Have you recently finalized company registration in Vietnam? Then it is important to remember that corporate compliance is not limited only to setting up your business; It is something that you will need to maintain throughout the year.
Vietnam has several requirements that foreign-owned companies must follow after incorporation. This article will show you a one-year cycle of corporate compliance in Vietnam and will help you get a head start on planning your business tax reporting throughout the fiscal year.
Understanding corporate compliance requirements for newly incorporated companies
Tax registration
As a newly incorporated company in Vietnam, the first thing you need to do upon obtaining your Business Registration Certificate is complete tax registration through the local tax department. Registration is mandatory for both individuals and companies earning income in Vietnam.
The local tax office will provide your business with a company registration code that will simultaneously act as your tax code number for filing quarterly and annual tax returns, as well as any other reports that may be required to submit to local tax authorities.
Business licensing and capital contribution
Any legal entity that is seeking to conduct business activities in Vietnam must secure a business license before moving forward with any operations. Once you are licensed, you are required to pay an annual Business License Tax (BLT) in Vietnam. Failure to comply with the yearly payment can result in fines and withdrawal of your company license.
The BLT is paid according to the calendar year and the payment deadline is always January 30th of the new year. New organizations are currently exempt from the Tax for the first calendar year. The amount owing is determined on a case-by-case basis depending on the specific tax subject’s registered capital. Typically rates range between USD 40.00 and USD 120.00.
Company founders also have 90 days from business registration to make their capital contribution, which refers to paid-up capital. If the contribution does not match the registered capital, then you will have to re-register your business license and change the amount.
Navigating VAT invoices for your operations
Companies in Vietnam are required to pay Value Added Tax (VAT) by submitting VAT invoices, which is the assessed value of manufactured or imported goods and services intended for the Vietnamese consumer market. The standard VAT rate is set at 10%, although current financial relief measures have temporarily lowered it to 8% until June 2024.
Vietnamese businesses can use electronic, pre-printed, self-printed, or ordered invoices to register them with the Municipal Taxation Department. This process generally takes up to 10 days. Emerhub can help you with requesting and registering your VAT invoices as well as determining the right filing method for your operations:
- Credit Method: most common means of filing for registered Vietnamese businesses. The payable VAT amount is calculated by subtracting the creditable VAT input from the Output.
- Direct Method: Generally applies to companies without a Vietnamese Accounting System, or who trade with gold, silver, and gems. The payable amount is determined by the added value of sold goods and services multiplied by the VAT rate.
Ensuring compliance with Vietnamese labor laws
Local and foreign employee registrations
If your operations in Vietnam include employing local or foreign employees, then you must ensure compliance with Vietnamese labor laws through efficient employee payroll management. As an employer, you are required to register your employees for mandatory statutory contributions towards health and social security.
Additionally, since January 2022, the Vietnam government implemented Decree 143/2018/ND-CP which mandates employees to contribute 8% of their monthly salary towards the retirement and survivorship fund. The shared contributions for resident and foreign employees are as follows:
- 8% of monthly salary by employee
- 17.5% of monthly salary by the employer
Labor use reporting for foreign employees in Vietnam
Vietnamese companies are required to submit bi-annual labor use reports which give an overview of the amount of employees currently registered with the company, to allow regulatory bodies to monitor workplace compliance with labor policies properly.
If your company employs a foreign employee, they must be immediately registered. Currently, work permits are issued for up to 24 months. However, there are several restrictions in place in the Labor code, meaning that you must justify the necessity of recruiting in the foreign workforce, through examples such as:
- language proficiency
- Specific skill requirements
- International experience
- Educational requirements
To ensure adequate compliance with these regulations, companies that employ foreign workers must submit Foreign labor use reports every quarter. To learn more, check out our related article on employing foreign workers in Vietnam.
Corporate compliance in Vietnam throughout the year
Overview of Vietnamese compliance reporting deadlines
You must ensure corporate compliance for your operations throughout the year in Vietnam. Several types of reports and submissions are required from companies, and deadlines can vary depending on whether they relate to annual, bi-annual, quarterly, or monthly submissions. Below, you will find a complete overview of the typical submissions required for businesses in Vietnam:
| Compliance interval | Type of tax/report | Declaration and payment deadline |
|---|---|---|
| Quarterly compliance | VAT | 30th day of the following quarter |
| Personal Income Tax | 30th day of the following quarter | |
| Corporate Income Tax | 30th day of the following quarter (paid on estimates, no required declaration) | |
| FDI Report | Before the 10th of the month of each new quarter | |
| Foreign Labor Use Report | 5th of the month of each new quarter | |
| Biannual compliance | Labor Use Report | June 5th and December 5th |
| FDI Overall Supervision and Assessment Report | Two report deadlines: A Semi-Annual 6-month report before July 10 of the reporting year. An Annual Report before February 10 of the succeeding year. | |
Annual compliance | Business License Tax | January 30 |
| Audited Financial Statement | 90 days after fiscal year-end | |
| Corporate/Personal Income Tax Settlement | 90 days after fiscal year-end | |
| Foreign Direct Investment (FDI) report | March 31 |
Changes in corporate structure
Although reports and tax payments have definite deadlines, all other changes that may take place in a company must be addressed and reported immediately. Examples include:
- Change of company address
- Changes to the board of directors
- Founder or board member receives a new passport
This is also important for business licenses. If you plan to start providing a new service or selling a new product throughout the year, you will need to apply for the corresponding permit within 10 days.
Consequences of non-compliance
Failure to comply with tax submission and payment requirements can result in severe consequences for your company, such as fines which will be calculated based on the number of late days. Ignoring these fines and avoiding reporting claims may result in government bodies annulling a company's license and restricting any future operations by that entity.
Emerhub’s team of advisors is experienced with corporate compliance in Vietnam and can assist you with ensuring compliance through accurate and timely reporting. If you are interested in partnering with us to navigate the intricacies of tax and payroll through our comprehensive corporate compliance service, contact us via the form below!