I nt e rn a t ion a l Ta x Viet nam Highlight s 2017 I n ve st m e n t ba sics: Cu rre n cy – Viet nam Dong ( VND) Fore ign e x cha n ge t rol – VND m ust be used in t r ansact ions bet ween Viet nam ese ent it ies and individuals, unless specifically allowed under the for eign ex change cont r ol r egulat ions A for eign cur r ency can be used as t he funct ional cur r ency for account ing and r eport ing pur poses, subj ect t o cert ain condit ions Bot h r esident s and nonr esident s can hold bank account s in any cur r ency For eign cur r ency m ay be r em it t ed ov er seas, alt hough r egist r at ion and/ or t ax requir em ent s m ay need t o be m et Accou n t in g prin ciple s/ f in a n cial st a t e m e n t s – Viet nam ese Account ing St andar ds and t he Viet nam ese account ing syst em apply St at ut or y financial st at em ent s m ust be pr epar ed, audit ed and subm it t ed annually , except for list ed com panies whose financial st at em ent s ar e r equir ed t o be audit ed and subm it t ed on a sem iannual basis Prin cipa l bu sin e ss e n t it ie s – These are t he j oint st ock com pany , lim it ed liab ilit y com pany and pr iv at e enter pr ise Br anches of foreign cor por at ions ar e lim it ed t o cer t ain indust r ies Corpo t e t a x a t ion : Re siden ce – Residence is not defined, but a corpor at ion gener ally is consider ed t o be r esident if it is incor por at ed in Viet nam Ba sis – Resident s ar e t axed on wor ldwide incom e; nonr esident s ar e t ax ed only on Viet nam ese- sour ce incom e For eign- sour ce incom e der iv ed by r esident s is subj ect t o cor por at ion t ax in t he sam e way as Viet nam ese- sour ce incom e Ta x a ble incom e – Tax is im posed on a com pany’s pr ofit s, which include t he pr ofit s of affiliat es and br anches ( dependent unit s) Tax able r ev enue includes incom e fr om t he sale of goods; t he pr ovision of ser vices; t he leasing or sale of asset s; t he t r ansfer of pr oper t y, shar es or a business; j oint vent ur e oper at ions wit h ot her econom ic ent it ies; and financial oper at ions Ta x a t ion of divide n ds – Div idends paid by a com pany in Viet nam t o it s cor por at e shar eholder s ar e not subj ect t o t ax Ca pit a l ga ins – Ther e is no separ at e capit al gains t ax; gains ar e t axed at t he st andar d corpor at e t ax r at e of 20% The t r ansfer value is based on t he actual pr ice in t he t r ansfer contr act , alt hough a deem ed fair m ar k et v alue will be used if no cont r act pr ice is available or if t he pr ice st at ed in t he cont r act is deem ed not t o be on ar m ’s lengt h t er m s Losse s – Losses m ay be car r ied for war d t o offset t axable incom e for up t o fiv e consecut iv e year s aft er t he year in which t he losses ar e incur r ed The car ryback of losses is not per m it t ed Losses fr om t r ansfer s of r eal pr opert y and invest m ent pr oj ect s m ay be offset against pr ofit s fr om nor m al business oper at ions in t he sam e t ax per iod Gr oup loss r elief is not allowed Ra t e – The st andard corpor at e r at e is 20% The r ate for ent er pr ises oper at ing in t he oil and gas and nat ur al r esour ce sect or s r anges fr om 32% t o 50% , depending on t he pr oj ect Su rt a x – No Alt e rn a t ive m in im u m t a x – No Fore ign t a x cre dit – For eign t ax paid m ay be cr edit ed against Viet nam ese t ax , but m ust be det er m ined based on pr et ax incom e The cr edit is lim it ed t o t he am ount of Viet nam ese t ax payable on t he for eign incom e Vietn am Highlights 20 17 Pa rt icipa t ion e xe m pt ion – See under “ Taxat ion of dividends.” H oldin