Tax is a compulsory payment to the state budget by organizations, households, business households, and individuals according to the provisions of tax laws. Tax is a tool to increase the State's funding source to help State agencies maintain, operate, and perform functions and tasks for the purpose of stabilizing and developing society.
During the process of production and business activities, enterprises need to pay the following taxes:
1. Business license tax (business license fee)
1.1. Legal basis
- Decree 22/2020/ND-CP Amending Decree 139.2016/ND-CP on business license fees;
- Decree 139/2016/ND-CP regulates business license fees.
Business license fee is a direct fee levied on the charter capital or investment capital of an enterprise.
1.2. Regulations on declaring business license tax
- One-time declaration when the fee payer starts production, business or is newly established.
- The deadline for paying business license fees is January 30th of the solar calendar.
- From February 25, 2020, business license fees are exempted in the first year of establishment or business operation (from January 1 to December 31) for:
- Newly established business;
- During the period of exemption from business license fees, if an enterprise establishes a branch, representative office, or business location, the branch, representative office, or business location will be exempted from business license fees.
1.3. Business license tax rate
Level | Charter capital | Closing level |
1 | ≥ 10 billion | 3 million/year |
2 | < 10 billion | 2 million/year |
3 | Representative office or dependent accounting branch |
2. Value Added Tax (VAT)
2.1. Legal basis
- Law on Value Added Tax 2008;
- Law on Value Added Tax, Law on Special Consumption Tax and Law on Tax Administration, amended in 2016.
Value added tax is an indirect tax, calculated on the added value of goods and services from the production, circulation to consumption process.
2.2. Deadline for VAT declaration
- In case the enterprise declares monthly, the deadline is 20 days from the end of that month.
- In case the enterprise declares quarterly, the deadline for submission is 30 days from the end of that quarter.
- Deadline for VAT payment: Same as deadline for VAT declaration submission.
2.3. Method of calculating VAT
- Calculate VAT by deduction method:
VAT payable | = | Output VAT | – | Deductible input VAT |
- Calculate VAT by direct method
VAT payable | = | Revenue | x | Percentage |
In there:
- Revenue for calculating VAT is the total amount of actual sales of goods and services recorded on sales invoices for goods and services subject to VAT, including surcharges and additional fees that the business establishment is entitled to.
- The percentage rate for calculating VAT on revenue is specified for each activity as follows:
- Distribution and supply of goods: 1%.
- Services, construction without materials: 5%.
- Production, transportation, services associated with goods, construction with contracted materials: 3%.
- Other business activities: 2%.
3. Corporate Income Tax (CIT)
3.1. Legal basis
- Law on Corporate Income Tax 2008;
- Law amending the Tax Laws 2014.
Corporate income tax is a direct tax, collected on the final production and business results of an enterprise.
3.2. Regulations on corporate income tax declaration
- According to Article 17 of Circular 151/2014/TT-BTC dated October 10, 2014 of the Ministry of Finance: Enterprises do not have to prepare a provisional corporate income tax declaration, they only need to calculate the provisional payment amount based on the results of the enterprise's production and business activities no later than the 30th day from the end of the quarter in which the tax obligation arises.
- Corporate income tax settlement: The deadline for submitting documents is no later than the 90th day from the end of the calendar year or fiscal year. From July 1, 2020, according to Tax Administration Law 38/2019/QH14, the deadline for corporate income tax settlement documents is no later than the last day of the 3rd month from the end of the calendar year or fiscal year.
3.3. Method of calculating corporate income tax
Corporate income tax payable | = | (Taxable income) | – | Part of the science and technology fund provision) | x | Tax rate |
Taxable income | = | Taxable income | – | |
Taxable income = (Revenue – Deductible expenses) + Other income
4. Personal Income Tax (PIT)
4.1. Legal basis
- Personal Income Tax Law 2007 amended in 2012;
- Law amending the Tax Laws 2014;
- Circular 111/2013/TT-BTC.
Personal income tax is a direct tax levied on the income of earning employees.
4.2. Regulations on personal income tax declaration
- Enterprises declare and pay personal income tax monthly (in case enterprises declare VAT monthly and the amount of personal income tax payable in the month is 50 million VND or more): No later than the 20th day of the following month.
- Enterprises declare and pay personal income tax quarterly (in case enterprises declare VAT quarterly or enterprises declare VAT monthly and the amount of personal income tax payable in the month is less than 50 million VND): No later than the 30th day of the following quarter.
