One uniform income tax regime is applied to both foreign-owned
and domestic companies. Taxpayers are subject to tax rates provided in
the CIT Law. The standard CIT rate effective from 1 January 2009 is
Oil and gas companies and companies involved in exploitation of
precious minerals are subject to CIT at rates ranging from 32% to 50%
depending on the specific project.
Tax incentives and criteria for eligibility to tax holidays and
reductions are set out in the CIT regulations and is elaborated in Part
C6 of this Guidebook.
Computation of CIT
CIT is computed under the following formula:
Assessable income * tax rate
Taxable income – (Tax exempt income + Loss carried forward in accordance with law)
(Turnover – Deductible expenses) + Other income
Determination of taxable income
The taxable income of an enterprise is the income shown in the
financial statements, subject to certain adjustments due to the
differences between tax rules and accounting rules. Taxable income
includes income derived by business operations and other activities
(including income from the capital or securities transfer, transfer of
immovable property which will be discussed in the next sections and
Deductibility of expenses
In general, expenses will be deductible provided that they are
related to revenue generation, supported by proper
invoices/documentation and not specifically identified as being
non-deductible items for CIT calculation purposes. Examples of
non-deductible expenses include:
For certain businesses, such as
insurance companies, securities trading, and lotteries, the Ministry of
Finance provides specific guidance on deductible expenses for CIT
Business entities in Vietnam are allowed to set up a tax
deductible Research and Development fund with the amount up to 10% of
assessable income to the fund.
Depreciation for tax purposes must follow the Ministry of
Finance regulations. Current regulations on fixed asset depreciation
provide three methods for calculation of fixed asset depreciation.
Among the regulatory methods, the straight-line method is the most
Depreciation rates must be in accordance with the Ministry of
Finance’s rules. A brief summary of maximum allowable annual
depreciation rates are as follows:
Annual depreciation rate (%)
Machinery and equipment
5 - 50
Means of transportation
3.3 - 16.6
2 - 4
Other types of houses and buildings
4 - 16.6
Warehouses, containers, bridges, roads, parking places, and driving yards
5 - 20
Other construction work
10 - 20
Accelerated depreciation is
possible in certain cases. The accelerated depreciation rate shall be
capped at 2 times higher than the rate set by the Ministry of Finance.
Loss carried forward
Taxpayers are allowed to carry forward their losses incurred in
operations for a maximum period of five years. Carrying back losses is
not allowed. Loss must be carried forward entirely and continuously to
the following year.
The tax year is in accordance with fiscal year which is the
calendar year as regulated. A tax year (fiscal year) other than
calendar year is allowable. In this case, notification to the relevant
local tax authorities on a different fiscal year is required.
Provisional quarterly CIT returns are required to be filed
based on either actual revenue/expenses arising in the quarter or the
estimated ratio of taxable income over revenue deriving from the
previous year’s result. The provisional return has to be submitted to
tax authorities by the 30th day of the following quarter. Provisional
CIT must be paid at the time of submitting the return.
The final CIT is filed on an annual basis. The annual tax
finalization return must be submitted within 90 days from the end of
the tax year (fiscal year). Outstanding tax (if any) must be paid on
the same day the final return is submitted.
The amounts of CIT shall be assessed and payable where the
business has its main head office and where the business has its
dependently accounting production establishments (if they are in a
province or city under central authority other than the locality of the
main head office).
The amount of tax payable in the province where the enterprise
has its dependant establishment shall equal the amount of CIT payable
in the period multiplied by the ratio of expenses of the dependant
establishment over the total expenses of the enterprise.
The enterprise lodges its annual tax finalization with the
local tax authority where the head-quarter is located. The outstanding
CIT payable upon finalization shall equal the amount payable in
accordance with the tax finalization less the provisional quarterly tax
paid amounts by its headquarters and its dependant establishments. The
outstanding or refundable tax amount after tax finalization shall also
be allocated at the same ratio to the places where the head-quarter
and its dependant establishments are located.
Foreign investors shall be permitted to remit their profits
annually at the end of the financial year or upon termination of the
investment in Vietnam after their tax obligations in Vietnam are
fulfilled. Foreign investors are not permitted to remit profits if the
investee company has accumulated losses.
The foreign investor or the investee company are required to
notify the tax authorities of the plan to remit profits at least 7
working days prior to the scheduled remittance.
Income tax on capital gains and from transfers of securities
Gains from a capital transfer (capital gains) or the sale of
securities (including shares, bonds, fund certificates and other
regulated securities) are taxed at 25% CIT.
The taxable gain is determined as the excess of the sales
proceeds less purchase price of transferred capital portion less
Where the transferor is a domestic business, they shall be
responsible for declaring the gains from capital and securities transfer
as other income in their CIT declaration.
