Glossary

Term	Definition	Term	Definition
CIT	Corporate Income Tax	IFRS	International Financial Reporting Standards
DPI	Department of Planning and Investment	LLC	Limited Liability Company
DTA	Double Taxation Agreement	MOF	Ministry of Finance
DOLISA	Department of Labor, Invalids and Social Affairs	VAS	Vietnamese Accounting Standards
IRC	Investment Registration Certificate	VAT	Value Added Tax
IAS	International Accounting Standards	WTO	World Trade Organization

A-Country profile

1. Country snapshot

Location

South East Asia

The country borders China, Laos and Cambodia

Land area

331,344.3 km²

5 Municipalities and 58 provinces

North: Hanoi – the capital

Center: Danang City – important seaport

South: Ho Chi Minh City – the largest city

Language

Vietnamese (official language)

English (widely taught at school)

Currency

Vietnamese Dong

Population

99,329,145 (provided by the UN up to November 2022)

Employment

Labor force: Estimated 50.6 million (aged 15 and above) Unemployment rate: 3.20%

Business hours

Normal working hours are 8 hours per day, or 40-48 hours per week

Average annual income

Approximately USD2,152 (Vietcombank’s exchange rate on 1 July 2022: USD1 = VND23,420)

Climate and weather

Varies from North to South

2. Major airports

Airports	Million passengers/year	Million tons/year
Noi Bai - Ha Noi	25	0.5
Van Don - Quang Ninh	2.5	-
Cat Bi - Hai Phong	2	-
Vinh - Nghe An	-	-
Dong Hoi - Quang Binh	-	-
Phu Bai - Thua Thien Hue	-	-
Da Nang	6	-
Chu Lai - Quang Nam	-	-
Phu Cat - Binh Dinh	-	-
Tuy Hoa - Phu Yen	-	-
Cam Ranh - Khanh Hoa	7.1	-
Tan Son Nhat - HCMC	28	0.55
Can Tho	3	-
Phu Quoc	4	0.5

3. Major seaports

Seaports	Maximum vessel size (1000 tons)	Cargo (million tons/year)
Cai Lan - Quang Ninh	8.5	50
Dinh Vu - Hai Phong	0.5	30
Lach Huyen - Hai Phong	-	80
Thai Binh - Thai Binh	-	50
Nghi Son - Thanh Hoa	14	50
Hon La - Quang Binh	-	80
Cua Lo - Nghe An	-	20
My Thuy - Quang Tri	-	100
Son Duong - Ha Tinh	-	300
Vung Ang - Ha Tinh	-	50
Chan May - Thua Thien Hue	4.5	50
Ky Ha - Quang Nam	-	20
Dung Quat - Quang Ngai	5.5	70
Nhon Hoi - Binh Dinh	-	50
Quy Nhon - Binh Dinh	-	63.5
Vung Ro - Phu Yen	-	250
Van Phong - Khanh Hoa	-	200
Sai Gon - Hiep Phuoc	-	8.7
Tan Cang Cat Lai	-	45
Dinh An - Tra Vinh	-	20
Ca Mau - Ca Mau	-	5
Phu Quoc	-	50

4. Coastal economic zones

Economic zones	Size (ha)
Van Don - Quang Ninh	217,133
Quang Yen - Quang Ninh	13,303
Dinh Vu, Cat Hai - Hai Phong	21,640
Thai Binh - Thai Binh	30,583
Nghi Son - Thanh Hoa	18,611
Dong Nam Nghe An - Nghe An	18,826
Vung Ang - Ha Tinh	22,781
Hon La - Quang Binh	10,000
Dong Nam - Quang Tri	23,792
Chan May, Lang Co - Thua Thien Hue	27,108
Chu Lai - Quang Nam	27,040
Dung Quat - Quang Ngai	2,807
Nhon Hoi - Binh Dinh	12,000
Nam Phu Yen - Phu Yen	20,730
Van Phong - Khanh Hoa	150,000
Dinh An - Tra Vinh	5,404
Nam Can - Ca Mau	11,000
Phu Quoc - Phu Quoc Island and Nam An Thoi Islands	56,100

B-Investment protection and investment incentives

1. Investment protection

Under the Law on Investment 2020, the Government provides the following investment protection to foreign investors:

- No appropriation or confiscation;

- Compensation in the event of confiscation for national defense, security or national interest;

- No priority to domestic goods, services or vendors;

- No restriction on export ratio quantity, value, types of goods, services;

- Self-balance of import-export, import substitution, R&D ratio;

- Investors can choose the headquarter location or location to provide goods/service;

- Entitlement to new incentives if more favorable;

- Remain current incentives if less favorable than before.

