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Taxes in Vietnam

Posted by invest_admin on June 8, 2020
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If you are planning to open a business in Vietnam, you will certainly have to pay taxes. It is clear that usually in both small and large businesses, hired local specialists are involved in tax procedures, and the business owner only gives out money, but we’ll try to understand a little how big this amount is.

1. Corporate income tax (CIT)

The most basic and largest tax in Vietnam, the standard rate is 20% (they plan to raise up to 25%) of net profit, sometimes under certain conditions 10, 15 or 17%. For the oil and gas industry CIT is 32-50%, and for industries using natural resources, depending on the location, 40-50%.
Some areas of business that Vietnam wants particularly to develop have tax vacations:

  • Exemption for 4 years, 50% for the next 5 years, then 10%: enterprises engaged in social activities and education, culture, sports, social housing, planting and forest protection, agricultural development.
  • Exemption for 4 years, 50% for the next 9 years, then 10% for 2 years: investment projects in technology parks, high-tech projects, infrastructure development, biotechnology, green energy, environmental protection, production of raw materials for electronics.
  • Exemption for 2 years, 50% for the next 4 years, then a 20% rate for 6 years: the production of steel, agricultural machinery and equipment, feed, energy-saving products.

2. VAT

For most goods and services, VAT is 10%. A reduced 5% tax is applied for necessary goods and services such as medicines, water, feed and fertilizers, natural products. For export goods VAT is not applicable, i.e. equals zero.

3. Special Sales Tax (SST)

SST applies to harmful products such as cigarettes and alcohol, also in some sense replaces the luxury tax – this includes yachts, airplanes, jewelry, cars and powerful motorcycles, as well as casino, lottery, golf clubs. It can reach up to 150%

4. Employment Taxes

Local Employees:

  • Personal Income Tax (employee): from 5 to 35%, calculated from the average monthly income. The more income – the more deductions.
  • Trade union deductions (employee): 2%
  • Social fees
    • Social insurance: 8% employee, 17.5% employer
    • Health insurance: 1.5% employee, 3% employer
    • Unemployment insurance: 1% of both

Foreign employees:

  • Personal Income Tax (employee): from 5 to 35% residents and 20% non-residents
  • Trade union deductions (employee): 2%
  • Social fees
    • Social insurance: 0% employee, 3.5% employer
    • Health insurance: 1.5% employee, 3% employer

Starting January 1, 2021, foreign employees will pay the same social fees as local ones.

Personal Income TaxMonthly Taxable Income (VND)
5%< 5.000.000
10%5.000.000 – 10.000.000
15%10.000.000 – 18.000.000
20%18.000.000 – 32.000.000
25%32.000.000 – 52.000.000
30%52.000.000 – 80.000.000
35%> 80.000.000
Personal income tax table

Annual business patent

The most common tax in Vietnam in small business, once a year until January 31 you need to pay a fixed patent cost of 2 million dong (about $ 90)

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