Where the capital transferor is a foreign organization having
no legal status in Vietnam, the transferee is required to withhold the
tax due from the payment to the transferor, and account for this to the
tax authorities. Where the transferor and the transferee are foreign
organizations, the Vietnamese entity will be responsible for tax
declaration and payment on behalf of these parties. The tax return and
payment is required within 10 days from the date of the approval of the
assignment by the competent authorities or the date of the assignment
agreement in case no approval is required.
When foreign investment funds or foreign organizations having
no legal status in Vietnam sell securities, e.g. shares (listed or
non-listed), CIT is payable on a deemed basis at 0.1% of the total
value of the securities sold.
In respect to bonds, 0.1% CIT will be calculated on the face
value of the bond plus interest at the time the interest is received.
Income tax on transfer of immovable property
Income from transfer of immovable property includes those from
transfer on LUR, land leased rights, sub-lease of land of real estate
companies irrespective of whether or not there are any associated
infrastructure and/or architecture work.
The assessable income from the transfer will be calculated
based on the sale proceeds less the initial cost less deductible
transfer expenses less losses carried forward (if any) from immovable
transfer activities of previous years. CIT rate of 25% will apply.
If a company does not regularly conduct immovable property
assignments, the gain on such transfer should be provisionally declared
per each transaction. At the year-end, it will be included in the
annual CIT finalization of the company.
Under the conventional VAT system, output tax is collected from
a customer by adding VAT at the applicable rate to the amount
charged. However, a business also pays input VAT to its suppliers on
purchases that it makes. The output tax must be paid to the tax offices
after deducting the creditable input VAT. The tax is actually borne by
the end consumer or enterprises which engage in goods/services supply
not subject to VAT.
Scope of VAT application
VAT is applicable to goods and services consumed within
Vietnam. VAT is also applied at the import stage on imported goods. The
import VAT must be paid to relevant customs concurrently with the
import duty payment.
There are 26 categories of goods and services out of the scope of VAT application. Examples of these include:
The standard VAT rate is 10%. A 0% rate applies to exported
goods and services subject to certain conditions. A 5% rate exists
for “essential” goods and services such as clean water, fertilizer,
teaching aids, books, foodstuffs, medicine and medical equipment,
husbandry feed, various agricultural products and services,
technical/scientific services, rubber latex, sugar and its by-products.
Output VAT calculation
The output VAT is calculated by multiplying the taxable price (net of VAT) by the applicable VAT rate.
Claiming input VAT credit
Input VAT (including input VAT withheld on FCs under the
withholding tax mechanism) credit must be claimed within 6 months from
the month that the invoice is issued. Input VAT credit that is beyond
this time limit will be rejected.
In case the invoice total value (i.e. sale price plus VAT) is
VND20 million or more, a bank payment proof must be made available for
the input VAT to be claimable.
Method of VAT calculation
VAT regulations provide two methods of VAT calculation:
Under this method, VAT payable is calculated as the output VAT
charged to customers less the creditable input VAT paid on purchases of
goods and services. Proper bookkeeping and invoices are requisite
requirements for applying for this method.
In order to calculate VAT payable under this method, the added
value in the period must firstly be calculated. The applicable VAT rate
shall be applied to the added value to calculate the VAT payable.
Enterprises which fail to satisfy the requirements on book
keeping/invoices and certain deemed goods/services (i.e. trading
gold/foreign currency) shall be deemed to apply for this method.
VAT code registration
All businesses (including foreign contractors, branches,
operating offices of foreign organizations in certain cases) must
register for a VAT code with local tax authorities within 10 working
days from the date the investment license or certificate of business
registration is granted.
VAT declaration and payment
The filing due date for monthly VAT return is 20th of the
following month. VAT payable is required to be settled on the same due
An input VAT refund is allowed in certain cases (e.g. input VAT
credit is larger than output VAT for 3 consecutive months). A refund
may be conducted monthly, quarterly or annually depending on the
circumstances of taxpayers.
The Foreign Contractor Tax (FCT)
regime applies to payments made by a Vietnamese contracting party to a
foreign entity carrying out projects in Vietnam, or providing services
to Vietnamese customers without setting up a legal entity in Vietnam,
except for the pure supply of goods at border gates, services performed
and consumed outside of Vietnam, and certain other services performed
outside of Vietnam (such as repair of transportation means, machinery
and equipment; advertising and marketing services; brokerage services;
A foreign contractor (FC) is defined to include a foreign
individual or entity that does business in Vietnam or have income
arising in Vietnam on the basis of a contract, agreement or undertaking
between such foreign contractor and a Vietnamese organization or
The FCT consists of two components (i.e. VAT and CIT). The rates vary depending on the nature of the payment.
