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DAGON TAX, located in Shenzhen, has a team of experts in the field of tax law, focusing on professional services in the fields of corporate compliance, high-net-worth private, financing and M&A, capital market taxation, tax dispute resolution, international taxation, transfer pricing and anti-avoidance response.
【 Department of International Revenue
The purpose of this column is to share articles related to international taxation, and we can provide non-resident investment in China, tax treaty treatment and tax incentive application, investment structure planning, profit repatriation, exit plan planning and other tax-related services.
Organized by the Grand Duke team
Reprinted with the source
Vietnam's tax legislative power and taxing power are concentrated in the central government. The current tax laws and regulations include the following taxes: enterprise income tax, value-added tax, individual income tax, withholding income tax, special consumption tax, non-agricultural land use tax, business license tax, social security tax, import and export tax, environmental protection tax, resource tax, etc.
01 Corporate income tax
Corporate income tax is a tax levied on enterprises (including resident enterprises and non-resident enterprises) and other organizations that derive income in Vietnam on their production and business income.
Resident enterprises refer to enterprises established in Vietnam in accordance with the laws and regulations of Vietnam.
The basic rate of corporate income tax in Vietnam is 20%. From July 1, 2023, the corporate income tax rate for oil and gas activities in Vietnam is 25%-50%, while the corporate income tax rate for exploration, exploration and exploitation of other precious and rare resources is 32%-50%.
Vietnam's tax reduction and exemption is self-verification and self-exemption, and the year-end liquidation. At the end of the year, the tax department conducts an annual tax clearance, and the tax reduction and exemption of the enterprise is reviewed and determined together, and if it is found that the enterprise does not meet the tax reduction and exemption regulations, the enterprise is required to pay tax at the same time, and a penalty of not paying or underpaying the tax is not less than one time but not more than five times.
Enterprises set up in designated investment zones, i.e., economic zones, high-tech zones, industrial zones and export processing zones, can enjoy preferential policies such as four exemptions and nine halves, four exemptions and five halves, and two exemptions and four halves. Certain types of income can be subject to tax rates such as 15% and 10%. Employees who hire a certain percentage of female employees and ethnic minority employees can also enjoy a fixed tax deduction.
Income from the transfer of immovable property should be recognized separately for tax filing purposes.
Non-resident enterprises with permanent establishments in Vietnam are subject to corporate income tax at a basic rate of 20% and are required to pay corporate income tax on income derived from sources within Vietnam and income derived from the establishment of institutions or places established by them, as well as income derived from sources within Vietnam that are actually connected with the institutions or establishments established by them.
Income derived from non-resident enterprises without permanent establishment in Vietnam shall be subject to corporate income tax on taxable income occurring in Vietnam, and shall be taxed at the tax rate determined by the type of income. The tax payable is calculated based on the income from the sale of goods and the provision of services obtained in Vietnam and the corresponding percentage, as follows:
(1) Provision of labor services: 10% for the management of shops, hotels and casinos, 1% for taxable services when selling goods, 2% for those who cannot divide the value of goods and services, and 5% for others;
(2) Provision and transfer of goods in Vietnam in accordance with international trade regulations: 1%;
(3) Royalties: 10%;
(4) Leasing fee for ships and aircraft (including their engines and accessories): 2%;
(5) Derrick, machinery and equipment, and means of transportation leasing (except for the provisions of the previous point): 5%;
(6) Loan interest: 5%;
(7) Securities transfer and overseas reinsurance: 0.1%;
(8) Financial derivatives services: 2%;
(9) Construction, transportation and other activities: 2%.
Vietnam allows foreign investors to remit profits at the end of each financial year or at the end of the investment in Vietnam. If the investee company accumulates losses, the foreign investor is not allowed to remit the profits. The foreign investor or investee company must notify the tax authorities of the plan to remit profits at least 7 business days before the planned remittance.
