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Tax consultancy for foreign company in Vietnam

Tax consultancy advice for foreign-invested enterprises is very important. Vietnam is considered an attractive destination for FDI capital flows due to the advantages of cheap human resources, favorable geographical location, FTA agreements in a fast-growing economic environment, and a strong political and legal system. stable law. To attract businesses with foreign direct investment (FDI), many preferential policies have been applied, including tax incentives. Taxpayer is one of the mandatory obligations for foreign-invested enterprises prescribed under Vietnamese law in which taxpayers must follow the law on a certain order when paying taxes. This is not an easy problem for foreign-invested enterprises because many taxes must be paid and procedures must be followed according to regulations.

Tax consultancy for foreign company in Vietnam

With nearly 20 years of experience in the field of tax legal consulting, Viet An Tax Agent is ready to provide tax legal advice to foreign-invested enterprises to help businesses overcome difficulties and concentrate on tax law. Focus on production and business development to continuously develop the business. In the article below, Vietnam Tax Agent will mention some tax regulations for foreign-invested enterprises as follows:

Table of contents

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    Taxes applicable to foreign invested enterprises

    Excise

    License tax is a tax collected annually from businesses and business households. In addition to providing revenue, license tax helps state management agencies understand the operating situation of business entities in the economy.

    For enterprises with foreign investment, registered capital is determined as investment capital and depending on the amount of capital recorded on the Investment License, there will be different license tax rates:

    Unit: Dong

    License tax tier Registered capital Tax rate (VND/year)
    Level 1 From 10 billion 3,000,000
    Level 2 Under 10 billion 2,000,000
    Level 3: For dependent units (branches, representative offices, business locations, public service units, and other economic organizations). 1 million

    Corporate income tax

    Corporate income tax is a tax levied on income from production and business activities and other income of businesses. Other income is usually income from the transfer of assets and property rights.

    How to calculate corporate income tax

    • Corporate income tax payable = [Taxable income – (Tax-free income + Loss carried forward from the previous year)] × Tax rate
    • Taxable income = Revenue – Deductible expenses + Other income.

    Tax rate to calculate corporate income tax in 2024

    The normal corporate income tax rate is 20%, except for the following cases:

    Case

    Tax
    Search, exploration, and exploitation of oil, gas, and other rare resources in Vietnam 32% – 50%
    Enterprises enjoy preferential tax rates 10% or 17%.
    New investment projects; corporate income from implementing new investment projects in the field of environmental protection; manufacturing sector; New projects belong to the list of priority supporting technology products for development 10% in 15 years
    Income from publishing activities of the Publisher; investment projects – social housing business for sale, lease, lease purchase; from social activities in the fields of education – training, vocational training, and health 10%
    Cultivation, animal husbandry, and processing in areas with particularly difficult economies 15%
    People’s Credit Funds, Cooperative Banks, and Microfinance Institutions 17%

    Notes on corporate income tax and personal income tax for employees of 100% foreign-owned enterprises

    Tax obligations for 100% foreign-owned enterprises must declare and pay all taxes of the enterprise according to the provisions of law. Tax rate of 20% for all foreign projects that are not subject to incentives. The personal income tax portion calculated from the employee’s salary and wages is calculated as follows:

    • Tax rate 20% for non-resident individuals;
    • 10% for resident individuals or according to a partially progressive schedule.

    Value added tax

    Value added tax is a tax levied on the added value of goods and services during the production, circulation and distribution process. However, not all goods and services are subject to tax. Goods and services specified in Article 5 of the Law on Value Added Tax are not subject to tax.

    Value added tax policy in 2024

    • In 2024, to remove difficulties and create conditions for businesses and organizations to conduct business and production, the Government has issued Decree 94/2023/ND-CP stipulating the VAT reduction policy under Resolution 110/2023/QH15 dated November 29, 2023, on value added tax reduction policy.
    • Specifically, reduce value added tax for groups of goods and services currently applying a tax rate of 10%, except for the following groups of goods and services: Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and fabricated metal products, mining products (excluding coal mining), coke, refined petroleum, and chemical products.

    Tax obligations for enterprises with 100% foreign capital for value added tax, the VAT amount will be the same as for enterprises in Vietnam. For enterprises that produce goods abroad, depending on whether the enterprise is eligible to apply the policy for export processing enterprises, if they meet the prescribed conditions for export processing enterprises or not, there will be VAT rates. different. Specifically:

    • If the policy is applied to export processing enterprises, they are not subject to VAT declaration; Goods purchased at 0% VAT at customs do not incur VAT refunds.
    • Not subject to the policy applied to export processing enterprises, exported output will be charged 0% VAT and input tax refunded.

    Value added tax calculation method

    There are two methods of calculating value added tax as follows:

    Method Calculation formula
    Deduct Value-added tax payable = Input value-added tax – Deductible output value-added tax
    Direct Value-added tax payable = Added value of goods and services sold × Value-added tax rate

    Value-added tax rates have three levels: 0%, 5% and 10%, depending on the group of goods and services specified in Article 10 of the Law on Value-Added Tax.

    Special consumption tax

    A special consumption tax is an indirect tax levied on consumers of luxury products and services that are not necessary for daily life or areas that the state wants to limit. If companies with foreign capital trade in products and services specified in Article 2 of the Law on Special Consumption Tax, they must pay this tax.