2. Types of investment incentives and support

2.1. Form of investment incentives (Articles 15, 18 of the Law on Investment 2020):

- Import duties exemption;

- Accelerated depreciation, increasing the deductible expenses when calculating taxable income;

- CIT incentives: preferential tax rate and tax holiday;

- Exemption and reduction of land levy and rental.

2.2. Projects eligible for investment incentives

- Investment projects in encouraged sectors regulated in Clause 1 Article 16 of the Law on Investment 2020.

- Investment projects located in encouraged areas regulated in Clause 2 Article 16 of the Law on Investment 2020.

- Large investment with a total investment capital from VND6,000 billion subject to detailed conditions on disbursement schedule.

- Social housing construction projects; investment projects located in rural areas and employing at least 500 employees; investment projects that employ persons with disabilities in accordance with regulations of law on persons with disabilities.

- Hi-technology enterprises, science and technology enterprises and science and technology organizations, projects involving transfer of technologies on the List of technologies the transfer of which is encouraged in accordance with regulations of the Law on Technology Transfer No. 07/2017/QH14; technology incubators, science and technology enterprise incubators prescribed by the Law on High Technology No. 21/2008/QH12, and the Law on Science and Technology No. 29/2013/QH13, enterprises manufacturing and providing technologies, equipment, products and services with a view to satisfaction of environment protection requirements prescribed by the Law on Environmental Protection No. 55/2014/QH13.

- Innovation start-up projects, national innovation centers and research and development centers.

- Business investment in small and medium-sized enterprises’ product distribution chain; business investment in technical establishments supporting small and medium-sized enterprises, small and mediumsized enterprise incubators; business investment in co-working spaces serving small and medium-sized enterprises and innovation startups prescribed by the Law on Small and Medium-Sized Enterprises.

2.3. Investment incentives and support in Industrial Zones (Izs) and Economic Zones (Ezs)

Below is a summary of the number of IZs by region:

Region	Quantity	%	Area (ha)	%
Northern Midlands and Mountains	33	8	7,937.39	6.22
Red River Delta	112	27	32,871.98	25.77
Central Coast	74	18	24,849	19.48
Tay Nguyen	11	3	1,488.02	1.17
Southeast	114	28	44,476.65	34.87
Mekong Delta	64	16	15,934.24	12.49
Total	408	100	127,557	100

Investment Incentives and support:

Investment Incentives and support	Industrial Zones (IZs)	Economic Zones (EZs)
CIT	Tax exemption for two years and 50% tax deduction for four following years.	CIT incentive rate of 10% in 15 years. Tax exemption for 4 years and 50% tax deduction for 9 following years (excluding income from real estate transfer).
Import duty	Exported goods from Export Processing Zone (EPZ), imported goods to EPZ for processing exported goods are not subject to customs duty. Investment projects for IZ infrastructure development and those located in IZ are free of import duty for imported goods to create fixed assets. Investment projects for IZ infrastructure development are free of import duty for importing materials and components not yet produced domestically for manufacturing in five years from the operation date.	Investment projects located in coastal EZs are free of import duty for imported goods to create fixed assets and free of import duty for importing materials and components not yet produced domestically for manufacturing in five years from the operation date.
Land	Investment projects for IZ infrastructure development and operation are free of land rental after the land rental exemption of the construction period at different levels from 11 years to the whole rental term depending on specific conditions.	Investment projects located in EZs are free of land rental after the land rental exemption of the construction period at different levels from 11 years to the whole rental term depending on specific conditions.
Credit	Investment projects for IZ infrastructure development are entitled to investment loans in accordance with the Decree 32/2017/ND-CP.	EZs are allowed to employ other capital mobilization methods for construction of important socio-technical infrastructure, namely bond issue, Official Development Assistance (ODA), preferential credit, Public-Private Partnership (PPP) fund, advance from investors, etc.
Construction	Construction of some key facilities in IZs are supported by the State budget. Expenses for construction, operation, rental of dormitories and other social infrastructure work for workers in IZs are deductible for CIT purposes. Investment projects for construction of housing and other facilities for workers are entitled to regulated incentives for social housing construction and related fields.	Construction of some key facilities in EZs are supported by the State budget. Expenses for construction, operation, rental of dormitories and other social infrastructure work for workers in Ezs are deductible for CIT purposes. Investment projects for construction of housing and other facilities for workers are entitled to regulated incentives for social housing construction and related fields.

