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Sohaib Ikram
Sohaib Ikram serves as the Director of Emerhub in Malaysia.
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Andi Refandi
Andi serves as a Senior Account Executive on Emerhub’s global team.
Expanding your business to Vietnam offers significant opportunities as a foreign investor. However, you must have a clear understanding of the Vietnamese tax system to ensure compliance and optimize your financial position through available incentives.
This guide provides a clear overview of the essential tax considerations for business owners in Vietnam, helping you manage your obligations effectively and make informed decisions for your business.
Understanding Personal Taxes in Vietnam
Who is Considered A Tax Resident in Vietnam?
An individual’s tax residency status determines whether they are taxed on their worldwide income or only income generated within Vietnam. This is a critical first step.
You are considered a Vietnam tax resident if you meet any of these conditions:
- Stay in Vietnam for 183 days or more during a 12-month period.
- Have a permanent residence (recorded on a temporary or permanent residence card).
- Lease a property in Vietnam for 183 days or more in a tax year.
On the other hand, a company is automatically a tax resident if it’s established under Vietnamese law (like a Foreign-Invested Company).
Understanding Vietnamese Personal Income Tax (PIT) Regulations
For individuals working in Vietnam, the PIT rules differ significantly based on residency. If you’re a tax resident, you’ll be taxed on your worldwide income, while non-residents are only taxed on income earned in Vietnam at a flat rate.
Moreover, in Vietnam, personal income tax (PIT) follows a progressive system. Meaning the more you earn, the higher the rate you’ll have to pay. The rates range from 5% to 35%, depending on your income bracket.
Here’s a breakdown of the progressive PIT rates for resident individuals in Vietnam:
| Monthly Taxable Income (VND) | PIT Rate |
| Up to 5 million | 5% |
| Over 5 to 10 million | 10% |
| Over 10 to 18 million | 15% |
| Over 18 to 32 million | 20% |
| Over 32 million to 52 million | 25% |
| Over 52 million to 80 million | 30% |
| Over 80 million | 35% |
Taxable income includes salaries, wages, bonuses, allowances, and other employment benefits.
However, residents can claim certain statutory deductions, such as personal relief (VND 11 million/month), dependent relief (VND 4.4 million/dependent/month), and mandatory insurance contributions, which can reduce the overall tax burden.
Employers usually handle PIT on employment income by withholding it monthly or quarterly. However, if you are self-employed or earn additional income, you must file your own taxes.
If you’re a non-resident, only the income you earn in Vietnam is taxed, and it is subject to a flat rate of 20%. Since you are not eligible for deductions like personal or dependent allowances, your overall tax burden may be higher compared to residents. However, depending on your home country, you might be able to reduce your burden through a double taxation agreement.
Overview of Corporate Taxes in Vietnam For Businesses
Corporate Income Tax (CIT) Rates, Incentives, and Deadlines
In Vietnam, the standard corporate income tax (CIT) rate is 20%, but this can vary depending on your industry or type of investment:
- 20% for most businesses
- 10% to 17% for priority sectors such as high tech, education, healthcare, and infrastructure
- 32% to 50% for industries like oil, gas, and mineral extraction
CIT is calculated based on your company’s taxable income, which includes business revenue, capital gains, and other earnings. You can deduct necessary expenses like employee salaries, raw materials, depreciation, and insurance contributions. However, certain costs, such as excessive interest payments, fines, and non-compliant related party transactions, are not deductible.
To encourage foreign investment, Vietnam offers several CIT incentives, especially if you’re in a priority sector:
- Lower tax rates (for example, 10% for 15 years for high-tech projects).
- Tax holidays, with full exemptions for 2 to 4 years, followed by a 50% reduction for subsequent years.
- Special incentives for businesses in special economic zones (SEZs) or less developed areas.
As a business, you must file quarterly CIT reports and pay your estimated taxes by the 30th day of the following quarter. You must submit your final annual CIT return within three months after your fiscal year ends through the General Department of Taxation portal.
Missing tax deadlines can lead to penalties, including a daily late payment interest of 0.03% and fines for incorrect or missing filings. Emerhub offers comprehensive tax and accounting services to help you ensure everything is filed accurately and on time.
Value Added Tax (VAT) in Vietnam
Value Added Tax (VAT) is a key part of Vietnam’s tax system, applied at different rates depending on the type of goods and services:
- 10% (Standard Rate): Applies to most goods and services.
- 8% (Temporary Standard Rate): This is the current standard rate applied to most goods and services, applicable until December 31 2026.
- 5% (Reduced Rate): Covers essential items such as clean water, medical equipment, and certain agricultural products.
- 0% (Special Rate): Reserved for exports, international transportation, and certain incentivized activities.
