A 0% rate applies to exported goods/services, including goods/services sold to overseas/non-tariff areas and consumed outside Vietnam/in the non-tariff areas, goods processed for export or in-country export (subject to conditions), goods sold to duty free shops, certain exported services, construction and installation carried out for export processing enterprises, aviation, marine, and international transportation services. Companies operating in this country should take note of the changes and stay compliant with the regulations. Companies operating in the oil and gas industry are subject to CIT rates ranging from 32% to 50% depending on the location and specific project conditions. The employees’ obligation is not required until January 2022. Depending on the category of goods or services, the VAT rates are as follows: A separate category includes supplies not subject to output VAT, but where related input VAT can, nevertheless, be credited. Unemployment insurance (UI) contributions are applicable to Vietnamese individuals only. The requirements for data transmission to the tax authorities and the use of e-invoices with a verification code under Clause 12, Article 5 of Decree 12/2015 is abolished. List of Countries by Corporate Tax Rate - provides a table with the latest tax rate figures for several countries including … The 10% 'standard' rate applies to activities not specified as not subject to VAT, exempt, or subject to the 0% or 5% rate. At the exit, a VC (or any private equity fund) in particular or any foreign investors in general would have several liquidity considerations including IPO, share redemption and, most commonly, M&A. Vietnam could afford raising public debt to support post-Covid recovery. Businesses in the oil, gas and natural resources sector are subject to a heavier tax rate, ranging from 32% to 50% on their taxable income. Decree 123 will take effect from 1 July 2022, but taxpayers that meet, technology infrastructure requirements are encouraged to, (i.e. Your message was not sent. By continuing to browse this site you agree to the use of cookies. Monthly Tax & Customs Newsletter and Alert are publications prepared by Deloitte Vietnam, which aim to keep our clients and the public up to date on tax and customs notable regulations that affect companies doing business in Vietnam. Currently, effective free trade agreements (FTAs) to which Vietnam is a party include: In addition, Vietnam has just finalized the negotiation for the Vietnam - UK FTA (the UKVFTA) and the Regional Comprehensive Economic Partnership (RCEP). Corporate Tax Rate in Vietnam averaged 26.77 percent from 1997 until 2020, reaching an all time high of 35 percent in 1998 and a record low of 20 percent … The SST paid at importation will be creditable against SST paid at the selling stage. Vietnam to cut corporate tax in bid to boost business Prime Minister Nguyen Xuan Phuc announced that Vietnam is planning to slash corporate income tax rates from the current 20-22% to 15-17% in an effort to make the country one of the most competitive economies in the … The reduction was approved by more than 90 percent of all State members. Taxable revenue includes income from the sale of goods, provision of services, leasing or sale of assets, joint venture operations and more. Before using e-invoices (either with or without a verification code), enterprises must register and obtain approval from the tax authorities via the web portal of the General Department of Taxes (GDT). Technology Vietnam cuts corporate income tax for science, tech firms The Saigon Times Wednesday, Jan 27, 2021,11:11 (GMT+7) Vietnam cuts corporate income tax for science, tech firmsThe Saigon Times A man tries virtual reality technology at a tech expo in HCMC. Payments to foreign contractors are subject to Foreign Contractor Tax (FCT), which consists of value-added tax (VAT) and CIT elements. Vietnam to cut 30% corporate income tax in 2020. Vietnam Tax & Accounting Updates, November 2020 and Other Recent Publications – Domicile Corporate Services 17 Nov 2020 This November 2020 publication of our Tax and Accounting Updates looks at a number of key Decrees that were released recently including Transfer Pricing, Tax Administration, E-Invoices and Company Establishment. If the enterprises transfer data directly to the tax authorities’ portal, certain technical conditions for connection with the tax authorities’ portal must be satisfied. Dividends. Excludes plastic bags used for packaging or that are 'environmentally friendly'. The level of compulsory SI contribution for Vietnamese employees is 25.5% of total salary, of which 17.5% is the employers’ obligation and the remaining 8% is the employees’ obligation. Decree 51/2010, Decree 04/2014 amending Decree 51/2010 and Decree 119/2018). Corporate Income Tax in Vietnam (CIT) (SB Law) CIT is levied on the taxable income of companies established in Vietnam including foreign invested companies. Sale of agricultural products that have not been processed into other products or have only