ENG

Taxation System
국가별 조세 제도 – 베트남2020-05-19T16:04:18+09:00

VIETNAM

Vietnam Taxation System

Income tax is classified into income tax for individual taxpayers and profit-seeking enterprises.

Personal income tax (PIT)

Taxable Income

Determination of taxable incomes earned by taxpayers

  • Taxable incomes earned by residents are the incomes earned within or outside Vietnam’s territory, regardless of locations or payment and receipt.
  • Taxable incomes earned by non-residents are the incomes earned within Vietnam’s territory, regardless of the location of payment and receipt.
Personal Income Tax Rate

Personal income tax on incomes from business, wages is the total tax on each level of income. The tax on each level of income equals the assessable income of that level multiplied by (x) the corresponding tax rate of that level.
Assessable income equals taxable income minus (-) the following deductions.
The progressive income tax rate is released by Ministry of Finance and used to calculate the tax obligation for Vietnam residents.

The progressive tax rate is listed in below table for reference.

Taxable Income (million VND)Tax Rate
0 ~ 605%
60 ~ 12010%
120 ~ 21615%
216 ~ 38420%
384 ~ 62425%
624 ~ 96030%
960 ~ above35%

If the wages paid to the employees are exclusive of tax (net salary), they must be converted into assessable income

Proportion of taxable income
ActivityProportion of taxable income (%)
Distributing and supplying goods7
Service provision, construction (exclusive of materials30
Production, transportation, service provisions associated with goods supply, construction, inclusive of materials.15
Other business activities12
The whole tax rate for the other kinds of incomes

Tax payable = assessable income x tax rate

Type of incomesTax Rate (on selling price)
Capital investments5%
Capital transfer20%
Securities transfer20%
Real estate transfer2% on the transfer amount
Or 25% on assessable income
Royalties5%
Franchising5%
winning prizes10%
Inheritance and gifts10%
Rental10%

Corporate Income Tax

Taxable Income

For profit-seeking enterprise having its head office within Vietnam territory, an income tax shall be levied on its total onshore and offshore income.

In case the entity already paid income tax to a foreign government for its offshore income, such paid tax may be deducted against the tax payable to Vietnam tax office (foreign tax credit). However, the deducted amount shall not exceed the increased tax payable computed based on the applicable domestic tax rate if include the offshore income in its tax return.
For profit-seeking enterprise having its head office outside of Vietnam territory, an income tax shall be levied on its Vietnam sourced income.

Income Tax Rate

The Common corporate income tax rate for Vietnam companies is 20%. However, for the companies that meet the conditions for the corporate income tax incentives, the applied tax rate can be less than 20% (depend on the specific cases). The lowest tax rate relates to tax incentives can be 10%.

Summary of Income Tax for Company
Entity TypeAlmost companies and branchesEnterprises of petroleum prospecting, exploration and exploitationThe prospecting, exploration and extraction of precious and rare natural resources
Income Tax Rate20%32% – 50%
Depend on the decision of the Ministry of Finance
40% – 50%
Depend on the area

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Foreign contractor withholding Tax (FCWHT = CIT + VAT)

A foreign contractor withholding tax is an income tax paid to the government by the payer of the income rather than by the recipient (foreign contractor). The tax is thus withheld or deducted from the income paid to the recipient.

The definition of foreign contractors is specified as one of the following cases.
  • Foreign business organizations having permanent establishments in Vietnam or not; foreign business individuals that are residents of Vietnam or not (hereinafter referred to as foreign contractors and foreign sub-contractors) who do business in Vietnam or earn income in Vietnam under contracts, agreements, or commitments between the foreign contractor and a Vietnamese entity or between a foreign sub-contractor and a foreign sub-contractor to perform part of the main contract.
  • Foreign entities providing goods in Vietnam in the form of domestic export and earn income in Vietnam under contracts between them and Vietnamese companies (except for cases in which goods are processed and then returned to foreign entities) or distribute goods in Vietnam or provide goods under Incoterms rules that require the sellers to be responsible for goods that have been taken into Vietnam’s territory.
  • Any foreign entity that performs the whole or part of goods distribution or service provision in Vietnam, who is still the owner of goods that are delivered to Vietnamese organizations or take responsibility for the cost of distribution, advertising, marketing, quality of goods/services delivered to Vietnamese organizations, or impose prices (including the cases in which the foreign entity authorities or hires some Vietnamese organization to perform part of the distribution or service provision pertaining to goods sale in Vietnam).
  • Any foreign entity that negotiates or concludes contracts via a Vietnamese entity
  • Any foreign entity that exercises its right to export, import, distribute goods in Vietnam, buy goods to export, or sell goods to Vietnamese traders in accordance with trading laws.

Value-Added Tax (VAT)

The business tax or VAT system in Vietnam is generally similar to many other countries. Except for specified in the tax regulations, VAT is levied on the sales of goods and services within the territory of Vietnam at each stage of the supply chain.

The business tax levied on imported goods is calculated at the prescribed tax rate and the gross value after custom duty, special tax, and environment tax if applicable.

