After incorporating a foreign-owned company in Vietnam, you need to make sure it follows local laws and reporting requirements. We have put together this article to show you a one-year cycle of corporate compliance in Vietnam and help you plan your tax reporting in Vietnam in advance.
Table of contents
Compliance requirements after incorporation
#1 Tax registration
The first thing you need to do after obtaining a Business Registration Certificate is to complete tax registration at a local tax department.
Each company will receive a company registration code that simultaneously acts as a tax code number as well.
#2 VAT invoices
Companies in Vietnam can use electronic, pre-printed, self-printed, or ordered invoices. Pre-printed invoices are for companies applying direct deduction method and sold by the Municipal Taxation Department.
You may also use electronic, self-printed VAT invoice, or ordered invoice templates. However, you need to register invoices with the Municipal Taxation Department. Thus, the process of issuing invoices can take up to 10 days.
You don’t need to worry about requesting or registering VAT invoices when using Emerhub’s assistance – it is part of our Tax Registration service.
#3 Business license tax
The newly established enterprise has to declare a business license by applying and paying the business license tax by the last day of the month of acquiring business and tax registration certificates.
The tax is paid annually and is part of our tax registration service.
The founders have 90 days to make the capital contribution after obtaining the Business Registration Certificate.
If the capital contribution is less or more than initially registered, you must re-register the business license and change the amount of capital contribution in it as well.
Corporate compliance in Vietnam throughout the year
Reporting and taxes
Type of Tax
Quarterly Declaration and Payment Due
No later than the 30th day of the following quarter
Personal Income Tax
No later than the 30th day of the next quarter
Corporate Income Tax
Paid on estimates, no declaration required
Due: the 30th day of the next quarter
Foreign labor use report
Hiring foreign nationals requires you to submit a foreign labor use report on a quarterly basis, according to Circular 40/2016/TT-BLDTBXH.
The report should give an overview of the use of the foreign workforce in the last quarter.
Labor use report
You also need to register all employees on your payroll in Vietnam within 30 days after the incorporation. The Municipal Department of Labor also asks for a labor use report twice a year.
The report should provide an overview of the number of employees, their positions, qualifications, type of labor contract, such as fixed-term or indefinite duration labor contracts, etc.
Audited annual report
The Law on Independent Audit stipulates that audited annual financial statements must be submitted by the end of the first quarter, 90 days after the end of the fiscal year.
An independent Vietnamese auditing company must also inspect reports.
Foreign investment reports
Keep in mind that you also need to present the reports of foreign investors’ projects at the beginning of the year. These statements give feedback on profits, expenses, and losses met during the year.
Business license tax
Paying the business license tax is one of the first things to do together with declaring business license tax after incorporation. However, it is an annual tax. The due date of business license tax is on 30 January.
The amount of the tax is paid according to their registered capital. If you wish to change the amount of capital contribution and this new capital contribution changes the amount of the tax the company has to pay, you need to declare and submit business license application again.
Corporate income tax and personal income tax settlement report
Final Corporate Income Tax reports must be submitted annually and no later than 90 days after the end of the financial year. The outstanding tax demand must be fulfilled simultaneously.
The same applies to Personal Income Tax returns. In addition to quarterly compliance, the company has 90 days from the end of the fiscal year to submit the final PIT report and pay any outstanding additional tax or receive any exceeded tax.
Registering local and foreign employees
Registration for social insurance
The New Labor Code No.10/2012/QH13 left the probationary period in Vietnam the same as in the previous code – 2 months. Subsequently, you must register all the local employees for social, health and unemployment insurance. The employer and employees cover these three kinds of insurance costs.
In October 2018, the government released the long-anticipated Decree 143/2018/ND-CP which made social insurance payments compulsory also on foreign employees starting from 1 December 2018.
The percentages are, accordingly:
- 0% by the employee
- 3.5% by the employer
Find more information in our previous article about payroll management in Vietnam.
Work permits for foreign employees
Labor use report is to be submitted biannually. However, if a company employs foreign employees, they must be registered immediately.
The above-mentioned Labor Code 2012 also stipulates more restrictions on recruiting foreign workforce. As stated in Article 173, work permits are now issued for 24 months, instead of the previous 36 months.
Also, you need to first explain the necessity for a foreign workforce, for example, if the position requires a proficient level of a specific language, specific skills, international experience, etc.
Find more information in our previous article about employing foreign employees in Vietnam.
Changes in corporate structure
Although reports and taxes have a definite deadline, all other changes taking place in a company must be declared immediately. For example if:
- the company’s address changes
- there is a change in the board of directors
- a shareholder or a board member gets a new passport
The same applies to licenses. If during the year you would like to start providing a new service or selling a new product, you must first apply for the corresponding permit within 30 days.
Consequences of non-compliance
Not complying with the requirements of tax reporting and payment in Vietnam can have severe consequences for your business.
Late or no submission of the records or failure to pay the taxes or insurance fees will result in fines. The amount of the fine will be calculated based on the number of late days.
Should the company ignore the fines and reporting claims, the government bodies will annul its licenses and keep the company from operating in the future.
Keeping up with the compliance in Vietnam demands accuracy and consumes a lot of time. Emerhub provides you with a full range of corporate compliance services to make sure that your company complies with all the local regulations.
Get in touch with our consultants by using the form below.