Investment incentives for supporting industrial parks, specialized industrial parks, ecological industrial zones, and high-tech industrial zones

a) Supporting industrial parks, specialized industrial parks, ecological industrial zones, and high-tech industrial zones are entitle to investment incentives and supports in accordance with regulations applicable to normal industrial zone.

b) Industrial parks, specialized industrial parks, ecological industrial zones, and high-tech industrial parks are also entitle to following special incentives and supports:

- The development of the industrial parks follow the above-mentioned forms are not subject to the occupancy requirement of 60%.

- Land rent exemption or reduction granted in accordance with legislation on land.

- Priority to have access to the State-offered investment loans.

- Eligibility to be included in the list of investment-attracting projects of local goverment.

c) Beside the above incentives and supports mentioned above, ecological industrial zones are also entitle to other incentive and support as follow:

- Support for the technical construction facilities inside and outside the perimeter of the existing industrial park in order to build connection to enterprises inside the industrial park and assist them in development of the industrial co-operation and transformation into the eco-industrial park.

- Scientific, engineering, technology transfer assistance aimed at helping enterprises of industrial parks improve procedures for management and operation of their system, renovation of new manufacturing technologies in the expectation of reducing sources of pollution, recycling raw materials.

- Priority to have access to incentive loans, green credit, green bond.

- Priority to have access to information on current status, technology, industrial co-operation.

Special incentives and investment support

The Law on Investment 2020 and Decision 29/2021/QD-TTg prescribing special investment incentives dated 6 October 2021, issued by the Prime Minister, introduced a mechanism which allows the Government’s approval for special investment incentives at different levels to encourage the development of several investment projects that have significant socio-economic impact, including:

Subject:

- Subject A: Investment projects in sectors subject to special investment incentives which have investment capital of VND30,000 billion (equiv. USD1.28 billion) or above and disburse at least VND10,000 billion (equiv. USD427 million) within three years from the date of the Investment Registration Certificate (IRC) issuance or in-principle approval.

- Subject B: New investment projects (including the expansion of such new projects) establishing innovation centers and research and development centers which have total investment capital of VND3,000 billion (equiv. USD128 million) or above and will disburse at least VND1,000 billion (equiv. USD42.6 million) within three years from the date of IRC issuance or in-principle approval.

- Subject C: National Innovation Center established under a decision of the Prime Minister.

Non-subject:

- Investment projects that have been granted an investment certificate, IRC, or in-principle approval prior to the effective date of the Law on Investment 2020.

- Investment projects in following sectors:

-> Mineral mining projects.

-> Projects on manufacturing, sale of goods and services subject to special excise tax according to the Law on Special Sales Tax No. 27/2008/ QH12, except for projects for the manufacturing of automobiles, aircrafts, and yachts.

-> Commercial housing construction projects prescribed by the Law on Residential Housing No. 65/2014/QH13.

Detailed special investment incentives and support

Special incentives and investment support	Subject or Conditions
- CIT rate of 9% for 30 years. - CIT exemption for five years and 50% reduction for 10 subsequent years. - Land rental, water surface rental exemption for 18 years and 55% reduction for the remaining years.	Subject A
- CIT rate of 7% for 33 years. - CIT exemption for six years and 50% reduction for 12 subsequent years. - Land rental, water surface rental exemption for 20 years and 65% reduction for the remaining years	- Subject B, or - Subject A which meets one of the following conditions: -> High technology project level 1. -> Participation of Vietnamese suppliers and service providers level 1. -> Technology transfer level 1. -> Value added accounting for more than 30% to 40% of the total production costs of finished products.
- CIT rate of 5% for 37 years. - CIT exemption for six years and 50% reduction for 13 subsequent years. - Land rental, water surface rental exemption for 22 years and 75% reduction for the remaining years.	- Subject C, or - Subject A which meets one of the following conditions: -> High technology project level 2. -> Participation of Vietnamese suppliers and service providers level 2. -> Technology transfer level 2. -> Value added accounting for more than 40% of the total production costs of finished products.

- CIT rate of 9% for 30 years.

- CIT exemption for five years and 50% reduction for 10 subsequent years.

- Land rental, water surface rental exemption for 18 years and 55% reduction for the remaining years.

Subject A

- CIT rate of 7% for 33 years.

- CIT exemption for six years and 50% reduction for 12 subsequent years.

- Land rental, water surface rental exemption for 20 years and 65% reduction for the remaining years

- Subject B, or

- Subject A which meets one of the following conditions:

-> High technology project level 1.

-> Participation of Vietnamese suppliers and service providers level 1.

-> Technology transfer level 1.

-> Value added accounting for more than 30% to 40% of the total production costs of finished products.

