In the context of Vietnam’s deep integration into the global economy, attracting foreign investment is increasingly important. However, foreign-invested enterprises need to clearly understand tax regulations to comply with the law and optimize business operations. Here is an overview of the main types of taxes that foreign-invested enterprises may have to pay when operating in Vietnam.
1. Business License Fee:
The business license fee is a type of tax that enterprises and individuals engaged in the production and trading of goods and services must pay annually to legally conduct business activities.
According to Clause 1, Article 4 of Decree No. 139/2016/NĐ-CP, the business license fee rates for enterprises are as follows:
For branches, representative offices, business locations,
For organizations with charter capital or investment capital of up to 10 billion VND: 2 million VND per year.
2. Corporate Income Tax (CIT):
Corporate income tax is a direct tax imposed on the taxable income of enterprises, including income from the production and trading of goods and services, as well as other income as prescribed by law. This taxable income is determined after deducting reasonable and lawful expenses related to the enterprise’s income.
Legal Basis: Articles 10 and 13 of the 2008 Corporate Income Tax Law.
CIT rates may vary depending on the business sector:
- For oil and gas exploration, prospecting, and extraction in Vietnam: 32% to 50%.
- For the exploration, prospecting, and extraction of rare and precious mineral resources (including platinum, gold, silver, tin, tungsten, antimony, gemstones, and rare earths, excluding oil and gas): 50%.
- If the rare and precious mineral resources cover at least 70% of the allocated land area in a locality classified as having exceptionally difficult socio-economic conditions under the CIT incentive list: 40%.
- For other taxable sectors: 20%.
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3. Value-Added Tax (VAT):
VAT is a tax levied on the added value of goods and services during the production and business process.
Legal Basis: Articles 11 and 12 of the 2024 Value-Added Tax Law.
There are two methods for VAT calculation:
Deduction method:
VAT payable = (Taxable price of goods and services sold x VAT rate) – Input VAT that is deductible.
VAT rates are 0%, 5%, 10% depending on the type of goods and services.
Direct calculation method:
VAT payable = Revenue subject to VAT x Percentage (%) to calculate VAT on revenue.
4. Personal Income Tax (PIT):
Foreign-invested enterprises (FIEs) operating in Vietnam and directly employing workers are responsible for declaring, withholding, and paying personal income tax on behalf of their employees. This is a crucial part of financial management and legal compliance.
Thus, in addition to corporate income tax, wholly foreign-owned companies must also fulfill their obligations related to personal income tax for employees.
5. Import and Export Duties:
Legal Basis: Articles 5 and 6 of the 2016 Import-Export Tax Law.
These taxes apply only to goods that are imported or exported across Vietnam’s borders. There are two types of tax applications:
- Percentage-based tax: Applied to goods taxed as a percentage of their value.
- Absolute tax: Applied as a fixed amount per unit of goods.
Foreign-invested enterprises in Vietnam must understand and comply with the regulations on the above taxes to ensure legal and efficient business operations.
For detailed information and specific legal consultation, please contact Legal Consultant Hotline: 0987 290 273 or email info@dnp-law.com.
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