g com pa n y re gim e – No I n ce n tive s – Pr efer ent ial t ax r at es of 10% ( for 15 year s) and 17% ( for 10 y ear s) ar e av ailable for t axpayer s engaged in encour aged inv est m ent pr oj ect s or in socioeconom ically disadv ant aged locat ions, r espect ively , as st ipulat ed by t he gov er nm ent A t ax holiday of up t o four year s and a 50% t ax r educt ion for up t o nine year s ar e av ailable fr om t he fir st pr ofit - m aking year or t he four th r evenue- gener at ion year , whichever com es fir st Cur rent t axpayer s wit h new pr oj ect s also ar e ent it led t o t ax incent iv es, subj ect t o cer t ain condit ions An t i- a voida n ce rule s: Tra n sf e r pricin g – Viet nam has t r ansfer pr icing r ules t hat gener ally follow t he OECD guidelines The follow ing m et hodologies ar e per m it t ed: com par able uncont r olled pr ice, r esale pr ice, cost plus, com par able pr ofit and pr ofit split , alt hough no pr ior it y of m et hods exist s The t axpayer m ust est ablish t hat it is using t he “ best ” m et hod appr opr iat e under t he cir cum st ances Cont em por aneous docum ent at ion is r equir ed The t ax aut hor it ies can adj ust pr ofit s if t he pr icing st r at egy is found not t o be at ar m ’s lengt h Advance pr icing agr eem ent s ar e possible Th in ca pit a liza t ion – No Con t rolle d f ore ign com pa n ie s – No W it h h oldin g t a x : D isclosu re re qu ire m en t s – No D ivide n ds – No t ax is im posed on div idends r em it t ed over seas unless paid t o an indiv idual, wher e a 5% wit hholding t ax is im posed Com plia n ce f or corpora t ion s: I n t e re st – I nt er est paid t o a nonr esident is subj ect t o a 5% wit hhold ing t ax , unless t he r at e is r educed under a t ax t r eat y Roya lt ie s – Roy alt ies paid t o a nonr esident ar e subj ect t o a 10% wit hholding t ax , unless t he r at e is r educed under a t ax tr eat y I ncom e der iv ed by a nonr esident fr om t he t r ansfer of a r ight t o use a t r adem ar k also is subj ect t o a 5% v alue added t ax ( VAT) Te ch n ical se rvice f ee s – A wit hhold ing t ax of 5% ( cor por at e t ax ) and 5% ( VAT) gener ally applies t o t echnical ser v ice fees paid t o a nonr esident A corpor at e t ax exem pt ion m ay apply under a t ax tr eat y Bra n ch re m it t a n ce t a x – No Ot h e r t a x e s on corpora t ion s: Ca pit a l du t y – No Pa yroll t a x – No Re al prope rt y t a x – The m unicipal aut hor it ies lev y t ax ( e.g land r ent al t ax , land use fees, et c.) on t he use of r eal pr oper ty Social se cu rit y – The em ploy er is r equir ed t o m ake social insur ance ( SI ) , healt h insur ance ( HI ) and unem ploy m ent insur ance ( UI ) cont r ibut ions of 18% , 3% and 1% , respect iv ely St a m p du t y – A st am p dut y of 0.5% t o 20% is levied on cer t ain t y pes of asset s, including r eal pr oper t y Tra n sf e r t a x – No Ot h e r – For eign cont r act or wit hholding t ax is im posed on incom e fr om t he pr ovision of goods and ser vices fr om over seas or ganizat ions ( except for pur e t r ading t r ansact ions) , which com pr ises cor por at e incom e t ax and VAT at a t ot al com bined r at e of 0.1% t o 15% Ta x ye a r – The t ax year is t he fiscal year A com pany m ust not ify t he t ax aut hor it ies if it s fiscal y ear differ s fr om t he calendar year and, in such a case, only a quar t er - end fiscal year is allowed Con solida t e d re t u rn s – Consolidat ed r et ur ns ar e not per m it t ed; each com pany wit h independent legal st at us is r equir ed t o file a separ at e r etur n Filin g re qu ire m en t s – Pr ovisional quar t er