Taxes that foreign enterprises must pay

Foreign-invested enterprises established and operating under Vietnamese law also have tax obligations like domestic enterprises. Specifically, the types of taxes that foreign enterprises must pay include:

1. Business license fee

According to Clause 1, Article 4 of Decree 139/2016/ND-CP, the business license fee collection rate for enterprises is as follows:

2. Corporate income tax (CIT)

Point a, Clause 1, Article 2 of the 2008 Law on Corporate Income Tax stipulates that enterprises established under Vietnamese law are corporate income tax payers.

Therefore, corporate income tax is one of the taxes that foreign enterprises must pay.

According to Article 17 of Circular 151/2014/TT-BTC, based on production and business results, enterprises shall make provisional payment of corporate income tax for the quarter no later than the 30th day of the quarter following the quarter in which the tax liability arises; enterprises do not have to submit provisional quarterly corporate income tax declarations.

Corporate income tax payable is determined according to the following formula:

Corporate income tax payable = Taxable income x Corporate income tax rate

In case the enterprise has a fund for science and technology development, corporate income tax is calculated according to the formula:

Corporate income tax payable = (Taxable income - Provision for science and technology fund (if any)) x Corporate income tax rate

In there,

1) Taxable income = Taxable income - Tax-exempt income - Losses carried forward from previous years.

2) Taxable income = (Revenue - Deductible expenses) + Other income

3) Corporate income tax rate

- Tax rate of 20%: Applicable to all enterprises established under Vietnamese law.

- Tax rate from 32% - 50%: Applicable to enterprises engaged in searching, exploring, and exploiting oil and gas and other rare resources in Vietnam.

- Tax rate of 50%: Applicable to enterprises engaged in searching, exploring and exploiting rare resource mines such as platinum, gold, silver, tin, etc.

3. Value Added Tax (VAT)

Organizations and individuals producing and trading goods and services subject to value added tax and organizations and individuals importing goods subject to value added tax.

The value added tax that a business must pay is calculated according to the method that the business initially chooses.

- Tax deduction method

VAT payable = (Taxable price of goods and services sold x VAT rate) - Deductible input VAT

Depending on the goods and services, the VAT rate is different: 0%, 5%, 10%.

- Direct calculation method

The basis for calculating tax is the revenue subject to value added tax and the percentage rate for calculating VAT on revenue.

VAT payable = Value Added Taxable Revenue x % rate for calculating VAT on revenue

4. Import and export tax (XNK)

In case the item applies tax as %

Import-export tax payable = Actual quantity of each imported-exported item x Taxable price x Tax rate

Cases where absolute tax is applied to goods

Import-export tax payable = Actual quantity of each imported-exported item x Absolute tax rate x Tax calculation exchange rate

5. Resource tax

The subjects of application are enterprises exploiting natural resources subject to tax.

Resource tax payable = Taxable resource output x Taxable price x Tax rate

6. Environmental protection tax

Environmental protection tax payable = Quantity of taxable goods x Absolute tax rate per unit of goods

7. Special consumption tax

Special consumption tax = Special consumption tax calculation price x Special consumption tax rate