We are now entering tax filing season for 2018. If you are still confused and wonder how to go about this time-consuming task, you are not alone. Hundreds of thousands of individuals and companies feel the same as you do, and annual tax return in Vietnam becomes a nightmare of many entrepreneurs.
According to the World Bank’s Ease of Doing Business, the administrative requirements of Paying Taxes in Vietnam are some of the more demanding in the region and the world. The average Vietnamese company can spend about 500 hours on the tax reporting activities throughout the year (compared to Singapore 50 hours).
The consequences of omitting to submit the annual tax return can be severe and affect business operations. As the deadlines for tax filing in Vietnam is approaching, in this article, you will know some essential information for annual corporate income tax and annual filing obligations in Vietnam.
What is Personal Income Tax (PIT)?
This is a tax paid by taxpayers in Vietnam on the income earned by individuals. Taxpayers pay their personal income tax based on different rates according to their annual earnings in Vietnam.
The progressive tax rates for tax residents of Vietnam range from 5% to 35%.
These individual taxpayers in Vietnam are eligible for tax refunds on the personal income tax.
What is Corporate Income Tax (CIT)?
Corporate income tax in Vietnam, also known as corporation tax or company tax, is levied on both foreign as well as domestic companies. Just like personal income tax, businesses are required to pay taxes for their income earned in the companies.
Corporate Income Tax Rates
The corporate income tax rate is based on estimates and by annual settle declaration. The standard corporate income tax rate is 20%. It is paid every quarter (every three months). For overpayments and underpayments, the balance will be settled every year.
Foreigners and investors shall take note that tax incentives are available when registering a company in Vietnam.
Besides the standard tax rate of 20%, tax rates of 32% to 50% apply to enterprises involved in the oil and gas industry. Their absolute tax rate is determined based on the specific project conditions and location.
The tax rates can also go as high as 40 or 50 percent for companies involved in the exploration and exploitation of mineral resources – the exact tax rate is based on the project location as well.
Corporate Tax Return in Vietnam
Companies in Vietnam are able to get a tax refund on corporate income tax as well. The reimbursement is on an annual basis.
Reporting Corporate Income Tax in Vietnam
The tax compliance deadline for all tax individuals and companies to remember is not later than 90 days from the fiscal year end. Most companies use the calendar year as it is a standard tax year in Vietnam and businesses are obliged to notify the tax authorities when a different tax year than the calendar one.
Companies that fail to report their tax timely will face a different levels of penalties based on the days of overdue – a fine from VND 700,000 to VND 25 million (US$ 30 – US$ 1,100). Moreover, your company business license can be repealed anytime if you neglect your tax report and the fines.
As a result, it is common for companies and corporate to come up with proper tax planning with their consultant. Tax filing and reporting outsourcing to a reliable agency in Vietnam is a surefire way to prevent any hefty expenses and tax mishaps in the future.
For 2020 compliance deadlines, read our latest article.
Need assistance with your annual tax return?
Accurate corporate tax filing and reporting in Vietnam becomes very easy when you have professional assistance. This is where Cekindo can help.
Contact us now, and our team of experts will assist you to meet the tax requirements in Vietnam with the maximum tax benefits. We will make an annual tax return in Vietnam as efficient as possible.