ly cor por at e incom e t ax r et ur ns no longer ar e r equir ed I nst ead, a com pany is r equir ed t o m ake quart er ly pr ovisional cor por at e incom e t ax pay m ent s based on est im at es An annual declar at ion/ f iling m ust be m ade wit hin 90 days aft er t he fiscal year - end dat e Any shor tfall in excess of 20% bet ween t he pr ovisional cor por at e incom e t ax paym ent s and t he annual cor por at e incom e t ax liabilit y is subj ect t o a lat e paym ent penalt y Pe n a lt ie s – Penalt ies apply for failur e t o file, lat e filing or t he filing of a fr audulent r et ur n Taxpayer s are subj ect t o an ext r a 0.03% penalt y per day of lat e t ax pay m ent ( fr om July 2016) , 20% on under r epor t ed am ount s and m or e st r ingent penalt ies for evasion ( up t o 300% ) Ru lin gs – A t axpayer can request a t ax r uling fr om t he local or t he nat ional t ax aut hor it ies t o clar ify it s specif ic t ax concer ns Pe rson a l t a xa t ion : Ba sis – Viet nam ese r esident s ar e t ax ed on t heir wor ldw ide incom e; nonr esident s ar e t ax ed only on Viet nam ese- sour ce incom e Re siden ce – An indiv idual is r esident if he/ she: ( 1) spends 183 days or m or e in t he aggr egat e in a 12- m ont h per iod in Viet nam , st ar t ing fr om t he dat e t he individual ar r ives in Viet nam ; ( ) m aint ains a r esidence in Viet nam ; or ( 3) has leased a r esidence for 183 days or m or e in a Vietn am Highlights 20 17 t ax year , unless he/ she is pr esent in Viet nam for less t han 183 day s and can pr ov e r esidence in anot her count r y Filin g st a t u s – I ndiv iduals m ust file separ at e r et ur ns; j oint filing is not per m it t ed Ta x a ble incom e – Em ploym ent incom e, including m ost em ploy m ent benefit s ( whet her in cash or in kind) , is fully t axable Div idends, int er est ( ex cept for int er est on bank deposit s, life insur ance and gov er nm ent bonds) , capit al gains der iv ed fr om secur it ies t r ading, pr iv at e business incom e w it h annual r ev enue exceeding VND 100 m illion and ot her incom e fr om fr anchising, inher it ance, t he t r ansfer of land use r ight s and gift s/ winn ings or pr izes ( excluding casino w inn ings) also ar e t ax able Pr ofit s der ived fr om t he carr y ing on of a t r ade or pr ofession gener ally ar e t ax ed in t he sam e way as pr ofit s der ived by com panies Ca pit a l ga ins – Capit al gains der iv ed fr om t he sale of shar es and t he tr ansfer of im m ovable pr oper t y ar e t axable D e du ct ion s a n d allow a n ce s – Subj ect t o cer t ain r est r ict ions, deduct ions ar e gr ant ed for com pulsor y social secur it y , i.e t he SI , HI , and UI Sever ance allowances, r edundancy com pensat ion and “ non- accum ulat iv e” insur ance pr em ium s ar e not t ax able Ot her deduct ions include a per sonal deduct ion, a dependent deduct ion, a deduct ion for v olunt ar y r et ir em ent fund cont r ibut ions and char it able cont r ibut ions Ra t e s – For em ploy m ent incom e, pr ogr essive r at es r anging fr om 5% t o 35% apply t o r esident s, while nonr esident s ar e subject t o a flat r ate of 20% I ncom e fr om sour ces ot her t han em ploym ent is t axed at r at es r anging fr om 0.1% t o 20% , which apply t o bot h r esident s and nonr esident s Capit al gains der iv ed fr om a capit al assignm ent ar e subj ect t o a 20% t ax on gains Gains fr om secur it ies t r ading ar e subj ect t o 0.1% t ax on t he gr oss sale Social se cu rit y – Viet nam ese em ploy ees ar e r equir ed t o m ake SI , HI and UI cont r ibut ions at r at es of 8% , 1.5% and 1% of t he em ployee’s salar y , r