Instructions for declaring branch license tax in Vietnam

Because business enterprises are increasingly growing and there is a need to expand production scale, expanding more company branches is inevitable. However, when opening a new branch of the company, the established branch will have to declare a license tax to comply with the provisions of the law. In the article below, Viet An Law presents instructions for declaring branch license tax in Vietnam.

Legal basis

• Decree 126/2020/ND-CP on guidelines for the Law on Tax Administration, amended and supplemented by Decree 91/2022/ND-CP.
• Decree No. 139/2016/ND-CP regulating license fees, amended and supplemented by Decree No. 22/2020/ND-CP.
• Circular No. 302/2016/TT-BTC guiding license fees, amended and supplemented by Circular 65/2020/TT-BTC.
• Circular No. 80/2021/TT-BTC guiding the implementation of several articles of the Law on Tax Administration and Decree No. 126/2020/ND-CP detailing the Law on Tax Administration.

What is license tax?

The license tax is a direct tax that businesses must pay annually based on the charter capital recorded on the business license. The fee is divided into levels, based on the registered capital or revenue of the previous business year or the added value of the previous business year depending on each country and locality.

Subjects paying license tax

Article 2 of Decree 139/2016/ND-CP stipulates that subjects obliged to submit license fee declaration documents are organizations and individuals engaged in the production and trading of goods and services, including the branches of companies.

Thus, company branches are subject to regulations that must pay license tax. In particular, branches of the following organizations must pay enterprises established according to the provisions of law; organizations established under the Cooperative Law; public service units established according to the provisions of law; economic organization of political organizations, social organizations, socio-political organizations; Other organizations engaged in production and business activities.

Note:

• Under Article 16 of the Law on Support for Small and Medium Enterprises, branches of small and medium enterprises transferred from business households are exempt from license tax for a period of 3 years from the first time of issuance of the certificate.
• During the license fee exemption period, small and medium-sized enterprises that establish branches, representative offices, branch business locations, representative offices, and business locations are exempt from license fees.

Instructions for declaring branch license tax in Vietnam

In the case of independent accounting

The declaration and payment of license fees are done in the province or city where the branch headquarters is located.

In the case of dependent accounting

• For branches in the same area (same province or city as the company).

Under the provisions in Section 2, Point a Clause 1, Article 5 of Circular 302/2016/TT-BTC on declaration and payment of license fees for branches in the same locality at the provincial level: “In case the fee payer has a unit dependents (branches, representative offices, business locations) doing business in the same provincial locality, the fee payer must submit the license fee declaration dossier of those dependent units to the tax authority which manages directly the taxpayer”. Thus, the declaration and payment of license fees for branches in the same area are carried out at the company’s direct tax agency.

• For branches in different areas (different provinces and cities from the company).

Under the provisions in Section 2, Point a, Claue 1, Article 5 of Circular 302/2016/TT-BTC on declaration and payment of license fees for branches other than provincial-level localities: “In case the taxpayer has a unit (branch, representative office, business location) doing business in a different provincial locality where the fee payer is headquartered, the dependent unit shall submit the license fee declaration dossier of the applicant. dependent unit to the tax authority directly managing the dependent unit”. Thus, the declaration and payment of license fees for company branches established in other areas are carried out at the tax agency where the branch is headquartered.

Currently, there are three methods of declaring license tax for company branches to meet convenience in terms of time, minimize administrative procedures, and help businesses do business and operate more easily.

In the first method, the company branch declares license tax directly at the tax authority

The enterprise prepares 02 license fee declaration forms, filling in the following information: Initial or additional declaration registration, year of license fee payment, person paying the fee, tax code,… submitted at the branch Department of Taxation.

Note

• License tax declaration for dependent branches is only paid once. For businesses that change charter capital or change other factors leading to changes in license fees, they must resubmit the license tax declaration.
• When choosing to pay directly at the tax authority, businesses should pay attention to making the correct license tax declaration according to form No. 01/LPMB issued with Circular No. 80/2021/TT-BTC.

The second method, the company branch declares license tax online on the website thuedientu.gdt.gov.vn

• Make a license declaration on thuedientu.gdt.gov.vn is the most convenient and fastest way. When submitting a declaration when newly established, or submitting a license declaration when changing charter capital, you can declare this way.
• Submitting a license tax declaration online requires businesses to purchase a Digital Signature and register for electronic tax payment.
• You will register for electronic tax declaration and electronic tax payment on thuedientu.gdt.gov.vn.

The third method is for the company branch to declare taxes through the tax declaration support software HTKK of the General Department of Taxation.

In the case of dependent accounting in the same area

• Log in to the softwareHTKK and go to the Fees section.
• Select license fee declaration (01/MBAI)
• Select the newly established facility (date of creation (day/month/year on the branch’s business registration) and agree.
• In part 2 MST and unit name: Enter MST, branch name, and branch address along with area and license fee.
• After completing the declaration => press write => export XML and submit the declaration.

In the case of dependent accounting in different areas

• Branches must use their tokens to declare taxes with the branch’s directly managing tax authority.
• HTKK software => Branch code => fees/fees => License fee declaration (01MBAI) => select the first declaration => write the amount to be paid.
• After completing the declaration => press write => export XML and submit the declaration.

Some notes on declaring and paying license fees when businesses establish branches

• Branches of enterprises established under the Enterprise Law 2020 are subject to license fee payment.
• For businesses newly established since February 25, 2020, license fees are exempted in the first year of establishment or production and business activities (from January 1 to December 31) and during the first year of establishment or production and business activities (from January 1 to December 31). During the period of exemption from license fees, if an enterprise establishes a branch, the branch will also be exempt from license fees.
• The license fee payment for business locations is 1,000,000 VND/year.

In case an enterprise is established before February 25, 2020 (before the effective date of Decree No. 22/2020/ND-CP) and establishes an additional branch from February 25, 2020, the branch must pay License fees according to regulations in Decree No. 139/2016/ND-CP (ie, first-year license fees are not exempted as prescribed in Decree No. 22/2020/ND-CP).

• If established during the first 6 months of the year, license tax will be paid for the entire year;
• If established during the last 6 months of the year, 50% of the annual license tax will be paid.

The time limit for submitting license tax declaration and license fee to a company branch.

• The deadline for submitting the license fee declaration is January 30 of the year following the year of establishment or commencement of production and business activities.
• The deadline for paying license fees is January 30 every year.

Above is information on instructions for declaring branch license tax in Vietnam. Viet An Tax Agent is pleased to support your business with procedures for full tax declaration services and several services related to tax accounting services. Please contact us for instructions. most effective guidance and support.