Accounting service for company establishment costs in Vietnam

Accounting for company establishment costs is an important process for newly born businesses. In the context of a strongly growing economy, establishing a business is not only a major event for founders but also contributes positively to the diversity and enrichment of the business community. In the article below, Viet An Law will provide some information about the accounting service for company establishment costs in Vietnam, important aspects to pay attention to, and the benefits that cost accounting brings to sustainable development.

Legal basis

• Decree 01/2021/ND-CP on business registration.
• Decree 139/2016/ND-CP regulating license fees, amended and supplemented by Decree No. 22/2020/ND-CP, Decree 126/2020/ND-CP
• Circular 47/2019/TT-BTC regulates the rates, collection, payment, management, and use of fees for providing business information and business registration fees.
• Circular 78/2014/TT-BTC guiding the implementation of Decree 218/2013/ND-CP guiding the Law on Corporate Income Tax, as amended and supplemented from time to time.
• Circular 45/2013/TT-BTC guiding the management, use, and depreciation of fixed assets, amended and supplemented by Circular 147/2016/TT-BTC and Circular 28/2017/TT- BTC;
• Circular 219/2013/TT-BTC guiding the implementation of the Value Added Tax Law and Decree No. 209/2013/TT-BTC, amended and supplemented from time to time.

Costs for implementing business establishment procedures

In addition to the costs of renting a location and carrying out initial procedures to have a business registration location, businesses need to prepare taxes and fees according to state regulations to carry out business establishment procedures. These costs include:

Business registration fees are paid at the Department of Planning and Investment

• According to the provisions of Article 32 of Decree 01/2021/ND-CP, businesses must pay business registration fees and charges at the time of submitting documents to establish a company. According to regulations in Circular 47/2019/TT-BTC, the business establishment registration fee is 100,000 VND/time.
• Form: Business founders pay fees directly using electronic payment service.
• Note: In case of registering to establish a business online, the enterprise registering to establish a company will be exempted from the business establishment registration fee, accordingly, the enterprise only needs to pay the fee for publishing the business registration content as specified below.
• In addition, during the process of preparing documents and procedures to establish a company branch, businesses may have to bear several other costs such as the cost of using branch establishment services provided by Viet An Law supply (if clients need it), printing costs, notarization costs.

Fee for publication of business registration contents

According to the provisions of the Enterprise Law 2020, within 30 days, businesses must publish the business registration content on the National Business Information Portal.

The fee for publication of business registration content according to Circular 47/2019/TT-BTC is 100,000 VND.

Are expenses before having a tax code deductible?

The tax code is issued at the same time as the business code recorded in the business registration certificate. This means that invoice issuance and tax deduction declaration also arise from the time of completing business registration procedures. Can previous fees and charges for business registration be deducted from business expenses?

Deduction of corporate income tax

According to the provisions of Article 6 of Circular 78/2014/TT-BTC, as amended and supplemented by Circular 96/2015/TT-BTC, except for expenses that cannot be deducted when determining taxable income, the expenses that meet all prescribed conditions are deductible. Conditions include:

• Actual expenses incurred related to production and business activities of the enterprise.
• Expenses have enough legal invoices and documents according to the provisions of the law.
• Expenditures if there are invoices for each purchase of goods and services with a value of 20 million VND or more (price includes VAT) must have non-cash payment documents when paying.

For business establishment costs that meet all of the above conditions, they must not fall into one of the non-deductible cases, specifically, depreciation costs of fixed assets can be deducted from enterprise expenses.

Regulations on this issue, in Clause 3, Article 3 of Circular No. 45/2013/TT-BTC, enterprise expenses are not intangible fixed assets but are gradually allocated to the enterprise’s business expenses over time. The maximum period must not exceed 3 years from the date the business begins operations. This cost allocation regulation also applies to several costs incurred before establishing a business such as employee training costs, advertising costs incurred before establishing a business, costs for the research phase, relocation costs, purchasing costs to obtain and use technical documents, patents, technology transfer licenses, and trademarks.

Deduction of input value added tax

In Clause 12, Article 14, Circular 219/2013/TT-BTC regulates costs related to establishing businesses, and purchasing goods and supplies made by organizations and individuals. Authorizing founders with valid authorization documents are regulated as follows:

“12. Business establishments are allowed to declare and deduct VAT on goods and services purchased under the authorization of another organization or individual and the invoice bears the name of the authorized organization or individual, including the following cases:

1. b) Before establishing a business, the founders have written authorization for organizations and individuals to pay for some expenses related to establishing the business and purchasing goods and supplies. Enterprises are allowed to declare and deduct input VAT according to VAT invoices in the name of authorized organizations and individuals and must make payments to authorized organizations and individuals via banks for invoices with value of twenty million VND or more.”

Accordingly, if the founders have written authorization for individuals to pay for some expenses related to the establishment of a company or enterprise, the purchase of goods and supplies, the enterprise may declare input value added tax deduction.

Thus, businesses can declare and deduct input value-added tax according to value-added invoices in the name of authorized organizations and individuals. For invoices with a value of 20 million VND or more, businesses must make payments to authorized organizations and individuals via banks and have legal documents (invoices, legal documents). If there are no legal documents, the enterprise cannot declare those costs as input VAT deductible costs and cannot account for other deductible costs when calculating income subject to corporate income tax.

Costs for implementing post-establishment procedures

Cost of engraving business seal

Currently, depending on each unit, there are different prices. The cost depends on the unit providing the seal engraving service and the type of seal required by the business. The price for a company round stamp ranges from 200,000 VND to 300,000 VND. Seal the title of Director, Chairman…. from 70,000 VND to 150,000 VND.

Cost of making company signs

Depending on the sign-making unit, there are different prices. On the market, prices fluctuate from 300,000 VND to 1,500,000 VND depending on the material and size of the sign.

Fee for purchasing digital signature (Token)

The digital signature is an encrypted USB format used instead of the signature and seal of the legal representative to sign declarations or other online operations to identify all operations as belonging to the business. Businesses contact digital signature providers such as Viettel, Vina, and Vinca to purchase a Digital Signature device.

Cost depends on the provider and the number of years of service. Digital signatures with 03 years of use range from 1,500,000 VND to 2,000,000 VND.

Open a bank account and submit a bank account notification

Businesses must open a bank account for transactions and to pay taxes according to current mandatory regulations. The account opening procedure is free of charge. However, businesses need to ensure the account balance is at least 1,000,000 VND.

Declare and pay license fees

According to the provisions of Decree 139/2016/ND-CP regulating license fees, amended and supplemented by Decree 22/2020/ND-CP, Decree 126/2020/ND-CP, License fees are based on the company’s charter capital and divided into the following two levels:

• Charter capital from less than 10 billion, license fee is 2,000,000 VND/year.
• Charter capital is over 10 billion, and the license fee is 3,000,000 VND/year.
• The company is exempt from license fees in the first year of establishment but must still declare license tax.
• Companies eligible for support under Article 16 of the Law on Support for Small and Medium Enterprises are exempt from license tax for 3 years from the date of issuance of the first business registration certificate.

Accounting service for company establishment costs in Vietnam of Viet An Law

• Consulting, drafting, and representing clients to carry out business establishment procedures at competent authorities;
• Consulting and representing clients to apply for business licenses for businesses;
• Providing post-establishment services;
• Comprehensive accounting and tax services for businesses;
• Regular legal advice for businesses after establishment.

For clients who need advice on accounting for company establishment costs, please contact Viet An Law Firm for the best support.