Special sale tax (SST)

SST is a form of excise tax that applies to the production or import of certain goods and the provision of certain services.
Imported goods (except for various types of petrol) are subject to SST at both the import and selling stages.

Tax rate

The Law on SST classifies items subject to SST into two groups

Commoditiescigarettes, liquor, beer, automobiles having less than 24 seats, motorcycles, airplanes, boats, petrol, air-conditioners up to 90,000 BTU, playing cards, votive papers
Service activitiesdiscotheques, massage, karaoke, casinos, gambling, lotteries, golf clubs and entertainment with betting.
The SST rate is as follows
Goods/servicesTax rate (%)
Cigar/Cigarettes75
Spirit/Wine
a) Spirit/Wine with ABV ≥ 20°
b) Spirit/Wine with ABV < 20°
65
35
Beer65
Automobiles having less than 24 seats10-150
Motorcycles with cylinder capacity above 125cm320
Airplanes
Boats
30
30
Petrol7-10
Air-conditioner (not more than 90,000 BTU)10
Playing cards40
Votive papers70
Discotheques40
Massage, karaoke30
Casinos, jackpot games35
Entertainment with betting30
Golf20
Lotteries15

Natural Resources Tax (“NRT”)

Natural resources tax is payable by industries exploiting Vietnam’s natural resources including petroleum, minerals, natural gas, forestry products, and natural water. Natural water used for agriculture, forestry, fisheries, salt industries and sea water for cooling purposes may be exempt from NRT provided that certain conditions are satisfied.

The tax rates vary depending on the natural resource being exploited, range from 1% to 40%, and are applied to the production output at a specified taxable value per unit. Various methods are available for the calculation of the taxable value of the resources, including cases where the commercial value of the resources cannot be determined.
Crude oil, natural gas and coal gas are taxed at progressive rates depending on the daily average production output.

Non-agricultural land use Taxes

Foreign investors generally pay rental fees for land use rights. The range of rates is wide depending upon the location, infrastructure and the industrial sector in which the business is operating.

Environment Protection Tax

Environment protection tax (”EPT”) is applicable to the production and importation of certain goods deemed detrimental to the environment, the most significant of which are petroleum and coal.

Payable of environmental protection tax shall be calculated according to the following formula: Payable environmental protection tax = Quantity of taxed goods units x specific tax amount on a goods unit.

Import and Export Duties

Import and export duty rates are subject to frequent changes (normally being updated at the end of a calendar year).

Import duty rates are classified into 3 categories: ordinary rates, preferential rates and special preferential rates. Preferential rates are applicable to imported goods from countries that have Most Favoured Nation (MFN, also known as Normal Trade Relations) status with Vietnam. The MFN rates are in accordance with Vietnam’s WTO commitments and are applicable to goods imported from other member countries of the WTO.
Special preferential rates are applicable to imported goods from countries which have a special preferential trade agreement with Vietnam. Currently, effective free trade agreements (“FTA”) to which Vietnam is a party include FTAs, between ASEAN member states, between ASEAN member states and Japan, China, India, Korea, Australia – New Zealand, Vietnam and Japan, Chile, Korea, Cambodia, Laos, and FTAs between Vietnam and Eurasian Economic Union (Vietnam and the Customs Union of Russia, Belarus, Kazakhstan).
Vietnam has concluded 3 important agreements, the ASEAN – Hong Kong FTA (AHKFTA), the European Union FTA (EVFTA), and the Comprehensive and Progressive Trans-Pacific Partnership (CP-TPP). In addition, Vietnam is negotiating other agreements including the Regional Comprehensive Economic Partnership (RCEP) and the FTAs with European Free Trade Association (Vietnam and Iceland, Liechtenstein, Norway, Switzerland), and with Israel.
To be eligible for preferential rates or special preferential rates, the imported goods must be accompanied by an appropriate Certificate of Origin. When goods are sourced from non-preferential treatment/non-favoured countries, the ordinary rate (being the MFN rate with a 50% surcharge) is imposed.

Export Duties

Export duties are charged only on a few items, basically natural resources including sand, chalk, marble, granite, ore, crude oil, forest products, and scrap metal.

Rates range from 0% to 40%. The tax base for the computation of export duties is the FOB /Delivered At Frontier price, i.e. the selling price at the port of departure as stated in the contract, excluding freight and insurance costs. In case the customs values of the exported goods cannot be determined using the transaction value method, they will be determined by the customs authority using, sequentially, the following customs valuation bases: the transaction prices of similar exported goods in the customs authorities’ pricing database, the selling prices of similar goods in the local market with certain adjustments, or the selling prices of exported goods collected, classified & adjusted by the customs authorities.
Other taxes potentially imposed on imports

FEES

Other fees and taxes can apply in Vietnam, including business license fee and registration fees on the transfer of certain registrable assets.

License fee

The rate of licensing fees for the organizations having the production and business of goods and services is as follows

Charter/Investment capital (billions)Rate (VND)
Over 103,000,000
Less than or equal 102,000,000
The branches, representative offices, business location, public service providers and other business organizations1,000,000