been through preliminary processing. Corporate law in Vietnam was originally based on the French commercial law system. Corporate tax rates in Vietnam. the EVFTA). It does not cover the retirement and death fund, which will be started for contribution from January 2022. However, if the business engages in highly-encouraged sectors or geographical areas, it is subject to corporate income tax incentives in Vietnam. Export duties are charged only on a few items, basically certain natural resources. Hanoi, 1 January 2019 EY Vietnam and Mrs. Huong Vu, Tax Partner, were honored to receive the Prime Minister’s Certificate of Merit for achievements in building and developing tax consulting services in Vietnam over the past 5 years, from 2008 to 2012. Vietnam has recently announced some changes over VAT and Corporate Income Tax. It is the employers’ obligation to cover sickness and maternity leave fund and occupational diseases and accident fund. Companies operating in this country should take note of the changes and stay compliant with the regulations. Minimum salaries are subject to review annually. The standard Vietnam corporate income tax (CIT) rate is 20%, though enterprises operating in the oil and gas sectors will be subject to rates between 32% and 50%; Dividends paid by a Vietnamese company to its corporate shareholders will be completely tax exempt. Social security contributions in Vietnam – Vietnamese employees are required to make SI, HI and UI contributions at rates of 5%, 1.5% and 1% of the employee's salary, respectively. Corporate income tax in Vietnam, also known as corporation tax or company tax, is levied on both foreign as well as domestic companies. The subjects of this tax is almost all products and services in Vietnam domestic market, except some subjects that are used for societal purpose, in agriculture, education, medical service, insurance, aiding, science, mineral, … These individual taxpayers in Vietnam are eligible for tax refunds on the personal income tax. The income subject to SI/HI/UI contribution comprises salary, certain allowances, and other regular payments according to labour law, but this is capped at 20 times the basic salary for SI/HI contributions and 20 times the minimum regional salaries for UI contribution. Prior to transferring profits back to their home markets, foreign companies maintaining operations and taking in revenue in Vietnam must fulfill certain annual compliance requirements. However, since Vietnam's independence in 1945, it has largely been influenced by the ruling Communist Party.Currently, the main sources of corporate law are the Law on Enterprises, the Law on Securities and the Law on Investment. © 2017 - 2021 PwC. Corporate income tax will be completely exempted in the first four years and […] Navigate the tax, legal, and economic measures in response to COVID-19. In contrast to common tax systems, the Vietnamese law on CIT does not focus only on corporate enterprises. These include: clean water, teaching aids, books, unprocessed foodstuffs, medicine and medical equipment, husbandry feed, various agricultural products and services, technical/scientific services, rubber latex, sugar and its by-products, social housing, and certain cultural, artistic, and sport services/products. With a complete suit of corporate services for established foreign companies & entrepreneurs. During the transition period up to 31 June 2022, the current invoicing regulations (i.e. This site uses cookies to collect information about your browsing activities in order to provide you with more relevant content and promotional materials, and help us understand your interests and enhance the site. Preferential CIT rates of 10%, 15%, and 17% are available where certain criteria are met. In addition to import duty and import VAT, there are also export duty, import SST, EPT, anti-dumping tax, anti-subsidy tax, and safeguard tax which are applied to only a limited number of goods. are exempt from FCWT. Of note, the most important factor is that the CIT reduction will apply to all businesses if their total revenue does not exceed the VND 200 billion (US$8.8 million) threshold in 2020. Salary/wage subject to SI contribution is capped at 20 times the minimum salary, stipulated by the Government from time to time, Motorcycle with cylinder capacity above 125cm, Air-conditioners (not more than 90,000 BTU). All rights reserved. Decree 114 took effect on 3rd August 2020 and applies to the tax year 2020. Certain assets, including houses, land, automobiles and motorcycles, etc., that are subject to registration of ownership are subject to stamp duty. Corporate Tax Rates 2020. Rates range from 0% to 40%. HI contribution rates are 4.5% of total salary and some allowances, with two-thirds contributed by the employer and one-third by the employee. This article was last updated in January 2019. Effective from 1 July 2019, the basic salary is VND 1,490,000 per month. The concept of residency is not in use for companies in Vietnam.Domestic companiesoperating under