Taxes and fees of foreign investment in Vietnam

Foreign-invested enterprises in Vietnam are subject to the same taxes as other domestic enterprises. When establishing a business in Vietnam, foreign investors need to pay attention to some basic taxes and fees as follows:

1. Business license fee

The business license fee for enterprises with charter capital of over 10 billion VND is 3 million VND/year; and 2 million VND/year for enterprises with charter capital of 10 billion VND or less. Enterprises are exempted from business license fees in the first year of establishment (from January 1 to December 31).

2. Value added tax

Value added tax is applied to goods and services at a tax rate of 10%, applicable to most types of goods and services, except for goods and services subject to a tax rate of 5% or 0% as follows:

Value added tax must be declared monthly or quarterly, depending on the case. Failure to submit or late submission of value added tax declarations as prescribed may result in administrative penalties.

3. Corporate income tax

The corporate income tax rate is 20% of taxable income applied to most enterprises, except for oil and gas activities and exploitation of rare resources, which apply a tax rate of 25 - 50%.

Foreign-invested enterprises operating in investment incentive sectors and in investment incentive areas may enjoy investment incentives with a corporate income tax rate of 10% for a certain period of time as prescribed in the Law on Corporate Income Tax[5].

Corporate income tax must be settled annually. The total amount of corporate income tax provisionally paid for 04 quarters must not be less than 80% of the amount of corporate income tax payable according to the annual settlement[6].

4. Personal income tax

Japanese investors who are individuals need to pay attention to income that is subject to personal income tax[7], including:

• Income from wages and salaries;
• Business income;
• Income from capital investment;
• Income from capital transfer;
• Income from real estate transfer;
• Income from winnings;
• Copyright income;
• Income from franchising;
• Income from inheritance is securities, capital in economic organizations, business establishments, real estate and other assets that must be registered for ownership or registered for use;
• Income from receiving gifts of securities, capital in economic organizations, business establishments, real estate and other assets that must be registered for ownership or use.

Depending on whether the Japanese Investor is a resident or non-resident individual, the tax rate applicable to each case will be different. A Japanese Investor is an individual who (i) has been present in Vietnam for 183 days or more in a calendar year or for 12 consecutive months from the first day of presence in Vietnam, or (ii) has a permanent residence in Vietnam, which is a place of temporary residence registration or rents a house to live in Vietnam under a rental contract with a term of 183 days or more in a tax year. Those who do not meet the above conditions are considered non-residents[8].

5. Export tax, import tax

Enterprises with goods exported or imported through Vietnam's border gates or brought from the domestic market into duty-free zones and from duty-free zones into the domestic market are subject to export and import taxes[9].

Tax rates for exported goods will be specified in the Export Tariff. Tax rates for imported goods include preferential tax rates, special preferential tax rates and normal tax rates. In addition, there is an "absolute tax" which is a tax determined by a certain amount of money calculated on a unit of exported or imported goods[10].

[1] Decree 139/2016/ND-CP regulating business license fees, Article 4.1

[2] Law on Value Added Tax, Article 8

[3] Decree 126/2020/ND-CP on guidelines for the Law on Tax Administration, Article 9

[4] Law on Corporate Income Tax, Article 10

[5] Law on Corporate Income Tax 2008 (amended and supplemented in 2013), Article 13

[6] Decree 126/2020/ND-CP on guidelines for the Law on Tax Administration, Article 8.6 (amended by Decree 91/2022/ND-CP)

[7] Circular 111/2013/TT-BTC guiding the Law on Personal Income Tax, Article 2

[8] Circular 111/2013/TT-BTC guiding the Law on Personal Income Tax, Article 1.1

[9] Law on export tax and import tax 2016, Article 2

[10] Law on export tax and import tax 2016, Article 6