Understanding the tax landscape in Vietnam - 5 common types of taxes
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For businesses entering or operating in Vietnam, understanding the country’s tax obligations is not just a compliance necessity—it’s a foundation for strategic planning and sustainable growth. Recognizing this, PLF Law Firm has released a practical guide titled “Understanding the Tax Landscape in Vietnam – 5 Common Types of Taxes”, designed to help companies navigate key tax categories with clarity and confidence.
Whether you’re launching a startup, expanding regionally, or managing cross-border investments, this guide serves as a concise yet comprehensive reference to the taxes most relevant to business activities in Vietnam.
1. Corporate Income Tax (CIT)
Corporate Income Tax is imposed on the profits of enterprises. The standard CIT rate in Vietnam is 20%, though preferential rates may apply in certain sectors or investment zones. Businesses are expected to maintain proper accounting records, submit annual tax returns, and make quarterly provisional tax payments.
Key considerations include:
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Revenue recognition rules
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Deductible and non-deductible expenses
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Loss carry-forward policies (up to 5 years)
2. Value-Added Tax (VAT)
VAT is an indirect tax levied on the sale of goods and services. The standard VAT rate is 10%, but 5% and 0% rates apply to specific goods and export services.
VAT impacts nearly all business transactions, and companies must:
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Register for VAT
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Issue VAT-compliant invoices
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File monthly or quarterly declarations
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Reconcile input and output VAT credits
3. Personal Income Tax (PIT)
Employers in Vietnam are responsible for withholding PIT from employees’ salaries. Residents are taxed on worldwide income, while non-residents are taxed only on Vietnam-sourced income.
Progressive tax rates (from 5% to 35%) apply to most employment income, and businesses must:
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Register employees with tax authorities
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Declare and pay PIT monthly or quarterly
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Provide year-end PIT finalization
4. Foreign Contractor Tax (FCT)
Foreign entities providing services or goods associated with services to Vietnamese customers may be subject to FCT, a combination of CIT and VAT. Whether applied as a withholding tax or self-declared by the foreign contractor, this tax ensures Vietnam collects revenue from cross-border commercial activity.
FCT obligations depend on:
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Type of contract and services
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Presence of a permanent establishment in Vietnam
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Whether the contractor uses Vietnamese sub-contractors
5. Business License Tax (BLT)
Often overlooked but mandatory, the Business License Tax is an annual fixed fee based on a company’s charter capital or revenue. Paid at the beginning of each calendar year, BLT serves as a basic registration fee to operate legally.
Typical fees range from VND 1 million to 3 million per year, and newly established businesses may be exempt in their first year.
Why This Guide Matters
PLF’s accounting guide goes beyond listing tax categories—it explains their practical impact and how businesses can proactively manage compliance to avoid penalties. For foreign investors and entrepreneurs unfamiliar with Vietnam’s regulatory environment, this publication offers a much-needed map through the complexity of tax procedures.
By understanding these five tax pillars, businesses can better forecast liabilities, structure operations efficiently, and build trust with local authorities.