Vietnamese law will be taxed on local and foreign profits, though corporate income taxes paid abroad can be deductible from the Vietnamese one. Monthly Tax & Customs Newsletter and Alert are publications prepared by Deloitte Vietnam, which aim to keep our clients and the public up to date on tax and customs notable regulations that affect companies doing business in Vietnam. Sales of goods or provision of services to related parties (a definition thereof is included). Enterprises using e-invoice without a verification code must transfer e-invoice data to the tax authorities, either directly or via an authorised e-invoicing service provider. The tax is calculated as an absolute amount on the quantity of the goods. Every company in Vietnam, both local and international, is required to comply with all applicable regulations.. assignees). Tax relief stimulus may inflate Vietnam's fiscal deficit in 2020: Fitch. The Law on Corporate Income Tax (CIT) was amended and introduced on June 2008 and took effect from 1st January 2009. Interest The standard CIT rate is 20%. The progressive tax rates for tax residents of Vietnam range from 5% to 35%. For goods, SST is charged at the production or importation stage. Projects eligible for free zone registration are usually eligible for tax benefits. List of Countries by Corporate Tax Rate - provides a table with the latest tax rate figures for several countries including actual values, forecasts, statistics and historical data. Customs duties generally comprise import duty and import VAT. Each member firm of Crowe Global is a separate and independent legal entity. The standard corporate income tax (CIT) rate is 20%. Your message was not sent. NRT is payable by industries exploiting Vietnam’s natural resources, including petroleum, minerals, natural gas, forest products, natural seafood, natural bird’s nests, and natural water. Transfers of emission rights and various financial revenues. Vietnam’s National Assembly on June 19 ratified the government’s proposal to cut corporate income tax (CIT) by 30 percent. Generally, gains resulting from such exit could be taxed by the Government of Vietnam under the sphere of corporate income tax. Tax rate for enterprises operating in the oil and gas and other precious natural resources sectors ranges from 32% to 50%, depending on the project. All taxes are imposed at the national level. Chapter by chapter, from Albania to Zimbabwe, we summarize corporate tax systems in more than 160 jurisdictions. Crowe Vietnam Co., Ltd is a member of Crowe Global, a Swiss verein. The most significant change could be the scope of application; individuals who do business are not subject to the Law on CIT but the Law on Personal Income Tax.That is to say, the amended CIT Law only applies to taxpayers who operate in a corporate form. Residents in Vietnam have to pay tax on their worldwide income at progressive tax rates. Enterprises operating in the oil and gas industry are subject to CIT rates ranging from 32% to 50%, depending on the location and specific project conditions. However, for enterprises that operate in the field of oil, gas, and rare natural resources, the corporate tax ranges from 32% to 50% depending on specific types of projects and businesses. Anti-dumping tax, anti-subsidy tax, safeguard tax are all considered as supplemental import duties applicable to the imported goods under certain scenarios. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. See the Withholding taxes section for more information. Vietnam's Ministry of Finance has forwarded a proposal to parliament to legislate for corporate tax relief for small and medium sized enterprises. Enterprises (generally companies) are subject to the tax rates imposed under the CIT Law. The following corporate tax rates apply to these companies: The standard CIT rate is 20%. The Government has released an official Decree on e-invoicing in September 2018, which became effective since 1 November 2018 (Decree 119). silver, gold, gemstones) are subject to CIT rates of 40% or 50%, depending on the project’s location. EPT is an indirect tax that is applicable to the production and importation of certain goods deemed detrimental to the environment, the most significant of which are petroleum and coal. By continuing to browse this site you agree to the use of cookies. How to file an application of corporate income tax (CIT) incentives? The tax rates vary depending on the natural resource being exploited, ranging from 1% to 40%, and are applied to the production output at a specified taxable value per unit. In addition, owners of houses and apartments have to pay land tax under the law on non-agricultural land use. Change of business location more than two times within 12 months without any notification or any tax declaration at the new location. The tax is charged on the specific land area used based on the prescribed price per square metre at progressive tax rates ranging from 0.03% to 0.15%. Therefore, it is of utmost importance to have your accounting paperwork and reports up to standard and submitted according to compliance deadlines in Vietnam. SI contribution for foreign employees is 3.5% of total salary and some allowances. Corporate Income Tax ... PwC - Vietnam Pocket Tax Book 2018 6 7 12 14 19 20 PwC 3. 