Certain types of goods and services in Vietnam are not subject to value-added tax. These include essentials like healthcare, education, financial services, insurance, and public transportation. If your business only provides VAT-exempt services, you will not be able to claim back the VAT you pay on your expenses, so you will need to cover those costs yourself.
On the other hand, if you export goods, run large investment projects, or operate in a priority sector, you may qualify for VAT refunds. These refunds can ease your cash flow, but you must meet specific conditions and apply through the General Department of Taxation.
To stay compliant, you will need to file VAT returns regularly. Depending on your revenue, you will file your tax return either monthly or quarterly. Monthly filers must submit their reports and payments by the 20th of the following month, while quarterly filers have until the 30th of the following quarter.
Special Sales Tax (SST) and Other Business Taxes
This excise duty applies to the production or import of specific goods considered luxury or non-essential, such as alcohol, tobacco products, automobiles, and certain services like casinos or golf courses.
SST Rates vary significantly depending on the product.
Additionally, depending on your specific industry, you might encounter taxes like Environmental Protection Tax, Natural Resource Tax (if involved in extraction), or Import/Export Duties. It is important to identify all applicable taxes early to ensure accurate financial planning.
Emerhub’s tax and accounting experts advise you on any additional taxes applicable to your operations and handle registrations and filings on your behalf.
How to Report and File Taxes in Vietnam
Vietnam’s tax system relies on electronic filing. Your business will need to register with the General Department of Taxation (GDT) portal, prepare accurate electronic declarations (VAT, CIT, PIT withholding), and submit them by the deadlines.
Emerhub provides comprehensive tax filing services, ensuring accuracy and timeliness to avoid penalties.
Business Tax Filing and Compliance
The electronic tax filing system in Vietnam provides a streamlined way of submitting tax declarations to the General Department of Taxation (GDT). The process involves:
- Registering for online tax filing through the GDT system.
- Preparing tax reports based on financial records, invoices, and payroll.
- Submitting the required forms electronically before the deadlines.
- Confirming submission and payment through the tax portal.
Key forms and supporting documents generally required for this process include:
- VAT declarations with invoices and transaction records.
- Corporate Income Tax (CIT) filings, including financial statements.
- Personal Income Tax (PIT) reports with payroll details.
- Other applicable tax declarations, such as Special Sales Tax (SST).
Mistakes like miscalculations, missing documents, or late submissions can lead to penalties or audits. To avoid these issues, it’s important to follow electronic filing rules, including using digital signatures and the correct form formats.
Personal Tax Returns and Employee Tax Reporting
For individuals with multiple income sources or annual earnings above the taxable threshold, filing a personal income tax return is necessary. Employees must file taxes if they want to claim refunds, deductions, or report additional income, even if their employer has already fully withheld their taxes.
Stay Compliant and Optimize Your Taxes in Thailand with Emerhub
Successfully managing your taxes in Vietnam involves both staying compliant and finding ways to optimize your tax position. There are several opportunities to reduce your tax burden. This includes investment incentives, tax holidays, and deductions for expenses like employee training and eco-friendly initiatives.
However, navigating the tax system can be complex. As such, engaging in Emerhub’s services to provide expert guidance on tax compliance, filing, and strategic tax planning can help you fully leverage available incentives.
Need help with tax compliance and optimization in Vietnam? Fill in the form below to connect with our local experts.
Frequently asked questions
Yes, Vietnam requires foreign employees with a labor contract of at least one year to contribute to social insurance, regardless of their work permit status. The updated 2024 Social Insurance Law has relaxed the requirement for a work permit for contracts lasting 12 months or more. Participation in social insurance is mandatory, with some exemptions, such as intra-company transferees or retirees.
While hiring a tax agent is not mandatory, it is highly recommended. A local tax consultant can help ensure your tax filings are accurate, comply with Vietnam’s regulations, and meet critical deadlines. They can also assist in identifying tax incentives, minimizing liabilities, and avoiding penalties for non-compliance, which can save your business time and resources in the long run.
Foreign investors in Vietnam can access various tax incentives, including CIT exemptions for up to 4 years and preferential rates of 10% for sectors like healthcare, education, and high-tech. They may also qualify for import duty exemptions, land rent reductions, and sector-specific incentives for areas like renewable energy and agriculture. Additionally, projects in economic zones or disadvantaged regions benefit from enhanced tax holidays and favorable rates.
Yes, over 80 countries have signed double taxation agreements (DTAs) with Vietnam to prevent taxing the same income twice. These agreements often reduce or eliminate tax rates on certain types of income, like dividends, royalties, and interest. It’s important to verify your country’s eligibility under these agreements to ensure you’re not paying double taxes and can take advantage of reduced rates.