(1) Dividend withholding tax: Although the tax treaty signed between the Vietnamese government and the Chinese government stipulates that the dividend withholding tax rate is 10%, there is currently no tax on dividend income in Vietnam;
(2) Interest withholding tax: the agreed tax rate is 10%, and the domestic tax rate in Vietnam is 5% according to the principle of whichever is lower;
(3) Withholding tax on royalties and technical fees: the tax rate is 10%;
(4) Withholding tax on management service fees: 5% for general services, 10% for restaurants, hotels and casinos;
02 Individual income tax
Vietnam has a personal income tax system that combines classification and comprehensiveness.
Individual income tax resident taxpayer refers to an individual who meets one of the following conditions: an individual who has resided in Vietnam for 183 days or more in a year or in a continuous 12-month period from the first day of arrival in Vietnam, and has a habitual residence (recurrent residence) in Vietnam, which can be a registered permanent residence in Vietnam or a rental house for residence specified in the lease contract for more than 183 days. Vietnamese resident taxpayers are taxed on their worldwide income.
Residents' business income, wages and salaries are subject to the following progressive tax rates for excess:
The following tax rates apply to income from capital investment, income from transfer of assets, income from transfer of immovable property, income from winning lotteries, income from copyright, income from commercial concessions, income from inheritance or gift:
Non-resident taxpayers are taxed only on their Vietnam-sourced income. For the different types of income of non-resident taxpayers, the specific tax rates are as follows:
(1) Income from commodity trade, the tax rate is 1%;
(2) Income from the provision of labor services, the tax rate is 5%;
(3) Income from production, construction, transportation and other business activities shall be subject to a tax rate of 2%;
(4) Income from wages and salaries, the tax rate is 20%;
(5) Income from interest and dividends, the tax rate is 5%;
(6) The tax rate on income from the transfer of securities and capital is 0.1% of the transfer income;
(7) Income from the transfer of immovable property, the tax rate is 2% of the transfer income;
(8) Income from royalties, the tax rate is 5%;
(9) The tax rate is 10% for winning, inheritance or gift income.
03 Miscellaneous
1. Value-added tax
The scope of VAT covers the whole process of production, sales and services, and VAT is levied on the value-added amount generated in the process of production, circulation and consumption of goods or services.
The VAT rate is divided into zero rate, 5% and 10% (basic tax rate), the zero rate is applicable to export goods, the 5% tax rate is applicable to agriculture, medicine, health education, scientific and technological services, etc., and the 10% tax rate is applicable to petrochemical, electronics, chemical machinery manufacturing, construction, transportation, etc.
2. Business license tax
Taxpayers (1) economic organizations including state-owned enterprises, joint-stock companies, limited liability companies, private enterprises, foreign-invested enterprises, etc., and (2) self-employed households such as individuals, individual groups and families.
(1) Table of tax rates for business licenses of economic organizations
(2) The tax rate of the business license of self-employed households
3. Social security tax
The relevant taxes and fees that are closely related to social security tax are briefly described as follows:
(1) The proportion of social insurance contributions is 25.5% of the total salary, of which 17.5% is borne by the employer and the remaining 8% is borne by the employee;
(2) Unemployment insurance premiums are only applicable to Vietnamese employees, and the contribution rate is 2% of the total salary, and the employer and employee bear 1% respectively;
(3) The proportion of medical insurance premiums is 4.5% of the total salary, of which 3% is borne by the employer and the remaining 1.5% is borne by the employee.
Employers who fail to meet their payment obligations and fail to meet their payment obligations on time will be subject to a fine of 12% to 15% of the total amount of underpayment of taxes (up to a maximum of VND 75 million) in addition to making up the outstanding fees and interest.
PS: Due to space limitations, other taxes will not be introduced, and they have little to do with overseas investment. This article is only a brief combing to help Chinese residents invest overseas to understand local taxes, for specific business, please contact us, refer to the "Tax Guide for Chinese Residents Investing in Vietnam"
Written by: Caizi
Typesetting: Chen Wen
头条抖音公众号：大公Tax
The content of this article is for general information purposes only and does not constitute the provision of any professional advice or services. Nothing provided herein should be construed as formal tax, accounting, or legal advice.
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