Accounting and tax

Tax planning and obligation in Vietnam

Tax rates

  1. The standard 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%;
  2. Dividends paid by a Vietnamese company to its corporate shareholders will be completely tax exempt. Furthermore, no withholding tax will be imposed on dividends remitted to overseas corporate shareholders. For individual shareholders, the withholding tax will be 5%;
  3. Interest payments and royalties paid to non-residents individuals or corporate entities will be subject to withholding tax of 5% and 10% respectively;
  4. Personal income tax for residents is levied under a progressive system, ranging between 5% and 35%. However, for non-resident individuals, the tax is levied at a flat rate of 20%.

Tax filings

  1. Annual corporate income tax returns must be filed with the General Department of Taxation within 90 days from the end of the fiscal year. However, the company will be required to make quarterly income tax payments, based on estimates;
  2. Accounting records must be kept in the local currency, which is the Vietnamese Dong. They must also be written in Vietnamese, though they may be accompanied by a common foreign language such as English;
  3. A Vietnam-based auditing company must audit annual financial statements of foreign business entities. These statements must be filed with the licensing agency, the Ministry of Finance, the statistics office, and tax authorities 90 days before the end of the year;
  4. For an active trading company, Healy Consultants accounting and tax fees of US$4,950 are an estimate of our fees to efficiently and effectively discharge your annual company accounting and tax obligations, excluding independent auditor’s fees. Following receipt of a set of draft accounting numbers from your company, Healy Consultants will more accurately advise accounting and audit and tax fees. For a dormant company, Healy Consultants annual accounting and tax fees are only US$950.

Miscellaneous Tax information

  1. In 2001, the Vietnamese MOF introduced a new accounting system, the Vietnamese Accounting Standards (VAS). While this system is based on the IFRS principles, there are several differences including i) VAS does not require disclosure of key judgements and assumptions ii) VAS requires analysis of changes in equity and iii) VAS does not allow estimation techniques such as standard costing;
  2. All Vietnamese companies are required to strictly adhere to the VAS when preparing their accounting records and financial statements. Any company wishing to deviate from these norms will be required to seek approval from the Ministry of Finance;
  3. Vietnamese companies can be carried forward their business losses for up to five years after the year in which the loss can occurred;
  4. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfil those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.

Legal and compliance

Incorporation regulations

  1. With the new Law on Enterprises implemented in 2014, an entrepreneur i) must obtain an Foreign Investment Certificate before company incorporation and ii) will be allowed to appoint multiple legal representatives for the Vietnam company;
  2. Foreign investors are not allowed to incorporate a company without approval for a detailed investment “project.” A business plan or feasibility study must be submitted together with the incorporation documents;
  3. Decree 60 was passed in 2015 to discard the 49% foreign ownership rule for most listed companies. However, for certain industries, where i) the government has passed specific legislations capping foreign shareholding (banking) or ii) the government has signed international legislations to the same effect (agricultural and forestry services), the ownership cap will continue to remain in place;
  4. A foreign investor may set up a new legal entity as a wholly foreign-owned enterprise or as a JV. The investor must apply for both a Foreign Investment Certificate (FIC) and an Enterprise Registration Certificate.

Reporting and other compliances

  1. A private Vietnam company is required to maintain both a local registered address and a resident legal representative. Before the Government approves company registration, the company must sign an office premises lease agreement;
  2. Under Decree No.07 implemented in March 2016, the Representative of a branch or a representative office in Vietnam must authorize another person to act in his place if he leaves Vietnam. Where the Representative is not present in Vietnam for more than 30 days, the branch or representative office must appoint another person to be the new representative;
  3. Before any Vietnamese company can repatriate profits, it must submit i) audited financial statements and ii) complete tax filings to the authorities. Once these compliances are fulfilled, the company must inform the local taxation office, after which it can remit its profits; These profits must be remitted through the company’s capital account, instead of its corporate bank account which is used for daily business operations;
  4. Every company must lodge an annual return confirming relevant details of the company for the public register including i) names and addresses of all directors, ii) address of principal place of business and iii) details of shareholders and their shareholdings. A company is exempt from this obligation if there have been no relevant accounting transactions in the financial year;
  5. For any changes in particulars of the managers or directors of the company, it is mandatory to file a report with the license authority within 5 days of the change.

Contact us

For additional information on our accounting and legal services in Vietnam, please contact our in-house country expert, Mr. Simon Guidecoq, directly:
client relationship officer - Simon