Tax is always an issue that investors and enterprises are interested in and learn about due to its importance and direct impact on business activities and compliance with Vietnamese legal regulations. To better understand the current common taxes in Vietnam, please refer to our article below.
Vietnamese Law does not have a specific definition of tax, but it can be understood that tax is a management tool and a compulsory and non-refundable state budget revenue from organizations and individuals that generate taxable income set by the State.
Common taxes in Vietnam today can be mentioned as personal income tax, value-added tax, corporate income tax, tax import and export, and special consumption tax:
Personal Income Tax
Personal income collection is a tax that the state imposes on high-income individuals to ensure revenue for the state budget and to implement social justice.
Personal income taxpayers are seen by the Tax Law as resident individuals with taxable income inside and outside the territory of Vietnam and non-resident individuals with taxable income arising within the territory of Vietnam irrespective of the place of payment entered. Personal income tax rates will vary depending on the income source and payment method.
For some countries and territories, Vietnam has signed international treaties on the avoidance of double tax to facilitate individual investors, and experts conducting investment and business activities in Vietnam.
According to Vietnamese Law, the value-added tax is an indirect tax calculated on the added value of goods and services arising in the process from production, circulation to consumption.
Taxable objects are goods and services used for production, business, and consumption in Vietnam, except for some goods and services such as products are varieties of plants, livestock, and state-owned houses sold by the State to tenants, etc.
Value-added taxpayers are organizations and individuals producing and trading goods and/or services subject to value-added tax and organizations and individuals that import value-added taxable goods.
The value-added tax rate of each taxable entity is different. Some of the enterprises that are eligible to choose the value-added tax calculation option include the direct calculation method and the tax deduction method and must post a sign with the regulator before applying.
Corporate Income Tax
Corporate income tax is a type of direct tax calculated on the taxable income of organizations engaged in the production and trading of goods or providing services with taxable income cases specified in Article 2 of the Law on Corporate Income Tax 2008, including enterprises established and operating under Vietnamese Law, as well as enterprises established under foreign laws with permanent establishments or without permanent establishments in Vietnam but taxable income arises in the territory of Vietnam. Corporate income tax rates will be determined based on the size of the enterprise, industry, and geographical area of the enterprise investment and business activities.
Similar to personal income tax, Vietnam and some countries have signed international treaties on avoiding double tax to facilitate sue business activities and expand markets for foreign enterprises and investors.
Import And Export Duties
Import and export taxes are direct taxes. Taxable objects are goods exported or imported satisfying the factor of movement through Vietnam’s border gate, border, or domestic goods access and leave to export processing enterprises, export processing zones, tax protection warehouses, bonded warehouses, and other tariff zones as specified by the Law. Accordingly, taxpayers are organizations or individuals owning import and export goods, organizations entrusted with export and import, and some others.
In some cases, taxpayers will be exempted from or reduced import and export taxes if they satisfy the conditions of relevant laws on the price value of imported and exported goods, import and export purposes, etc.
Special consumption tax
The special consumption tax is an indirect tax levied on luxury goods and services that are not really necessary for life or affect people’s health and life safety to limit the consumption of these goods and services such as alcohol and beer, cigarettes, discotheque business, and casino service.
The special consumption tax rate for each type of goods and services may vary. Taxpayers are organizations and individuals producing or importing goods or providing services subject to tax.
The above are common taxes in Vietnam today. The Vietnam State applies tax collection policies to maintain operations and perform its management functions while promoting development economic development from home and abroad, ensuring equity and social security. Understanding taxes and tax rates will help enterprises and investors both ensure their interests and comply with regulations of law aimed at developing and expanding production and business activities.