dttl tax vietnamhighlights 2017

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 con 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 ra 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 1 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 ; ( 2 ) 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 1 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 ra 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 ra 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

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