Taxation in Vietnam for personal and corporations

by Mohimenul Islam SEO service provider

Taxes is one of the key points expats, business man and entrepreneurs living in Vietnam are facing as it is very tricky and a lot of rules are applied. For years, some english teachers decided not to pay it but the new law will allow the government to take actions and force them to pay. This is the first step the government is taking to reduce the amount of expat, foreign investors, retired people living in Vietnam without paying any taxes. Soon or later, foreign and expats will be ban if they do not take action to pay their personal taxes. How taxes work in Vietnam for corporation and expat resident living in Vietnam more than 183 days per year ?

 

Tax reform for LLC and foreign companies

A tax reform is under way. Corporate income tax is the same as that of domestic companies and is administered by the Ministry of Finance (28 Trang Hung Dao, Hanoi). It is 20% for companies with an income of more than VND 20 billion. This tax falls below 17% if the income is lower. However, some investment projects concerning the creation of production facilities benefit from reduced rates ranging from 10% to 20% if they are located in sectors where investment is encouraged.

Vietnamese law provides that all foreigners with income resulting from their activities in Vietnam are subject to IRPP (Income Tax) in Vietnam. The taxable threshold is VND 9 million and is progressive between 0% and 40% (exceeding VND 80 million).

 

Tax regime for the company's staff

The company must have at least one shareholder and one director (the main shareholder is not required to live in Vietnam unlike the director). These two functions can be managed by one and the same person. However, as a director, you must present documents proving that you have at least twelve months' managerial experience in addition to your work permit. Otherwise, you have the possibility, if you wish, to hire a service manager directly in the country.

 

The branch taxes for foreign branch and international companies

If you already belong to a company, you have the possibility to set up a branch in Vietnam. The latter remains affiliated with the parent company, and can carry out commercial activities (but the list of goods and services is very restrictive). It must also remain in the same field as the parent company and is subject to the same tax regime as the domestic company.

Investors wishing to establish a branch in Vietnam must submit an application to the Ministry of Industry and Trade in Hanoi and are not required to submit a summons.

Unlike a company with 100% foreign capital created by a single investor, an investment certificate is not required. You must present a valid passport declared for at least three months by the person who will be in charge of managing the establishment, a business visa and proof of residence in Vietnam. In addition, you must include in the application file a copy of your parent company's financial report for a complete year (the year preceding that of your application for establishment), the company's charter and the operating licence. These documents must be authenticated by a law firm, authenticated and stamped at the Vietnamese Embassy and translated into Vietnamese.

 

Personal taxes for expats, business men and retirees living in Vietnam

As an expat living in Vietnam, we have to pay personal taxes if we are a resident. Being a resident means that we spend more than 183 days per year. There are a taxation schema for residents following from 5 % up to 30 % of rates for personal taxes on worldwide income. Some income are not eligible to taxes such as pensions for retired people living in Vietnam and some kind of income from capital investments. There are a few step to follow such as applying for a PIT (personal income tax) ID, get in touch with an accountant and pay your taxes. You can find the list of taxes deduction, exemptions and PIT  on this updated study dedicated for expats. It is important during your first months as an expat in Vietnam to know when you need to fill your taxes, when the due dates are and how to get you a PIT and calculate the taxes from your earnings.

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Created on Aug 13th 2019 23:37. Viewed 260 times.

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