espect iv ely For eign em ployees ar e subject only t o HI Com plia n ce f or in dividu a ls: Ta x ye a r – Calendar year Filin g a n d pa ym e n t – Tax on em ploy m ent incom e is wit hheld by t he em ployer and r em it t ed t o t he t ax aut hor it ies An ind iv idual m ust file a t ax r et ur n and m ake a final t ax paym ent by 30 Mar ch in t he year follow ing t he assessm ent year Pe n a lt ie s – Taxpayer s ar e subj ect t o an extr a 0.03% penalt y per day for t he lat e paym ent of t ax ( fr om July 2016) , 20% on underr epor t ed am ount s and m or e st r ingent penalt ies for t ax evasion ( up t o 300% ) Va lu e a dde d t a x : Ta x a ble t n sa ct ion s – VAT and Special Sales Tax ( SST) ar e lev ied on t he sale of goods and t he pr ovision of ser vices Ra t e s – Rat es ar e 0% , 5% and 10% for VAT, and fr om 10% t o 70% for SST Re gist t ion – All or ganizat ions and individuals car r ying on t he pr oduct ion or t r ading of t axable goods and ser vices in Viet nam m ust r egist er for VAT purposes Each br anch or out let of an ent er pr ise m ust r egist er separ at ely and declar e t ax on it s own act ivit ies Tr ansfer s of goods bet ween br anches m ay be subj ect t o VAT Regist r at ion for t ax pay m ent is r equir ed wit hin 10 day s of the date a cor por at ion is est ablished Filin g a n d pa ym e n t – Mont hly filing and pay m ent of out st anding VAT m ust be m ade by t he 20t h day of the follow ing m ont h Quar t er ly VAT filing and paym ent is allowed for cer t ain t ax payer s, which ar e due by the 30t h day of t he following quar t er Ca pit a l du t y – No Sou rce of t a x la w : Law on Tax Adm in ist r at ion, Law on Cor por at e I ncom e Tax, Law on Per sonal I ncom e Tax, Law on Value Added Tax, Law on Special Sales Tax, Social and Healt h I nsur ance Laws St a m p du t y – A st am p dut y at r at es of 0.5% t o 2% applies on t he t r ansfer of pr oper t y Ta x t re a t ies: Viet nam has concluded ov er 70 incom e t ax t r eat ies Ca pit a l acqu isit ion s t a x – No Ta x a u t h orit ie s: Pr ov incial t ax depar t m ent s; Gener al Depar t m ent of Taxat ion Ot h e r t a x e s on in dividu a ls: Re al prope rt y t a x – The m unicipal aut hor it ies lev y a t ax on r eal est at e I n h e rit a nce / e st a t e t a x – I nher it ances and gift s above VND 10 m illion ar e subj ect t o incom e t ax at 10% N e t w e a lt h / n e t w ort h t a x – No Con t a ct : Thom as McClelland ( t m cclelland@deloit t e.com ) Vietn am Highlights 20 17 Deloitte r efers to one or m or e of Deloitte Touch e Toh m atsu Lim it ed, a UK priv ate co m p any lim ited by g uar an tee ( “ DTTL” ) , its netw ork of m em b er firm s, and th eir related en tities DTTL and each of its m em ber firm s ar e legally separat e and indep endent en tities DTTL ( also referred to as “ Deloitte Global” ) does not pro vide services to clients Please see ht tps: / / w w w deloitt e.com / abou t to learn m or e abou t our global netw ork of m em b er f irm s 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Sou rce of t a x la w : Law on Tax Adm in ist r at ion, Law on Cor por at e I ncom e Tax, Law on Per sonal I ncom e Tax, Law on Value Added Tax, Law on Special Sales Tax, Social and Healt h I nsur... uar an tee ( “ DTTL ) , its netw ork of m em b er firm s, and th eir related en tities DTTL and each of its m em ber firm s ar e legally separat e and indep endent en tities DTTL ( also referred... HI Com plia n ce f or in dividu a ls: Ta x ye a r – Calendar year Filin g a n d pa ym e n t – Tax on em ploy m ent incom e is wit hheld by t he em ployer and r em it t ed t o t he t ax aut hor