- CIT rate of 5% for 37 years.

- CIT exemption for six years and 50% reduction for 13 subsequent years.

- Land rental, water surface rental exemption for 22 years and 75% reduction for the remaining years.

- Subject C, or

- Subject A which meets one of the following conditions:

-> High technology project level 2.

-> Participation of Vietnamese suppliers and service providers level 2.

-> Technology transfer level 2.

-> Value added accounting for more than 40% of the total production costs of finished products.

Note:

- The level of high technology project is defined based on the level of high-tech product revenue, R&D expenses and personnel.

- The level of participation of Vietnamese suppliers and service providers in the supply chain is defined based on the level of Vietnamese enterprises participating and their value contributed into the supply chain.

- The level of technology transfer is defined based on the number of Vietnamese enterprises receiving the technology transfer.

C-Forms of business

1. Forms of foreign direct investment

A foreign investor may invest in Vietnam in the following forms:

- Establishment of a business entity.

- Capital contribution or purchase of shares/ stakes.

- Execution of an investment project.

- Business cooperation contract.

2. Forms of enterprise

Forms of enterprise in Vietnam

	Establishment	Ownership	Liability
Limited Liability Company With One Member	Established by its member(s) by way of capital contribution to the LLC.	One legal entity or individual.	The company owner is liable for the debts and other liabilities to the extent of the company’s charter capital.
Limited Liability Company With Two or More Members	Established by its member(s) by way of capital contribution to the LLC.	Legal entities or individuals.	Established by its member(s) by way of capital contribution to the LLC.
Joint Stock Company	Established by its founding shareholders on the basis of their subscription to shares of the Joint Stock Company (JSC).	Required to have at least three shareholders.	Established by its founding shareholders on the basis of their subscription to shares of the Joint Stock Company (JSC).
Partnership	Established by general partners. A partnership may include limited partners.	Required to have at least two general partners who must be individuals.	A general partner is liable for the company’s obligations equal to all of his/her assets. A limited partner is liable for the company’s debts equal to the promised capital contribution.
Private Enterprise	Established by a single individual.	Owned by a single Individual.	The owner is liable for the entire operation of the company equal to his/her total assets.

Source: Law on Enterprise No. 59/2020/QH14, dated 17 June 2020, issued by the National Assembly of Vietnam

3. Setting up an investment project and company in Vietnam

3.1. Business sectors that foreign investors can access the market

Sectors which are not yet accessible for foreign investors (List A of Appendix I of Decree 31/2021/ND-CP).	Foreign investor is not allowed
Sectors which are accessible with conditions for foreign investors (List B of Appendix I of Decree 31/2021/ND-CP).	Foreign investor is allowed with marketaccess conditions. Market-access conditions: - Foreign-owned ratio - Form of investment - Scope of investment - Investor capability - Others
Sectors which are not included in List A or List B	Foreign investors have the same market access as that of domestic investors

Sectors which are accessible with conditions for foreign investors (List B of Appendix I of Decree 31/2021/ND-CP).

Foreign investor is allowed with marketaccess conditions.

Market-access conditions:

- Foreign-owned ratio

- Form of investment

- Scope of investment

- Investor capability

- Others

Sectors which are not included in List A or List B

Foreign investors have the same market access as that of domestic investors

Source: Article 17, Decree No. 31/2021/ND-CP, dated 26 March 2021, issued by the Government

3.2. Procedures and timeline of registration process

a) Procedures and timeline of registration process of projects not subjected to in-principle approval (*)

- Projects inside EZs, IZs, EPZs, high-tech zones make a submission to Zones Management Board. After 15 days, IRC issued.

- Projects outside EZs, IZs, EPZs, high-tech zones make a submission to Provincial DPI. After 15 days, IRC issued.

b) Procedures and timeline of registration process of projects subjected to in-principle approval (*)

- National Assembly’s approval: Within 15 days from the date of receiving the complete documents, the Ministry of Planning and Investment shall report to the Prime Minister for the establishment of the State Appraisal Council.

- Prime Minister’s approval: Within 40 days from the date of receiving the documents, the Ministry of Planning and Investment shall conduct an appraisal of the documents and prepare an appraisal report, which will be submitted to the Prime Minister for approval of the investment policy.

- Provincial Authority’s approval: Within 25 days from the date of receiving the documents, the investment registration agency shall prepare an appraisal report and submit it to the provincial People's Committee.

(*): Investment in conditional sector activities is subject to in-principle approval of higher-level competent authorities (nuclear power plant, specialuse forests, headwater protection forests or border protection forests; construction of airports, terminals; petroleum processing; betting and casino for foreigners; golf courses; etc.). The process in conditional sectors takes more time and involves specialized competent authorities.