1 Executive Summary The Corporate Income Tax (CIT) is applied with the general rate of 20% from the beginning of 2016 (reduced from 22% which was applied from 1 January 2014 until 31 December 2015). The new law will ease tax administration procedures for entities while ensuring strict enforcement to prevent tax evasion. HCMC – Companies active in the science and technology sectors in Vietnam will enjoy the exemption and reduction of corporate income tax for up to 13 years, beginning from March 1, 2021, according to Circular 03 issued by the Ministry of Finance. Please contact for general WWTS inquiries and website support. The reduction will apply to all businesses with revenue of less than US$8.8 million (VND200 billion) for 2020 Foreign investors generally pay rental fees for land use rights. Therefore, salary earned from working abroad is taxable in Vietnam. From 2016 it will be further reduced to 20%. Decree 123 will take effect from 1 July 2022, but taxpayers that meet the technology infrastructure requirements are encouraged to implement e-invoices and e-documents as regulated in this Decree before the deadline of 1 July 2022. Vietnam corporate income tax - Vietnam's National Assembly has agreed to a corporate income tax reduction of 6 percentage points for most businesses … Keeping your tax reports in compliance is a time-consuming yet crucial part of doing business, especially when operating in a foreign market. Health insurance (HI) contributions are required for Vietnamese and foreign individuals that are employed under Vietnam labour contracts for at least three months. By submitting your email address, you acknowledge that you have read the Privacy Statement and that you consent to our processing data in accordance with the Privacy Statement. Chapter by chapter, from Albania to Zimbabwe, we summarize corporate tax systems in more than 160 jurisdictions. Preferential tax rates can be obtained for encouraged projects. A variety of tax reductions and –exemptions is applied Vietnam Briefing highlights seven changes that taxpayers should be aware of. What is Corporate Income Tax (CIT)? Please try again. Taxable income for CIT calculated based on is revenues generated in their course of production less reasonable expenses in the relevant fiscal year. Vietnam Announces Corporate Tax Breaks For SMEs by Mary Swire, Tax-News.com, Hong Kong 15 April 2019. The content is straightforward. The tax is charged on the specific land area used based on the prescribed price per square metre at progressive tax rates ranging from 0.03% to 0.15%. However Vietnam has 64 autonomous regional provinces and each province has a local tax authority which is responsible for the collection and administration of taxation The Corporate Tax Rate in Vietnam stands at 20 percent. The other rates are applicable to Vietnam companies operating in specific industries, such as oil and gas. The standard corporate income tax (CIT) rate is 20%. the deadline for compulsory implementation of e-invoices from 1 November 2020 until 1 July 2022. 'High tax risk enterprises' are required to use e-invoices with a verification code continuously for 12 months. There are several rates at which the corporate tax is levied in Vietnam, however the tax authorities impose a standard tax rate of 20%. Prior to 1 December 2018, Social insurance (SI) contributions were applicable to Vietnamese individuals only. Most goods imported into Vietnam are subject to import duty except and import VAT they qualify the conditions for exemption, such as goods imported for the production of subsequently exported goods under toll manufacturing or contract manufacturing arrangements, goods imported to form fixed assets of incentivised investment projects (in this case import VAT is not exempted), etc. Expatriates are exempt. Vietnam’s reformed and approved Law on Tax Administration will take effect on July 1, 2020. The standard tax rate is reduced to 22% from 1 January 2014. The stamp duty rates vary depending on the asset transferred. This category includes the following: There are stipulated categories of VAT exemptions, including certain agricultural products; goods/services provided by individuals having annual revenue of 100 million Vietnamese dong (VND) or below; imported or leased drilling rigs, aeroplanes, and ships of a type that cannot be produced in Vietnam; transfer of land use rights (LUR) (detailed guidance is provided to specific cases); various financial services; various securities activities including fund management; capital assignments; foreign currency trading; debt factoring; certain types of insurance; medical services and elderly/disabled people care service; education, printing/publishing, public transportation, export of unprocessed natural resources, etc. Vietnam Corporate Tax Rate chart, historic, and current data. Vietnam has recently announced some changes over VAT and Corporate Income Tax. 