TYPES OF TAXES THAT ENTERPRISES IN VIETNAM MUST PAY
Address, email, and contact phone number (See details)
-----------
When establishing and operating a business in Vietnam, understanding and complying with tax obligations is essential to ensure lawful operations, minimize risks of penalties, and optimize costs. Below is a complete and detailed summary of the taxes that enterprises in Vietnam are required to declare and pay under current regulations.
1. Value Added Tax (VAT)
Value Added Tax (VAT) is a tax levied on the added value of goods and services during the stages of production, circulation, and consumption.
In simple understand:
VAT = a tax ultimately borne by the end consumer
Businesses merely collect and remit VAT on behalf of the State.
Deduction method:
VAT payable = Output VAT – Input VAT
VAT rates: 0%, 5%, and 10% (10% is the most common rate).
Tax Declaration Period:
- Monthly or quarterly, depending on revenue levels.
- Enterprises must maintain proper accounting books, invoices, and supporting documents.
- VAT applies to most businesses engaged in trading, services, manufacturing, and import–export activities.
2. Corporate Income Tax (CIT)
Corporate Income Tax (CIT) is a tax imposed on the taxable income (profit) a business earns after deducting reasonable and allowable expenses in accordance with the law.
CIT formula: CIT payable = Taxable income × Tax rate (%)
Tax rates:
Standard CIT rate: 15% to 20%
Preferential rates: 10% – 17% for projects in prioritized sectors (IT, education, healthcare…) or in disadvantaged areas
Tax Declaration Period:
- Quarterly provisional payment
- Annual finalization
Enterprises must maintain complete accounting records, invoices, and supporting documents.
3. Personal Income Tax (PIT)
Personal Income Tax (PIT) is imposed on the income individuals receive, including salaries, wages, business income, and other taxable income sources.
Businesses are responsible for withholding and paying PIT on behalf of employees.
Applicable to:
- Income from salaries and wages
- Taxable income under labor contracts
- Foreign experts subject to foreign contractor tax
Tax Declaration Period:
Declaration Monthly or quarterly
Annual finalization declaration
4. Foreign Contractor Tax (FCT)
Foreign Contractor Tax (FCT) applies to foreign organizations and individuals conducting business or earning income in Vietnam without establishing a legal entity in Vietnam.
In simple understand
When a Vietnamese company pays a foreign contractor, it must withhold and remit taxes on behalf of the contractor — this is FCT.
FCT comprises:
VAT
CIT (or PIT for foreign individuals)
Calculation method:
Based on a percentage (%) of taxable revenue, depending on the business sector.
Tax Declaration Period:
Per transaction
(Each payment to the foreign contractor requires a tax declaration.)
5. Import and Export Duties
Import and Export Duties (collectively referred to as Customs Duties) are taxes imposed on goods exported from or imported into Vietnam.
In simple understand:
Goods exported from Vietnam → may be subject to export duty
Goods imported into Vietnam → may be subject to import duty
Imports may also be subject to:
VAT
Special Consumption Tax (for alcohol, beer, automobiles…)
Environmental Protection Tax (for petroleum, plastic bags…)
Import duty formula:
Import duty = Dutiable value × Duty rate
Duty rates:
Determined based on the customs tariff schedule and the specific type of goods.
Tax Declaration Period:
Per customs declaration (each import or export shipment).
6. Special Consumption Tax (SCT)
Not applicable to all enterprises.
SCT applies to:
- Tobacco, alcohol, beer
- Automobiles
- Karaoke, casino, dance clubs
- Certain types of fuel
SCT aims to limit consumption and regulate social behaviors.
7. Natural Resource Tax
Applicable to businesses engaged in:
Mineral extraction
Natural water exploitation
Natural forest exploitation
Marine resource exploitation
Tax rates depend on the extraction volume and the scarcity of the resource
8. Mandatory Fees, Charges, and Insurance
In addition to taxes, enterprises must also comply with:
Social, health, and unemployment insurance for employees
Environmental protection fees (if applicable)
Appraisal and licensing fees depending on business activities
Customs infrastructure fees, road maintenance fees for company vehicles.
Conclusion
A clear understanding of tax obligations helps businesses:
✔ Operate legally
✔ Minimize risks of penalties
✔ Optimize financial structure
✔ Build a solid foundation for long-term growth
If your business needs assistance with tax declarations, compliance reporting, tax finalization, or tax policy consultation, the legal team at Thuy Ngoc Law Firm is ready to support you.
Please contact Thuy Ngoc Law Firm via:
Address, email, and contact phone number (See details)