4.3. Method of calculating personal income tax
- For resident individuals with labor contracts of 3 months or more: Deductions are made according to the progressive tax schedule and the employee is entitled to family deductions before deductions. The income-paying organization is responsible for settlement on behalf of authorized individuals.
- For individuals residing without a labor contract or with a labor contract of less than 03 months: Directly deduct 10% at source before paying income with a total payment of 2,000,000 VND or more, not deductible for family circumstances but can make a commitment 02/CK-TNCN (if eligible) for the organization to pay income temporarily without deducting tax of these individuals.
- For non-resident individuals: Deduct 20% before paying income.
5. Some other taxes based on the characteristics of each business
5.1. Resource tax
Resource tax is a type of indirect tax, this is the amount of money that organizations and individuals must pay to the state when exploiting natural resources.
- Applicable to businesses with mineral exploitation activities.
- Tax basis: The basis for calculating resource tax is the taxable resource output, resource tax price, and resource tax rate.
- Resource tax = resource output x tax price x tax rate.
- The deadline for submitting monthly resource tax declarations is no later than the 20th of the following month. The annual resource tax finalization report must be submitted no later than the 90th day from the end of the calendar year or fiscal year.
5.2. Export and import tax
Import and export tax is an indirect tax levied on goods exported and imported through Vietnam's border gates and borders; goods bought, sold and exchanged by border residents and other goods bought, sold and exchanged are considered exported and imported goods.
- Export and import tax payable = actual quantity of exported and imported goods on the customs declaration x value of each item x tax rate.
- The deadline for payment of export tax and import tax is prescribed as follows:
- For exported goods, it is thirty days from the date the taxpayer registers the customs declaration.
- For imported consumer goods, taxes must be paid before receiving the goods; in case there is a guarantee for the amount of tax payable, the tax payment period is the guarantee period, but not exceeding thirty days from the date the taxpayer registers the customs declaration.
- For imported goods which are supplies and raw materials for the production of export goods, the tax payment period is two hundred and seventy-five days from the date the taxpayer registers the customs declaration; in special cases, the tax payment period may be longer than two hundred and seventy-five days in accordance with the production cycle and reserve of supplies and raw materials of the enterprise according to Government regulations.
- For goods traded under the method of temporary import, re-export or temporary export, re-import, it is fifteen days from the date of expiration of the temporary import, re-export or temporary export, re-import period according to the regulations of the competent state agency.
- Except for the above cases, the tax payment deadline for imported goods is thirty days from the date the taxpayer registers the customs declaration.
5.3. Environmental protection tax
Environmental protection tax is an indirect tax, collected on products and goods (hereinafter referred to as goods) that, when used, cause negative impacts on the environment.
- Applicable to businesses: If there is production or import of goods subject to environmental protection tax according to the provisions of the Law on Environmental Protection Tax 2010.
- Environmental protection tax = Quantity of taxable goods x absolute tax rate.
- Environmental protection tax is paid only once for manufactured or imported goods.
- For domestically produced goods: environmental protection tax payers shall submit environmental protection tax declarations to the direct tax authority.
- For imported goods: taxpayers submit tax declarations to the customs authority where customs procedures are carried out.
5.4. Special consumption tax
Special consumption tax is an indirect tax levied on certain special goods directly produced and sold by enterprises or imported and sold by enterprises.
- Applicable to businesses: If there are activities of manufacturing or importing goods or providing services subject to special consumption tax.
- Special consumption tax = taxable price x tax rate.
- The deadline for submitting monthly special consumption tax declaration is no later than the 20th day of the month following the month in which the tax liability arises.
5.5. Non-agricultural land use tax
Non-agricultural land use tax is a direct tax levied on non-agricultural land used for production, investment project implementation, construction of agency headquarters, etc.
- Land use tax = Land use area x Tax price of 1 m2 x tax rate.
- Land for non-agricultural production and business applies a tax rate of 0.03%.
- The deadline for paying annual taxes is December 31 of each year.
- Taxpayers have the right to choose to pay tax once or twice a year and must complete their tax obligations no later than December 31 of each year. The deadline for paying the difference as determined by the taxpayer in the General Declaration is no later than March 31 of the following year.
- In case within a stable 5-year cycle, the taxpayer requests to pay tax at once for many years, the latest tax payment deadline is December 31 of the year of request.
