35 |
Withholding tax
There is no withholding tax imposed on dividends for resident and non-resident companies in Vietnam. Interest rates for non-resident companies are set at five percent and can be further reduced under a tax treaty. Withholding tax on interest, royalties, and fees for technical services for resident companies are set at 20 percent.
Nature of income | Tax rate (%) | |
Residents | Non-residents | |
Dividends | ||
Interest | 20 | 5 |
Royalties | 20 | 10 |
Special consumption tax
The special consumption tax (SCT) is a form of excise tax that applies to the production or importation of 11 categories of products and six types of services, which are considered luxurious or non-essential, such as alcohol and tobacco products. Companies are liable for SCT both at the time of import and sale. However, to prevent an excessive tax burden, import SCT will be creditable against SCT incurred at the point of sale.
Foreign contractor tax
Foreign businesses are considered foreign contractors if they conduct business or earn income in the country under contract with local organizations and individuals.
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Usually, foreign contracts are the winners of auctions or bid offerings organized by the Vietnamese government or organizations and may be principal contractors, general contractors, partnership contractors or subcontractors.
Foreign contractors in Vietnam are liable to pay the same tax rates applicable to local companies, including import-export duties, personal income tax and other taxes required by authorities.
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As an expert in taxation and business regulations, I'll provide a comprehensive analysis of the concepts discussed in the article posted on February 16, 2023, by Ayman Falak Medina on ASEAN Briefing. This article outlines the tax structure in Vietnam, focusing on various taxes applicable to companies and foreign investors.
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Corporate Income Tax (CIT):
- All income generated within Vietnam is subject to CIT, regardless of the foreign enterprise having a Vietnam-based subsidiary or whether that subsidiary is considered a permanent establishment.
- The CIT rate is 20 percent for most companies. However, companies in the oil and gas industries may face a CIT rate between 32 and 50 percent.
-
Business License Tax (BLT):
- BLT is an indirect tax imposed on entities conducting business activities in Vietnam.
- It is paid annually by enterprises for each calendar year they operate in the country.
- The BLT ranges from VND 1 million to VND 3 million per year.
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Value-Added Tax (VAT):
- VAT is imposed on the supply of goods and services at rates of 0, 5, and 10 percent, with 10 percent being the standard rate.
- All organizations and individuals producing and trading goods and services in Vietnam must pay VAT.
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Personal Income Tax (PIT):
- Individuals in Vietnam are subject to PIT based on their residency status.
- The tax rates vary based on monthly income, ranging from 5 to 35 percent.
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Withholding Tax:
- No withholding tax is imposed on dividends for resident and non-resident companies in Vietnam.
- Interest rates for non-resident companies are set at five percent and can be further reduced under a tax treaty.
- Withholding tax on interest, royalties, and fees for technical services for resident companies is set at 20 percent.
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Special Consumption Tax (SCT):
- SCT is an excise tax applying to the production or importation of luxury or non-essential products and services.
- It covers 11 categories of products and six types of services, such as alcohol and tobacco.
- Companies are liable for SCT at the time of import and sale, with import SCT creditable against SCT incurred at the point of sale.
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Foreign Contractor Tax:
- Foreign businesses acting as contractors in Vietnam, earning income under contract with local organizations or individuals, are subject to foreign contractor tax.
- Foreign contractors are subject to the same tax rates as local companies, including import-export duties, personal income tax, and other taxes required by authorities.
In conclusion, this article provides a detailed overview of the tax landscape in Vietnam, covering corporate income tax, business license tax, value-added tax, personal income tax, withholding tax, special consumption tax, and foreign contractor tax. The information is valuable for businesses and investors looking to operate in Vietnam, showcasing the complexity of the tax system and the need for in-depth understanding and compliance.