    How to calculate special consumption tax

    Special consumption tax = Taxable price × Tax rate

    In particular, the taxable price is the selling price, the price of providing services without special consumption tax, environmental protection tax, and value added tax. Special consumption tax rates range from 15% – 65% depending on the type of goods and services.

    Import and export tax

    If a foreign-invested company exports or imports goods, it is obliged to pay import and export tax.

    There are three methods of calculating import and export tax:

    Percentage method

    • Determine tax as a percentage (%) of the taxable value of exported and imported goods.
    • How to calculate import and export tax: Taxable value × Tax rate.
    • Preferential tax rates and special preferential tax rates are specifically specified in the tax schedule between Vietnam and countries with preferential agreements. Normal tax rates are issued together with Decision No. 36/2016. If the goods are not included in the normal tax rate list, a tax rate of 150% will apply.

    Absolute method

    • Fix a certain tax amount on a unit of exported or imported goods.
    • Calculation method: Actual quantity of exported/imported goods × Absolute tax rate prescribed on one unit of goods at a time
    • Mixed method: Apply the above two methods simultaneously
    • Calculation method: Total tax calculated by percentage + Total tax calculated by absolute method.

    Viet An tax agent provides tax consultancy for foreign company in Vietnam

    • Consulting on the legality, reasonableness, and validity of invoices and documents;
    • Declare VAT monthly or quarterly;
    • Make temporary calculations of corporate income tax and personal income tax quarterly;
    • Pay taxes directly at the tax office or declare online;
    • Accounting and preparing quarterly accounting books;
    • Prepare corporate income tax finalization report;
    • Prepare personal income tax reports;
    • Prepare annual financial reports;
    • Complete the accounting book system;
    • Explain to tax authorities when there is a request to check, finalize and explain data.

    Company dossier needs to be provided quarterly when using tax accounting services for foreign-invested companies of Viet An Tax Agent

    • Input accounting documents. Including input contract, input invoice, and payment documents;
    • Output accounting documents. Including output contracts, invoices issued to customers, payment documents;
    • Enterprise invoices issued incorrectly, damaged, or revoked during the declaration period;
    • Fee payment invoices, fees, and other documents do not contain VAT;
    • New labor contracts arising during the declaration period;
    • Employee payroll for the months in the declaration period (payroll for insurance);
    • Documents for payment of social insurance for employees;
    • Statements of bank accounts arising during the declaration period;
    • Loan and debt repayment documents arising during the declaration period;
    • Contracts for which money has been collected and paid but no invoices have been issued or invoices have not been received during the declaration period.

    Legal advice on social insurance – health insurance – unemployment insurance registration for foreign invested companies

    Consult and advise on the current situation of the business to:

    • Choose the best option to minimize social insurance contributions for employers;
    • Consulting and drafting labor contracts;
    • Consulting and drafting labor rules and regulations;
    • Consulting, participating in negotiations, drafting collective labor agreements;
    • Consulting and participating in resolving labor disputes;
    • Consulting on other issues related to social insurance and labor regime.

    Documents needed to provide when performing social insurance, health insurance, and unemployment insurance registration services for foreign-invested companies

    • Enterprise registration certificate;
    • Labor contract;
    • Citizen identification card;
    • Phone number, contact email of the employee;
    • Social insurance book number of the employee (if issued);
    • Household registration book or residence confirmation (if the household code has not been synchronized).

    Viet An Law’s services on tax consultancy for foreign company in Vietnam

    • Consulting on issues related to foreign loans, parent company loans, loan registration with state banks;
    • Consulting on opening capital transfer accounts and capital contribution accounts for foreign-invested companies after establishment;
    • Consulting on procedures for transferring profits abroad for foreign invested companies;
    • Guide and declare tax records for newly established foreign-invested companies;
    • On behalf of clients, work with tax authorities regarding initial tax declaration, printing procedures, and first order printing of invoices;
    • Order printing of invoices at the request of foreign invested companies;
    • Register digital signatures and pay taxes electronically for foreign-invested companies;
    • Overall tax accounting consulting for foreign invested companies on a quarterly, monthly, and annual basis;
    • Declare and submit reports and taxes monthly, quarterly, and annually, and finalize taxes for foreign-invested companies;
    • Establish and complete the accounting book system for foreign-invested companies following current law;
    • Comprehensive consulting on issues related to value-added tax, corporate income tax, personal income tax,…
    • Advise businesses on adjusting errors in their accounting and tax activities;
    • Consulting on financial strategy planning, balancing reasonable costs in business activities of foreign-invested companies;
    • Representing clients to work and explain tax declaration and reporting issues to state agencies;
    • Representing clients to work and explain social insurance declaration issues to state agencies;
    • Consulting on issues related to foreign loans, parent company loans, loan registration with state banks;
    • Consulting on opening capital transfer accounts and capital contribution accounts for foreign-invested companies after establishment;
    • Consulting on procedures for transferring profits abroad for foreign invested companies.

    With a team of highly qualified professionals, knowledgeable about the law, dedicated to their work, and dedicated to customers, Viet An Tax Agent will bring businesses the best service package at the most reasonable price.

    If foreign-invested companies encounter difficulties or need more consulting information related to tax declaration and payment procedures, please contact Viet An Tax Agent for advice and support.

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