FCT payment methods
A FC may choose either of the following methods for tax payment:
According to this method, FCs will file VAT under the deduction
method in accordance with VAT Law and declare CIT on the actual net
profits at the standard tax rate in accordance with CIT Law. The FC
can recover the input VAT charged by the local subcontractors.
In order to adopt this method, FC is required to satisfy the following conditions:
FC who fails to satisfy one of the above-mentioned conditions
shall adopt the direct method. Under this method, VAT and CIT shall be
withheld and filed by the Vietnamese contracting party upon the
payment to the FC. VAT and CIT shall be defined based on a deemed
percentage of taxable turnover. The deemed tax rates depend on the
nature of service performance and the type of goods supplied. The VAT
element withheld will be available as an input VAT credit to the
Vietnamese contracting party if it supplies goods/services subject to
The deemed VAT and CIT rates under the Direct Method are as follows:
Effective VAT rate
Deemed CIT rate
Trading: distribution, supply of goods, materials, machinery and equipment in Vietnam
Services together with provision of goods
Construction, installation without supply of materials or machinery, equipment
Construction, installation with supply of materials or machinery, equipment
Leasing of machinery and equipment
Leasing of aircraft, vessels (including
Transfer of securities
Manufacturing, other business activities
Under this method, the FCT regime permits that where a FC
adopts simplified VAS (instead of full VAS), it may choose to pay VAT
under Deduction Method and CIT under Direct Method.
Foreign tax relief
Vietnam has signed tax treaties with many countries that provide relief from double taxation.
Standard Customs documentation
Customs entry as to entry of commodities for commercial
purposes will typically include the following documents, attached with
Preparation of commercial documentation to accompany shipment to be exported, in addition to declaration:
Export duty is only imposed on a few items, basically natural
resources, such as ore and minerals, plants and parts of plants of a
kind used primarily in perfumery, in pharmacy or, and scrap metal.
These rates range from 0% to 40%. The basis for calculating export
duties is the free on board (FOB) price, or delivery at frontier (DAF)
price – that is, the selling price of goods at the exporting port as
stated in the contract, excluding freight and insurance costs.
Import duty tariff
Import duty is generally assessed on an ad valorem (on
value) basis. The Ministry of Finance (“MOF”) is the authorized
Government body which is responsible for tax policy making and
accordingly introducing tariff for imports into Vietnam. In practice,
the policy making process in relation to import tariff is complex due
to the involvement of other ministries, e.g. the Ministry of Trade and
Industry, industry association, and State-owned general corporations.
Import duty tariffs fall into three categories: standard rates, preferential rates and special preferential rates.
To qualify for special
preferential rates, the imported goods must be accompanied by
particular Certificate of Origin (C/O). Without the C/O or if goods are
sourced from non-preferential treatment countries, the preferential
(i.e. MFN) rates or the standard rates will be imposed.
Import dutiable valuation
The dutiable value of imported goods for calculation of import
duty is generally in accordance with the WTO Valuation Agreement 1994
with certain modifications. Commonly, the dutiable value of imported
goods is the price actually paid or payable for the imported goods to
the first check-point of importation of Vietnam, which is primarily
determined as the Transaction Value, taking into consideration of
certain adjusted elements. Where the Transaction Value is unable to be
defined or the determination is not satisfied, alternative
methodologies are used in a hierarchical order:
Import duty exemptions
Exemption from import duty is granted, among others, for:
SST which is similar to excise
tax applies on certain imported and domestically produced goods and
certain provisions of services which are not encouraged for domestic
consumption or those considered luxurious.
Under SST regulations, subjects of SST include:
SST taxable price
Sales price excluding VAT
1 + SST rate
SST rates vary from 10% to 70% as follows:
Tax rates (%)
20 - 65
25 - 50
10 - 60
Motor vehicles with cylinder capacity above 125cm3
Aircraft and yachts
Air-conditioners (equal or less than 90,000BTU)
Massage salons, karaoke
Casinos, jackpot games, betting entertainment
A FOE is required to pay
business license taxes on an annual basis (at the beginning of the
calendar year) at the following rates:
Business license tax Payable per year (VND)
From 5 to 10
From 2 to 5
The Law on environment
protection tax took effect from 1 January 2012. The environment
protection tax is an indirect tax which is applicable upon the
production and importation of certain goods including petroleum
products. The tax is calculated as an absolute amount on the quantity
of the goods.
Natural resources tax is payable
by industries exploiting Vietnam’s natural resources such as
petroleum, minerals, forest products, seafood and natural water.
