A frequently asked question about tax when a start-up or a foreign-invested company invests in Vietnam is: How is the tax system in Vietnam?
To fully answer the above content, we need to read a bookcase! And when we finish reading a bookcase, we have a new shelf to read, on because inherently taxes always change.
So, we can summarize the answer as follows:
Each person has a different classification of taxes such as: classification according to indirect, or direct; classification according to the legal person or natural person. The following is the classification according to the list of tax names, for which businesses must pay the budget.
Vietnam's tax system has 14 types of taxes and tax equivalents.
- Cooperate Income Tax
- Cooperate Income Tax in Related Transactions
- Foreign Contractor Tax
- Capital Assignments Profit Tax
- Value Added Tax
- Special Sales Tax
- Nature Resource Tax
- Property Tax
- Environmental Protection Tax
- Personal Income Tax
- Business-license Tax
- Export / Import Tax
- Types of fees, considered taxes, are: registration fees, fuel fees, and land use fees.
- In internal accounting, the company's compulsory insurance payments are also considered tax equivalent
Most businesses operating in Vietnam will be subject to: Corporate income tax; Value Added Tax; Personal Income tax; Business-license Tax. Other taxes may affect certain activities.
Taxes that businesses often miss out, do not pay taxes, are detected when tax finalization, so they are collected taxes arrears and tax penalties are:
Case 1: Business-license Tax: The business forgot to pay Business-license Tax due to the small payment amount, once a year.
Case 2: Foreign Contractor Tax: because the person responsible for paying the tax is the foreign contractor, but the Vietnam Enterprise paying the money must be responsible for a tax offset, and pay it on behalf of the contractor.
Case 3: Corporate income tax in related transactions: for the reason that they do not know they have related parties in business transactions.
Case 4: Capital Transfer Tax: not specifically a separate tax, the tax rate in many cases is twenty percent on the taxable income of each transfer.
The Taxable Income =Transfer Price–Purchase Price of the Transfer Capital–Transfer Cost
If the seller is oversea and the purchaser is in Vietnam, the purchaser is responsible for tax offset and paying tax on behalf of the seller.
If the seller and the purchaser are both located abroad, the Vietnam Enterprise that owns the capital of the purchaser or the seller is responsible for withholding and paying tax on behalf of the seller.
In addition, The Tax Authority may collect tax on the capital transfer of the parent company, which has direct or indirect capital with its subsidiaries in Vietnam.
