TAXES FDI CORPORATES MUST PAY UNDER VIETNAM LAW

According to current Vietnamese laws, enterprises doing business in Vietnam may be imposed various taxes ( taxes FDI corporates must pay ). Many FDI enterprises believe that taxes are causing legal barriers for them during their business operations . Therefore, with the desire to provide necessary legal knowledge to minimize risks for clients, OTIS LAWYERS would like to share the following article content.

TAXES FDI CORPORATES MUST PAY: LICENSE FEE

License fee is the annual payable amount by the enterprise based on the charter capital stated in the enterprise registration certificate/investment capital stated in the investment registration certificate (for organizations).

License fee rates as prescribed in Clause 1, Article 4 of Circular 302/2016/TT-BTC are as follows:

• Organizations with charter capital or investment capital over 10 billion VND: 3,000,000 VND/year;
• Organizations with charter capital or investment capital of 10 billion VND or less: 2,000,000 VND/year;
• Branches, representative offices, business locations, non-business units, other economic organizations: VND 1,000,000/year.

The deadline for payment of license fee is January 30 every year (According to point b, clause 1, Article 5 of Circular 302/2016/TT-BTC).

Enterprises are exempt from license fees for the first year of establishment. In the following years, the enterprise shall pay the license fee according to the prescribed rate.

TAXES FDI CORPORATES MUST PAY: CORPORATE INCOME TAX

Corporate income tax is a direct tax, levied on taxable income of enterprises, including income from production and trading activities of goods and services and other incomes as prescribed by law.

The CIT period is determined according to the financial year and is calculated based on the business results shown in the annual financial statements. Previously, quarterly, based on the production and business situation and the declarations and reports sent to the tax agency, the enterprise must temporarily pay the CIT amount determined on a quarterly basis no later than the 30th day of the quarter following the quarter in which the tax liability arises.

Tax calculation: CIT = [Taxable income – (Exempt income + Loss forward from the previous year)] × Tax rate.

In which: Taxable income = Revenue – (Deducted expenses + Other income)

CIT rate: The current tax rate is 20% applicable to enterprises (Article 11, Circular 78/2014/TT-BTC), except for some enterprises enjoying preferential tax rates (Article 19, Circular No. Circular 78/2014/TT-BTC) and a number of specific enterprises (searching, exploration, exploitation of oil and gas, rare and precious resources).

TAXES FDI CORPORATES MUST PAY: PERSONAL INCOME TAX

Personal income tax is one of the taxes that enterprises need to pay on behalf of employees, calculated on a monthly basis. Declare monthly or quarterly, but settle on an annual basis.

• Payable PIT = PIT taxable income × Tax rate

In which: PIT taxable Income = PIT taxable Income - Deductions (PIT taxable income = Total PIT received - Exemptions)

The deductions include: Family circumstances deduction (For self is 11,000,000 VND/person/month; For dependents is 4,400,000 VND/person/month)

V.A.T

VAT is calculated on the added value of goods and services arising in the process from production, circulation to consumption in the territory of Vietnam.

Objects which imposed VAT are goods and services used for production, business and consumption in Vietnam (including goods and services purchased from overseas organizations and individuals), except for non-taxable ones as prescribed in Article 4 of Circular 219/2013/TT-BCT.

Taxpayers are organizations and individuals that produce and trade in VAT – taxable goods and services in Vietnam and the ones that import VAT taxable goods or purchase services from abroad 

The deadline for paying VAT is the last day of the deadline for submitting tax returns:

• For monthly tax declaration dossiers: the deadline for tax payment is the 20th of the following month.
• For quarterly tax declaration dossiers, provisional quarterly calculation: the deadline for tax payment is the 30th day of the next quarter in which the tax payment obligation arises.
• For annual tax dossiers: the deadline for paying tax is the 30th day of the first month of the calendar year.
• For tax declaration dossiers for each time a tax obligation arises: the time limit for paying tax is the 10th day from the date of arising tax payment obligation.
• For annual tax finalization dossiers: the deadline for paying tax is the 90th day from the end of the calendar year or fiscal year.

The method of calculating value added tax includes two methods:

• VAT deduction method: VAT = Input VAT – Output deducted VAT
• Tax direct calculation method: VAT = VAT of sold goods and services × VAT rate of such goods and services.

SOME TAXES BASED ON THE CHARACTERISTICS OF THE ENTERPRISE

Resource tax: an indirect tax, this is the amount that organizations and individuals must pay to the state when exploiting natural resources.

• Tax bases: The bases for calculating natural resource tax are the taxable output, the taxable price, and the tax rate.
• Resource tax = Resource output x taxable price x tax rate

Import and export tax: indirect tax, levied on goods exported or imported through Vietnam's border gates or borders; goods bought, sold and exchanged by border residents and other goods traded and exchanged are considered imported and exported goods.

Environmental protection tax: an indirect tax, levied on products and goods (hereinafter referred to as goods) when used, causing adverse impacts on the environment. Applied to enterprises producing and importing goods subject to environmental protection tax as prescribed in the Law on Environmental Protection Tax 2010.

Special consumption tax: An indirect tax levied on a number of special goods directly produced and sold by enterprises or imported and sold by enterprises. Applicable to enterprises with production or importation of goods or business services subject to excise tax.

Non-agricultural land use tax: a direct tax levied on non-agricultural land used for production, implementation of investment projects, construction of office buildings, etc.