Overview of Tax Compliance in Vietnam

Tax compliance is critical to any country's economic progress, and Vietnam is no exception. It refers to individuals and businesses adhering to the government's tax requirements, including correct income reporting, timely tax payment, and proper paperwork. Tax compliance is critical in Vietnam for various reasons, including revenue creation, economic stability, increased credibility, and access to international markets and investments. Vietnamese is Vietnam's national and official language. Vietnam aspires to be a developing, upper-middle-income country with a modern economy by 2030 and a high-income, developed country by 2045. Significant recent advancements in Vietnam have been related to transfer pricing, e-commerce activities, and the use of e-invoices.

Types of Taxes in Vietnam

• Corporate Tax: In Vietnam, regardless of whether a foreign firm has a subsidiary in Vietnam or companies or organizations, calculate if that subsidiary is considered a permanent establishment (PE); all earnings made within the country are subject to Corporate Income Tax (CIT). Certain sources of income, such as those earned from contracts for scientific research and technical development, are exempt from CIT. corporate tax which is levied directly on a company's or organization's earnings, computed as the difference between gross income and expenses. The usual CIT rate is 20%. However, the CIT rate for enterprises in the oil and gas industries ranges from 32 to 50 percent.
• Value Added Tax: The Value Added Tax is levied on the provision of goods and services in Vietnam, and it is divided into three rates: 0%, 5%, and 10%, with 10% being the usual rate. Regardless of whether an organization has a physical presence in Vietnam, all individuals and organizations which are involved in the production and exchange of goods and services must meet their VAT responsibilities.
• Personal Income Tax: Individuals in Vietnam must pay personal income tax (PIT) based on their residency status. Non-residents must pay PIT at a fixed rate on income received from working in Vietnam or income related to Vietnam throughout the tax year. They are also taxed at different rates on non-employment income. Tax residents, on the other hand, are required to pay Vietnamese PIT on their whole taxable income, regardless of where it is generated or received. Residents' employment income is taxed at a progressive rate structure, whilst non-work income is taxed at a different rate.

Other taxes in Vietnam

• Foreign Contractor Tax (FCT).
• License tax.
• Import and export duties.
• Excise tax.

Financial Year of Vietnam

In Vietnam, the primary tax year is beginning on January 1st and ending on December 31st. Businesses can, however, request clearance from the government for alternate accounting year-ends. If a corporation works for fewer than 183 days in its first year, its tax year is a 12-month period beginning with the start of operations. The company's tax year will be aligned with the ordinary calendar year in the following years. Businesses can also opt for a 12-month term that begins on the first day of any ordinary quarter. This option, however, must be legally registered with the Tax Department.

Tax Returns in Vietnam

In Vietnam, the yearly final Corporate Income Tax (CIT) returns and audited financial statements are critical components of business tax compliance. Companies are required to file this paperwork within a certain deadline. The submission deadline is no later than the last day of the third month following the end of the calendar or fiscal year. This criterion guarantees that businesses meet their tax responsibilities on time and correctly. The annual Corporate Income Tax (CIT) returns and audited financial statements are due on the last day of the third month after the end of the calendar year or financial year.

Foreign Tax Credit 

Any Corporate Income Tax (CIT) or comparable tax paid in a foreign country, or on behalf of the company by its partner in the receiving nation (including dividend taxes), can be eligible for a tax credit by Vietnamese enterprises producing income from abroad assets. The tax credit amount, however, cannot exceed the CIT payable in Vietnam. Additionally, if the foreign income tax is exempted or reduced under foreign legislation, it can be credited.

R&D Tax

R&D tax, also known as Research and Development tax, is a tax incentive or credit offered by governments to encourage corporations to invest in R&D operations. It permits businesses to deduct a percentage of their R&D expenses from taxable revenue, lowering their overall tax liability. Businesses in Vietnam have the option of establishing an R&D Fund that is tax deductible. These entities may contribute up to 10% of their annual income before taxes to this fund. However, certain conditions and requirements must be followed in order to capitalize on this opportunity.

Services offered by Enterslice

• Corporate Tax Advice:

Our corporate tax advising services include a wide range of services to guarantee that our clients are knowledgeable about and are in compliance with tax laws. 

1. We respond to any concerns expressed by organizations on the applicability of taxes, examine transactions to take positions on taxes, and create tax-effective structures. 
2. Additionally, we locate chances for tax optimization and give clients frequent updates. 
3. We also look at withholding tax on transactions involving other countries.

• Corporate Tax Compliance:

Enterslice offers a range of services for company tax compliance, beginning with tax registration. Along with fulfilling all other required tax reporting obligations, we compute due taxes and produce company tax returns. When tax authorities have questions, our team evaluates the tax returns that the company has prepared and gives assistance in interacting with them. Our goal is to make sure that tax laws are obeyed without any issues.

• Advice relating to Merger and Acquisitions:

We offer complete tax advising services for mergers and acquisitions. Determine prospective tax liabilities; this involves performing tax due diligence. We provide tax modeling, aid with vendor Paper works, and provide support with purchase or disposal structuring. To maximize tax results, we examine the tax status of both the acquiring and acquired enterprises.

• Planning for International Taxes:

Businesses going through changes, expanding into new countries, or conducting cross-border transactions might benefit from our international tax planning services. 

1. We handle worldwide compliance, organize international tax reporting, and aid in restructuring multinational groups. 
2. We are also skilled in creating effective cross-border finance and cash access plans, performing group tax health checks, and consulting with clients.

• Customs and Excise Advice:

We provide thorough advising services for situations involving excise and customs. This covers applications for tariff determination, planning, and ruling

In relation to free trade agreements, we evaluate the rules of origin and offer advice on computation, application of rulings, and regulatory compliance. Additionally, our team offers advice on duty drawbacks, free zone businesses, duty deferral and suspension plans, client risk reviews and audits, and post-clearance audit management. We also offer advice on the following:-

1. supply chain management, 
2. market access rules, 
3. labelling specifications, 
4. authorized economic operator applications, and 
5. Anti-dumping applications and defence.

• Advisory on VAT:

Our consultation services for value-added tax include a range of topics. To guarantee compliance, we do VAT health checks. Our staff helps with VAT compliance, including the creation and submission of VAT returns. We offer assistance throughout the procedure in the event of VAT audits or disputes. Also included in our list of services are help for tax agencies, assistance with VAT refunds, and preparation and submission of voluntary disclosures, requests for clarification, and reconsideration requests to the appropriate tax authorities.