Tax accounting service for FDI company in Vietnam

Currently, foreign directly invested (FDI) companies are increasingly developing and expanding their business activities in Vietnam, accounting and tax management have become one of the important factors in ensuring success and legal compliance. Many FDI companies have difficulty handling issues related to tax accounting. Viet An Law Firm – Tax Consultancy provides a full package of tax accounting services for FDI company in Vietnam.

What taxes do FDI enterprises in Vietnam have to pay?

License tax

License tax is an indirect tax that any enterprise, domestic or foreign, must pay to the State every year. Depending on the registered capital recorded in the annual business registration or the business revenue of the previous year, the enterprise determines the tax rate by level. However, to increase the attraction of investment resources in Vietnam, the Government has given preferential treatment to foreign investors such as newly established FDI enterprises to be exempted from license tax for the first year. From the second year of operation, new enterprises must pay the License Fee under Article 4 of Decree 139/2016/ND-CP amended and supplemented by Decree 22/2020/ND-CP.

Corporate income tax rate

Pursuant to the provisions of the Law on Corporate Income Tax:

• Tax rate of 20%: Applicable to all enterprises established under Vietnamese law.
• Tax rate from 32% – 50%: Applicable to enterprises engaged in searching, exploring, and exploiting oil and gas and other rare resources in Vietnam.
• Tax rate from 25% – 50%: Applicable to enterprises engaged in searching, exploring, and exploiting rare resource mines such as platinum, gold, silver, and tin…

Value added tax (VAT)

FDI enterprises, regardless of industry, form, or business organization, are obliged to pay VAT to the Vietnamese State and are calculated according to the method the enterprise selected upon establishment.

The method of calculating value-added tax by the deduction method is as follows: VAT payable is equal to the value of goods and services sold minus the deductible input value-added tax. With the direct method, it is necessary to multiply revenue by a percentage, in which the percentage depends on the revenue of each business activity.

Personal income tax (PIT)

Subjects subject to PIT are foreign individuals living and working in Vietnam. FDI enterprises are responsible for deducting personal income tax from employees before paying income and are responsible for declaring and paying the tax amount to the state budget.

Tax service for FDI company in Vietnam

Accounting work for FDI companies is often more complicated and includes more operations than for domestically invested companies. Tax accounting for FDI companies includes the following common accounting operations by current regulations:

• Revenue and expenditure management;
• Tax reporting;
• Financial reporting;
• Application of accounting standards;
• Other tasks: including internal control, inspection, auditing, inspection, liquidation, and dissolution.

In addition, accounting services for foreign companies also add some operations compared to accounting for domestic companies such as:

• Establish accounting systems and financial reports for foreign companies according to Vietnamese and foreign accounting standards;
• Translate accounting books into foreign languages, including general ledgers and journals;
• Summarize and classify types of financial statements related to consolidated financial statements between companies in Vietnam and headquarters abroad;
• Reporting internal transactions between subsidiaries related to consolidated financial statements;
• Management accounting includes planning and organizing operations according to foreign enterprise standards for companies in Vietnam;
• Other related work such as accounting, tax, and compliance consulting suitable for the specific operations of foreign companies.

Tax payment deadline for FDI enterprises

For license fees, enterprises pay annually, declare business license fees, and submit the Declaration to the direct tax authority before January 30 of the year following the year of new production, business activities, or new establishment.

For VAT and personal income tax, if the enterprise is required to declare tax monthly, the deadline is the 20th of the following month. If the enterprise is required to declare tax quarterly, the deadline is the last day of the first month of the following quarter.

Penalty for late tax declaration

Pursuant to Article 13 of Decree 125/2020/ND-CP regulating penalties for violations of tax declaration deadlines, specifically as follows:

• Warning penalty for submitting tax declaration dossier after the deadline from 01 day to 05 days and having mitigating circumstances;
• For the act of submitting tax declaration documents after the prescribed deadline of 31 to 60 days: fine from 5,000,000 VND to 8,000,000 VND;
• For the act of not submitting tax declaration but not incurring tax payable, submitting tax declaration after the prescribed deadline of 91 days or more: fine from 8,000,000 VND to 15,000,000 VND
• For the act of submitting tax declarations more than 90 days after the deadline for submitting tax declarations, resulting in tax payable: fine from 15,000,000 VND to 25,000,000 VND.

