Tax Compliance
What is tax compliance services?
Tax compliance or taxation is one of the most considered complicated part for the company. Especially in Vietnam, the taxation change constantly. When doing business in Vietnam, every company, firm, organization have to comply to the monthly, quarterly and yearly tax obligation. Understanding how the taxation works will take time and effort.
Legal services:
- Register new tax code for client;
- Preparation Yearly Licensing tax declaration and support online payment;
- Preparation VAT declaration and assistance with payment of VAT online (if any);
- Calculate Personal Income Tax (PIT) and support online PIT payment (if any);
- Calculate Corporate Income Tax (CIT) and support online CIT payment (if any).
How to proceed?
The monthly/quarterly/yearly tax compliance will be reviewed to meet the newest regulation before submitting and making tax payment.
By understanding the procedure of the tax department, we can simplify some special cases and save more time.L
Personal Income Tax (“PIT”) is the tax which applies to the residents earning taxable income within and outside Vietnam’s territory and to non-residents who earn taxable income within Vietnam’s territory.
Exemptions:
Tax regulations provide for many kinds of tax-exempt income, for example:
- Income from transfer of real estate between relatives in family (depending on each specific relationship);
- Income from the value of land use rights of individuals to whom land is allocated by the State;
- Income from receipt of inheritances or gifts that fall under the spectrum of real estate between relatives in family (depending on each specific relationship);
- Income from foreign exchange remittances.
Reductions: Taxpayers who face difficulties caused by natural disasters, fire, accidents or severe diseases which affect their tax paying ability may be considered for tax reduction corresponding to the extent of damage they suffer from but not exceeding payable tax amounts.
There are several personal income tax rates which depend on the kinds of personal income such as:
- monthly wages with progressive rates ranging from 5% to 35%;
- income from capital investment with a fixed rate of 5%;
- income from real estate transfer with rates of 2% or 25% depending on the case.
The following investment sectors benefit from tax incentives:
- Investment projects in preferential investment industries and trades such as: high-tech activities, production of new materials, new energy, clean energy, pre-school education, general education;
- Investment projects located in preferential investment geographical areas;
- Projects with a scale of capital being 6,000 billion Dong or more of which at least 6,000 billion Dong is disbursed within a period of three years from the date of issuance of the IRC;
- Investment projects located in rural areas and employing 500 employees or more.
There are process export zones with tax reductions such as:
- Import duty is not applied to the goods imported from abroad to the process export zone and used within such process export zone; and goods transported from one process export zone to another; or
- Export duty is not applied to the goods exported from the process export zone to outside Vietnam’s territory.
VAT stands for “Value-Added Tax” and is imposed on the added value of goods or services arising in the process of production, circulation and consumption.
The general VAT rate is 10%. Other rates such as 0% or 5% can be applied depending on each specific product or service.
Foreign companies established and operating in Vietnam will be subject to the following taxes: Value Added Tax, Corporate Income Tax, and Personal Income Tax (applicable to employees, owners, companies members, shareholders in the company), license tax, and other taxes depending on each specific case such as: environmental protection tax, land use tax, special consumption tax, import and export tax, etc.
Yes. Tax law of Vietnam offers many preferential policies for foreign-invested companies operating in Vietnam; depending on the type of industry and location of operation, the level of tax incentives will vary.
Depending on the type of goods and services provided by the company, the corresponding value added tax rate can be: non-taxable, 5% or 10%, or depending on the form of activity (domestic consumption or export) 0%.
Vietnam applies policies of double taxation avoidance (“DTA”) to individuals and companies from countries with which Vietnam has enterered into a DTA agreement. The types of taxes that are subject to the double taxation avoidance rules usually include Corporate Income Tax and Personal Income Tax.
Foreign investors (individuals / organizations) are allowed to remit profits to their country after the Vietnamese company has fulfilled its tax obligations.
