Things You Need to Know About Tax Declaration for Foreign Companies in Vietnam

When a foreign-invested company operates in Vietnam, it is required to declare and pay taxes in accordance with Vietnamese law. Complying with tax regulations ensures that the company adheres to the law, avoids legal risks, and ensures smooth business operations.

Types of taxes that foreign-invested companies typically have to pay when doing business in Vietnam:

Business License Tax: This is an annual tax levied on businesses and individual households. Apart from providing revenue, the business license tax helps government authorities keep track of the activities of economic entities. For foreign-invested companies, the registered capital is considered the investment capital, and the amount of business license tax is determined based on the investment capital as stated in the investment certificate.

Corporate Income Tax (CIT): This applies to profits earned from business activities in Vietnam.

Value Added Tax (VAT): This applies to the sale of goods and services in Vietnam.

Personal Income Tax (PIT): This applies to the income of foreign individuals working in Vietnam.

Other Taxes: Depending on the type of business, there could be additional taxes, such as resource tax, environmental tax, etc.

Factors affecting tax declaration:

• Company Structure: Representative office, branch, subsidiary, or partnership agreement.
• Business Type: Manufacturing, trading, services, investment, etc.
• Revenue and Profit: The larger the revenue, the higher the tax payable.
• Double Taxation Agreements: If applicable, this can help reduce the tax burden.

Basic steps in the tax declaration process:

Tax Registration:

• Purpose: To issue a tax identification number, determine the tax authority in charge, and define tax obligations.
• Documents: Registered business documents, investment license (if any), proof of business address, etc.
• Submission Location: The tax authority where the business’s headquarters or branch is located.

Periodic Tax Declaration:

• Purpose: To report revenue, expenses, profits, and tax payable for the period.
• Method: Direct submission to the tax authority or online submission.
• Deadline: As per the law (monthly, quarterly, annually).
• Common Taxes to Declare: Corporate income tax, value-added tax, personal income tax (for foreigners working in Vietnam), etc.

Tax Payment:

• Method: Direct cash payment at the bank or wire transfer to the tax authority’s account.
• Deadline: Same as the tax declaration deadline.

Document Storage:

• Purpose: For reconciliation and inspection when needed.
• Duration: Documents must be kept for at least 10 years from the end of the financial year.

Important Notes:

• Vietnam’s Tax Laws Frequently Change: Regular updates are needed to ensure compliance.
• Specific Cases May Have Different Rules: It is advisable to seek advice from accounting or tax experts.
• Declare Taxes on Time: Avoid penalties for late submission.
• Use Tax Declaration Software: It helps save time and minimizes errors.

Why seek expert assistance?

Declaring taxes for foreign companies can be complicated and prone to mistakes. To ensure compliance with legal regulations and optimize tax obligations, it’s recommended to seek support from experienced accounting and tax experts.

Tax support services for foreign companies:

• Tax Registration: Assistance in completing tax registration procedures.
• Periodic Tax Declaration: Timely and accurate tax declaration.
• Tax Consultation: Address any tax-related queries.
• Financial Report Preparation: Prepare financial reports according to regulations.
• Tax Representation: Act on behalf of the company to pay taxes at the tax authority.

Advice:

• Choose a Reputable Consultancy Firm: Thoroughly research the firm’s expertise and experience before making a decision.
• Sign a Clear Service Contract: Specify the scope of services, costs, and responsibilities of both parties.
• Work Closely with the Consultancy Firm: Provide all necessary information for the firm to perform its tasks efficiently.

Tax declaration for foreign companies is a mandatory requirement and requires careful preparation. Engaging expert support will help your company save time, effort, and avoid unnecessary risks.