Benefits of using tax accounting services

Using a full package of tax accounting services for FDI enterprises can bring many important benefits as follows:

• Professionalism and expertise;
• Compliance with laws related to accounting and tax;
• Optimizing costs;
• Saving time and human resources;
• Minimizing the risk of errors in calculating, reporting, and paying taxes.

Accounting services for FDI company in Vietnam

Package tax accounting for FDI enterprises involves collecting reasonable documents, processing and fully recording the arising economic operations. Issuing financial statements, and fulfilling tax payment obligations (if any).

Normally, the work of an FDI enterprise accountant includes 2 basic tasks: managing revenue and expenditure and submitting tax reports on time.

• Coordinate revenues and expenditures, including:
• Collect money from clients.
• Spend money on suppliers, pay salaries to employees, pay taxes.
• Evaluate the exchange rate difference.
• Conduct debt reconciliation on a monthly and quarterly basis.
• Expenses related to office rental, and expenses related to the production process.
• Setting aside provisions for inventories and receivables,…
• Fulfillment of tax obligations:

To make and submit tax reports according to the regulations of Vietnamese and foreign tax authorities:

• Report on VAT, CIT, PIT, import and export tax, and contractor tax.
• Review tax incentives for FDI enterprises.
• Compare free trade agreements between countries so that foreign-invested enterprises avoid being taxed twice.
• Submit financial statements according to regulations of Vietnamese and foreign state management agencies at the end of the fiscal year: financial statements, business statements, financial statements, reports on changes in equity,…
• Apply Vietnamese accounting standards (VAS) and international accounting standards (IFRS) in professional accounting, bookkeeping, and financial statements in the language of foreign investors.

Tax accounting services for FDI company in Viet An

Viet An Tax Agent specializes in providing tax accounting services for FDI companies in Vietnam. Supported by qualified accountants who are knowledgeable about the law and legal policies, we are committed to providing our clients with effective financial solutions at extremely affordable costs:

Coming to Viet An Tax Agent, clients will be supported with the following issues:

• Update legal information: When you use the tax accounting service for FDI company in Viet An, our unit will support and update the latest notices related to business laws, tax obligations, labor laws and social insurance.
• Consulting on economic, financial and tax policies: Optimal cash flow management and compliance with laws in Vietnam is a prerequisite for businesses to develop. Viet An accounting services will advise on forms and policies of economy, finance and taxation in connotation activities, thereby increasing profits, cutting costs, thereby optimizing business results.
• Data security: When clients use the service, we are committed to securing the company’s identity as well as all accompanying accounting data.
• Helps maximize cost savings: Hiring accountants to work at a company often costs more salary and training time than hiring a full-service tax accounting service.
• Responsible for accountability if requested: Viet An Tax Agent will be responsible for explaining the data that our company does if requested by the tax inspectorate.

Some questions related to FDI company tax accounting

Is a foreign-invested company that declares tax different from a Vietnamese-invested company?

FDI enterprises are legal entities in Vietnam, so they need to comply with the laws of Vietnam. Therefore, FDI enterprises must comply with the provisions of the Tax Law. In addition to the types of accounting reports that need to be submitted as usual, a number of additional types of reports, such as Investment reports, audit reports, reports on labor use, etc., must be submitted.

When can foreign investors’ profits be transferred abroad?

Foreign investors can transfer profits abroad annually or when terminating direct investment activities in Vietnam. At any time, enterprises must fulfill their financial obligations to the Vietnamese state, and submit all kinds of reporting documents under the law.

Is the rent invoice for a foreign expert deductible from VAT?

In case an enterprise has foreign experts who come to Vietnam to study, hold key management positions in Vietnam, and enjoy monthly salaries in Vietnam under signed labor contracts, they are not allowed to deduct VAT on the rent for these foreign experts.

Benefits of using tax accounting services for FDI enterprises of Viet An Law Firm – Tax Consultancy

• Tax consultancies have a great advantage and are different from normal accounting and auditing services, which is that Tax consultancies will be responsible for declaring the tax payment status and related issues of the enterprise to the Tax Authority. This is a conditional business line, requiring high expertise and understanding of tax policies;
• Viet An Tax Consultancy regularly updates new policies on tax and social insurance to ensure compliance with accounting and tax laws in Vietnam, minimize legal risks, and avoid negative consequences from violating the law;
• Fast and efficient processing;
• Save costs, and minimize risks.

If you need advice on tax accounting services for an FDI company in Vietnam, please contact Viet An Law – Tax Consultancy for the best advice and support!