Income Tax Related Matter in Vietnam for Expats
All companies in Vietnam, both domestic and international, are required to comply with all applicable regulations when doing business in Vietnam. These include regulations on accounting and tax reporting.
Companies need to register their financial invoices with the tax office in Vietnam. Moreover, it is mandatory to obtain Red Invoice before they can sell products and services and conduct other commercial activities. Red invoices, or VAT invoices, are invoices purchased in advance in Vietnam. They must be purchased in stock in order of a transaction to be registered and accounted for by the government bodies.
With regards to tax compliance, all companies are required to submit tax statements to tax offices in which they are registered. It does not matter whether these companies are active and conduct business activities or have any tax liabilities in Vietnam or not, tax statements must be submitted.
Vietnam Corporate Income Tax Rates
The standard rate of corporate income taxation in Vietnam is 20% for a resident company. But due to the pandemic, the Vietnamese government introduced a 30% Corporate Income Tax reduction – applicable to taxpayers whose total revenue is below VND 200 billion – under Decree 114/2020.
Vietnam Corporate Income Tax
To encourage and increase the number of foreign investments in Vietnam, the government has put in numerous efforts, which include decreasing the rate of corporate income tax. Between 2000-2018 alone, the corporate income tax had reduced significantly by 12%. Currently, a tax rate of 20% is applied. In accordance with the country’s tax law, the corporate income tax is payable on a quarterly basis for companies with turnover lower than VND 50 billion, for larger companies, the CIT is payable monthly.
Vietnam Personal Income Tax
Meanwhile, individuals are required to pay for their taxes if they generate any income in Vietnam. Unlike corporate income tax, the personal income tax rate varies depending on how much an individual earns every year.
Individuals residing and receiving money in Vietnam are taxed at progressive rates that range between 5% and 35%. That being said, employees in top positions such as directors and senior managers are subject to a personal income tax of 35%, whereas blue-collar workers are subject to a personal income tax of 5% to 10%. Non-resident tax payers (i.e., expats), are subject to a Personal Income Tax at a flat rate of 20% based on their Vietnam income.
How Can InCorp Help?
Home to over 95 million people and the highest percentage of productive adults, Vietnam’s GDP growth which is projected to grow by 6.1% in 2021, portrays it as one of the strongest economies in ASEAN. Add to that its low labour costs and tax incentives offered by government bodies, and it comes as no surprise why many revel in the idea of setting up a company in Vietnam.
This is where we can help. With over two decades of domain expertise, InCorp Global is undoubtedly the leading corporate services provider in Singapore and Southeast Asia.
Overall, key taxation services we provide in Vietnam include (but is not limited to) Tax planning and structuring, tax audit and investigation, tax filing and advisory, tax dispute resolution. If there are other aspects of Vietnam corporate taxation that you would like us to address, feel free to contact us or engage in our services.
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Frequently Asked Questions on Corporate and Income Tax in Vietnam
- The standard rate of corporate income taxation in Vietnam is 20% for a resident company.
- For smaller companies with turnover lower than VND 50 billion, the corporate income tax in Vietnam is payable on a quarterly basis. For larger companies, it is payable on a monthly basis.
- Yes, non-resident tax payers in Vietnam are subjected to a Personal Income Tax at a flat rate of 20%.