2020 Tax Guide for Businesses and Individuals in Vietnam

Posted 3.02. 2020 by Cekindo / Last update on 24.06. 2020

Regardless of where you live and work, you must file for taxes everywhere in the world including Vietnam. Vietnam is a very popular destination for expatriates from all over the world with diverse nationalities. As such, most foreigners in Vietnam are obliged to pay taxes as well.

As a result, it is vital to have an understanding of how taxes can affect you and your businesses, and what taxes you must pay to the Vietnamese government while you’re living here.

Here’s the latest Vietnam tax guide for 2020 that Cekindo has prepared for all businesses and individuals in Vietnam.

The Importance of Tax Compliance when Doing Business in Vietnam

Of course, tax compliance is important because it is one of the regulations in the country and if you don’t abide by it, you will have to face legal consequences.

Below in this Vietnam tax guide are some other reasons why it is important to comply with tax laws and regulations in Vietnam.

1. There are financial consequences if you don’t pay taxes

Penalties and interests on unpaid taxes can be hefty. Therefore, you’re only putting your business in financial danger if you don’t pay taxes as those fines and interests can be significant and detrimental to your financial health.

2. Tax revenues are used for public benefits and social programs

Taxes collected are used to improve the quality of life of the country as well as the local areas. Therefore, tax revenues are the reason you and your future generation can enjoy a better life.

2020 Vietnam Tax Guide

In this Vietnam tax guide, Cekindo will include the details of the most common taxes in Vietnam:

  • Corporate income tax
  • Personal income tax
  • Foreign contractor withholding tax
  • Value added tax
  • Special sales tax

Corporate Income Tax

  • Tax rate: 20% on assessable income; 32-50% for the oil and gas and other extractive industries
  • Tax year: January 1 to December 31
To help businesses recover from the COVID-19 crisis, The National Assembly decided to reduce 30% of corporate income tax for 2020 tax year. The eligible businesses are those with revenues not exceeding VND 200 billion.

Learn how to manage your corporate income tax in Vietnam the right way.

Personal Income Tax

  • Tax rate: 5 – 35% depending on the amount of an individual’s income
  • Tax resident: individual resides in Vietnam for at least 183 days in 12 consecutive months; individual who hold a permanent or temporary residency in Vietnam; individual who rent a property in Vietnam for a term of 183 consecutive days
  • Tax year: a calendar year as the individual’s tax year

Based on Resolution 954/2020/UBTVQH14 on June 2, 2020 about the Increases in family circumstance-based deduction for Personal Income Tax, take note of the following:

  • Increase Individual Deduction from VND 9 million (US$385) per month to VND 11 million (US$471) per month.
  • Increase Family Deduction from VND 3,6 million (US$154) per month to VND 4,4 million (US$188) per month.
  • These increases will reduce the accessible income for PIT treatment.
  • These changes are applied for monthly PIT treatment valid from July 1, 2020 and PIT finalisation for 2020.

Foreign Contractor Withholding Tax

  • Foreign organisations with income derived from contracts or have businesses in Vietnam are subject to this tax
  • Deemed CIT rate: 0.1 – 10% depending on the business lines
  • Deemed VAT rate: 0 – 5% depending on the business lines

Value Added Tax

  • Tax rate: 0 – 10% depending on the type of services and goods

Special Sales Tax

  • Applied on the importers, producers, and providers of goods and services
  • Tax rate: 7 – 150% depending on the type of product or service

Ensure Tax Compliance in Vietnam through Outsourcing to Cekindo

With a specialised team of dedicated tax compliance professionals in Vietnam, Cekindo can accomplish your requirements regardless of how simple or complex your taxes are.

The taxation in Vietnam can be highly particular and complex; thus, we think that there’s no one-size-fit-all approach.

Cekindo’s team has the unparalleled knowledge to deal with all your tax obligations in an expedient and efficient manner. We factor in all your short-term and long-term goals, and your business and personal objectives so that you will be able to optimise your tax position more effectively.

Talk to us and we will help you achieve the best tax outcomes. Fill in the form below.