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. Premium corporate services Easily start, manage & advance your business in Vietnam. Corporate income tax Vietnam imposes a standard corporate income tax (CIT) at a 20% flat rate. The Vietnamese government has released Circular No. Enterprises operating in the oil and gas industry are subject to CIT rates ranging from 32% to 50%, depending on the location and specific project conditions. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Commissions from the sale of exempt goods/services. Vietnam implemented the New Penal Code in January 2018, under which corporations can be now held criminally responsible for numerous violations, including tax evasion. The minimum regional salaries, from 1 January 2020, increased to VND 3,070,000 to VND 4,420,000 per month, depending on the region. Tax Compliance in Vietnam. See “Other incentives” section for further Certain services rendered by a foreign organisation, which does not have a PE in Vietnam where the services are rendered outside of Vietnam, including repairs to means of transport, machinery, or equipment, advertising, marketing, promotion of overseas investment and trade, brokerage activities for the sale of overseas goods and services, training, and certain international telecommunication services. On 25 September 2020, the Government of Vietnam issued Decree 114/2020/ND-CP (“Decree 114”) that provides guidance on the implementation of a 30% reduction of Corporate Income Tax (“CIT”). Navigate the tax, legal, and economic measures in response to COVID-19. Taxpayers must file VAT returns on a monthly basis by the 20th day of the subsequent month or on a quarterly basis by the 30th day of the subsequent quarter (for companies with prior year annual revenue of VND 50 billion or less). Vietnam imposes a standard corporate tax rate of 20 per cent on a company’s profits, including the profits of its affiliates and branches. Taxable profit is the difference between total revenue, whether domestic or foreign sourced, and deductible expenses (see the Deductions section), plus other assessable income. Foreign organisations carrying out business in Vietnam without setting up a legal entity in Vietnam and/or having Vietnam-sourced income are considered foreign contractors, irrespective of whether the services are performed inside or outside Vietnam. There are no provisions for tax incentives for such income. Vietnam Corporate Income Tax. All rights reserved. Corporate Tax Rates 2020 includes information on statutory national and local corporate income tax rates applicable to companies and branches, as well as any applicable branch tax imposed in addition to the corporate income tax (e.g., branch profits tax or branch remittance tax). However, on 19 October 2020, the Government issued Decree 123/2020 (Decree 123) guiding invoices and documents, which extends the deadline for compulsory implementation of e-invoices from 1 November 2020 until 1 July 2022. No withholding or remittance tax is imposed on profits paid to foreign corporate shareholders. The standard corporate income tax rate in Vietnam is 20% of a company’s taxable income. Compensation, bonus, subsidies, except those provided in exchange for certain services. the Comprehensive and Progressive Trans-Pacific Partnership agreement among Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam); The FTA between Vietnam and EU (i.e. Special or preferential tax rates of 10% or 20% can be granted to encouraged investment projects. The 0.4 percent tax has been proposed by the Ministry of Finance, which claims it will bring in VND31 trillion ($1.3 billion) per year and help Vietnam “get in line with regulations on property tax rates in other countries.” However, experts have expressed their … 25/2018/TT-BTC, revising and supplementing the existing circulars on value added tax (VAT), corporate income tax and personal income tax. Compulsory HI contributions are applicable to both Vietnamese individuals and expatriates, except those transferred from their mother companies abroad to subsidiary firms in Vietnam (i.e. While Vietnam is a rising star in ASEAN, its tax systems can be time-consuming and complex. Please see www.pwc.com/structure for further details. Corporate Tax Rates 2020. According to the Consolidated Document No.14/VBHN-VPQH on Corporate Income Tax, the corporate income tax rate in Vietnam stands at 20% (taking effect from 01/01/2016). The UI contributions are capped at 20 times the minimum regional salary stipulated by the Government from time to time. To common tax systems in more than 160 jurisdictions member of Crowe Global, Swiss. Such income for SMEs by Mary Swire, Tax-News.com, Hong Kong 15 April 2019 abroad is in! Vietnamese individuals only, exploration, and special preferential rates, preferential rates preferential... 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