Vietnam legal and accounting and tax considerations in 2023
Since 2003, Healy Consultants Group helps multi-national Clients to timely accurately and completely discharge their annual Vietnamese legal, accounting and tax obligations. The information on this web page will help your Firm understand Vietnamese accounting and tax considerations:
- Company annual net profits suffer a flat corporation tax rate of 20%. However, oil and gas enterprises are subject to rates between 32% and 50%.
- Capital gains tax is also 20%.
- Dividends paid by a Vietnamese company to its corporate shareholders are completely tax exempt. No withholding tax is imposed on dividends remitted to overseas corporate shareholders. Individual shareholders are subject to 5% withholding tax.
- Interest payments and royalties paid to non-residents individuals or corporate entities are subject to withholding tax of 5% and 10% respectively.
- Personal income tax for residents is levied progressively from 5% to 35%. Non-resident individuals are taxed at a flat 20%.
- The general VAT rate for goods and services is 10%, but a 5% rate applies for certain goods and services.
- All companies carrying out production or trading of taxable goods and services in Vietnam must register for VAT.
- Newly-established entities must file VAT quarterly.
- Within 3 months of the company accounting year end, the corporate income tax return must be filed with the General Department of Taxation. For the majority of our multi-national Clients’ with a December year end, the deadline for corporation tax return is 31 March.
- In the meantime, the company is required to make quarterly income tax payments, based on estimates.
- Accounting records must be kept in the local currency (Dong). They must be written in Vietnamese, though they may be accompanied by a common foreign language, such as English.
- A Vietnam-based auditing company must audit annual financial statements of foreign business entities. These statements must be filed with the licencing agency, the Ministry of Finance, the statistics office, and tax authorities 90 days before year-end.
- Multi-national Clients must submit annual reports including i) declaration of related party transactions ii) transfer pricing methodologies used iii) information on the company (address, phone numbers etc) which must match that on the business licence iv) information on staff, including salaries v) balance sheet vi) profit and loss vii) cash flow and viii) note of financial statement.
- All companies are required to submit annual audit of their financial statements regardless of whether they are active or dormant, and to submit quarterly VAT and personal income filings.
- For an active trading company, Healy Consultants Group 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, we will more accurately advise accounting and audit and tax fees. For a dormant company, Healy Consultants annual accounting and tax fees are only US$1,950.
- Businesses and individuals that produce or trade goods and services are subject to VAT.
- Businesses that trade and import goods and services into Vietnam must register for VAT once they have obtained a business license.
- Businesses or organizations are required to submit a monthly VAT return with the tax authority before the 20th of the following month.
- However, companies with a turnover less than VND 50 million are allowed to file on a quarterly basis.
- VAT Rates:
Rate Types of goods or services 15% Luxury goods 10% All types of goods and services except than the products subject 0% and 5% 5% Transportation, medical equipment, agricultural production and services 0% Exported goods and services
Miscellaneous tax information
- All Vietnamese companies must strictly adhere to Vietnamese Accounting Standards (VAS) when preparing their accounting records and financial statements. Any company wishing to deviate from VAS must seek approval from the Ministry of Finance.
- Vietnamese companies can carry forward their business losses for up to five years after the year in which the loss can occurred. Carry-back of losses is not permitted.
- Intercompany service charges are allowed as an expense in the Vietnamese P&L if i) the charge has commercial and economic value and ii) a fair and reasonable service charge calculation method is used and iii) the service improves the recipient’s operational efficiency. If it cannot be proved that the expenses offer direct benefit or value to the tax payer, then a tax deduction is not permitted.
- In principle, Vietnam follows the WTO Valuation Agreement. This means the dutiable value of imported goods is based on the transaction value.
- Export duties are charged only on a few items, for example natural resources. Rates range from 0% to 40%.
- 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 clarifying your annual reporting obligations.
- 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.
- According to the Law on Enterprises an entrepreneur i) must obtain an Foreign Investment Certificate before company incorporation and ii) is allowed to appoint multiple legal representatives for the Vietnam company.
- Foreign investors cannot incorporate a company without approval for a detailed ‘investment project’. A business plan or feasibility study must be submitted, along with incorporation documents.
- Most listed companies can be 100% foreign owned. However, there are foreign ownership caps for certain industries (e g banking, agriculture and forestry).
Reporting and other compliances
- A private Vietnam company must maintain a local registered address and a resident legal representative. Before the government approves company registration, the company must sign an office premises lease agreement.
- The basic set of Vietnamese financial statements comprise i) balance sheet and P&L ii) cash flow statement iii) notes to the financial statements and iv) a disclosure on changes in equity. These financial statements should be filed with i) the Ministry of Finance ii) local tax authorities iii) the Department of Statistics iv) the applicable licensing body and v) the Department of Labour.
- Under Decree No.07, the representative of a branch or a representative office in Vietnam must authorise 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.
- Before a Vietnamese company can repatriate profits, it must submit i) audited financial statements and ii) complete tax filings to the authorities. The company must then inform the local tax 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.
- Every company must lodge an annual return confirming 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.
- Accounting records are required to be maintained in the Vietnamese language. Entities that receive and pay mainly in a foreign currency can select that foreign currency to be used in their accounting records and financial statements provided that they meet all the stipulated requirements.
- For any changes in particulars of the managers or directors of the company, it is mandatory to file a report with the licence authority within five days of the change.