The tax rates vary depending on the natural resource being
exploited and are applied to the production output at a specified
taxable value per unit.
Tax is imposed based on residency status. Residents are taxed
on their total worldwide income, while non-residents are subject to tax
on their Vietnam sourced income only. There are different tax rates
for residents and non-residents and for various types of income.
Resident taxpayers are those who:
Pursuant to Official Letter
3473/TCT-TNCN issued by General Department of Taxation on 8 September
2010, an individual who stays in Vietnam for more than ninety (90) days
(whether or not maintaining leased accommodation) but less than one
hundred and eighty three (183) days in one (01) calendar year or in
twelve (12) consecutive months will be considered as tax non-resident
in Vietnam for PIT purposes provided that he/she can prove his/her
residency in a country other than Vietnam. The original tax residency
certificate is required to be submitted to the Vietnam tax authorities
in this case.
Resident taxpayers are subject to PIT on their worldwide income
at progressive tax rates regardless of where the income is paid.
Non-resident taxpayers are those who live in Vietnam for either
less than ninety (90) days or more than ninety (90) days but less than
one hundred and eighty three (183) days in one (01) calendar year or in
twelve (12) consecutive months and are tax residents of another
country. Tax non-residents are subject to PIT at a flat tax rate of 20%
on their employment income in relation to the work performed in
Vietnam, and at various rates on their non-employment income. In some
cases, the provisions of any applicable DTA could provide some tax
Taxable income includes employment, non-employment and business income.
Employment income covers all income received by the employee from their employer in cash or in kind, such as:
Some items of income that were
previously non-taxable are now included in taxable under the new PIT
scope including non-employment income, such as income from capital
investment, capital transfer, transfer of real property, income from
winnings, royalties, commercial franchises, inheritance and gifts.
In addition, business income of individuals which was governed by the Law on CIT is now included under the PIT scope.
Non taxable income includes:
Tax deductions and tax relief
Certain tax deductions and relief are deductible against business income and employment income as follows:
The progressive tax rates for resident foreigners and
Vietnamese citizens for business income and employment income are as
Taxable income/ annual
Taxable income/ month
Up to 60
Up to 5
Above 60 to 120
Above 5 to 10
Above 120 to 216
Above 10 to 18
Above 216 to 384
Above 18 to 32
Above 384 to 624
Above 32 to 52
Above 624 to 960
Above 52 to 80
Other taxable income and the relevant tax rate applicable are as follows:
1. Income from capital investment
2. Income from franchising, royalties (*)
3. Income from prize-winnings, inheritances and gifts (*)
4a. Income from capital transfers
4b. Income from share transfers
5a. Income from real-estate transfers
5b. Income from real-estate transfers where cost value is unable to be determined
Non-residents are taxed at
twenty percent (20%) of their employment income in relation to the work
performed in Vietnam. The following table represents other kinds of
taxable income and the tax rates applicable:
1. Income from salary, wages
2. Income from business activities
3. Income from capital investment
4. Income from franchising, royalties (*)
5. Income from prize-winnings, inheritances and gifts (*)
6. Income from capital transfers
7. Income from real-estate transfers
Note: (*) taxed on part of income exceeding VND10 million only.
Where the income received is on net basis, it is required to be
grossed up to reflect the tax on tax calculation for Vietnam PIT
calculation purposes. Formulas for grossing up are provided under
Tax code registration
Tax registration is compulsory for income paying bodies and
individuals having income subject to PIT. The place for submission of
the tax registration form is the tax office directly in charge of the
income paying body and/or individual.
An expatriate employee must secure a tax code within 10 days
from the date of commencement of his/her assignment in Vietnam.
Tax filing and payment
PIT liability is required to be filed and paid on a monthly
basis on the 20th day of the following month in respect of employment
income. The employer is required to withhold tax from the employee’s
income, declare and pay tax to the state budget. Monthly PIT payments
will be reconciled at the end of each calendar year.
An individual is required to file tax directly with the tax
authority if his employment income is paid by overseas organizations
and/or individuals. Likewise, non-employment income is required to be
declared by the individual separately per each type of taxable income
and the applicable tax rate as provided in the regulations.
A foreign resident individual terminating their employment
contract in Vietnam is required to submit the tax final return before
departure of Vietnam.
Vietnam has signed a double tax treaty with more than 60 countries. Some treaties have not been enforceable as yet.
Divider: Financial report and auditing
Motor vehicle, aircraft and yacht are newly added by the Law No.27/2008/QH11 on SST
Slot games is newly added by the Law No. 27/2008/QH11 on SST
Law No.27/2008/QH11 on SST
Applicable up to 31 December 2009
New SST rates apply from 1 January 2010