Source: Law on Investment No. 61/2020/QH14, dated 17 June 2020, issued by the National Assembly of Vietnam

3.3. Procedures and timeline of setting up company

Application dossiser for setting up company, including IRC to be made a direct, postal or online submission to Provincial Business Registration. After three working days, ERC issued.

Source: Law on Enterprise No. 59/2020/QH14, dated 17 June 2020, issued by the National Assembly of Vietnam

D-Development of intellectual property

Following the WTO’s requirements on Intellectual Property and the strategy of Vietnam on developing higher standards of intellectual property rights protection, on 16 June 2022, the National Assembly of Vietnam ratified the Amended Law on Intellectual Property, which will take effect on 1 January 2023. The following notable changes under the Law on Intellectual Property are expected to promote technology transfer and commercialization of intellectual property rights:

- Clearer Administrative procedures.

- More specific regulations relating to copyrights and related rights.

- Introducing the definition of sound trademark sample and legal framework for sound trademark protection.

E-Land and housing

1. Land

The Law on Land No. 45/2013/QH13, effective from 1 July 2014 regulates the forms of land use for Foreign Invested Enterprise, such as:

Forms of land use	Financial obligations in relation to land use right
Land allocated from the State	- For granting a land use right certificate: Land use fee, land use right registration fee, evaluation fee for the issuance of land use right certificate, license fee, land compensation fee (where applicable). - During operation: Land lease fee, Nonagriculture land use fee, agriculture land use fee, nature resource tax (where applicable).
Land leased from the State or real estate developers

Land allocated from the State

- For granting a land use right certificate: Land use fee, land use right registration fee, evaluation fee for the issuance of land use right certificate, license fee, land compensation fee (where applicable).

- During operation: Land lease fee, Nonagriculture land use fee, agriculture land use fee, nature resource tax (where applicable).

Land leased from the State or real estate developers

Land rental fee exemptions

Subject	Exemption duration
Projects in encouraged investment sectors	3 years
Projects in difficult socio-economic geographical areas	7 years
Projects in especially difficult socio-economic geographical areas or in encouraged investment sectors located in difficult socio-economic geographical areas	11 years
Projects in encouraged investment sectors located in especially difficult socio-economic geographical areas	15 years
Projects eligible for special investment incentives as prescribed in Article 20 of the Law on Investment 2020	Up to 22 years
Projects in especially encouraged investment sectors located in especially difficult socio-economic geographical areas or located in high-tech industrial zones	Whole project lifetime

2. Housing

Foreign individuals can buy, rent and purchase, receive, or inherit commercial housing in Vietnam which include apartments and separate houses in housing construction investment projects. According to newly issued regulations on commercial housing projects, the type of land used to build commercial housing may include:

(i) residential land; and

(ii) residential land and other non-residential land satisfying the conditions for permitting a change of land use purpose for the implementation of the project. After obtaining the in-principle approval issued by the competent authority, an investor shall apply for change in purpose of land use (if required) and fulfill the financial obligations in accordance with the law.

Article 4, Law on Amendments to certain articles of the Law on Public-Private Partnership investment, the Law on Investment, the Law on Housing, the Law on Procurement, the Law on Electricity, the Law on Enterprises, the Law on Special excise duties and the Law on Civil judgment enforcement No. 03/2022/QH15, dated 11 January 2022, issued by the National Assembly of Vietnam.

F-Accounting, taxation and customs

1. Accounting

1.1. Vietnamese accounting regulations

The Law on Accounting is the highest accounting regulation in Vietnam. Further guidance on accounting activities are provided by a system of decisions, decrees, circulars, official letters and the VAS.

1.2. Accounting standards

There are currently 26 VAS issued from 2001 to 2005, which were primarily based on the IAS and International IFRS prevailing at the time of issuance. The VAS has not been updated with the current IASs, therefore, some new accounting standards such as IFRS 9 on Financial Instruments, IFRS 15 on Revenue, IFRS 16 on Leases, have not been adopted yet. However, Vietnam has introduced a roadmap to close the gap between VAS and IFRS and it is expected that voluntary adoption of IFRS can be made by 2022.

1.3. Accounting system

Circular No. 200/2014/TT-BTC, dated 22 December 2014, issued by the MOF (Circular 200) providing guidance on Vietnamese Accounting System and the application of accounting standards is commonly used by enterprises in Vietnam.

1.4. Initial accounting set up at newly established entities

A new entity is required to notify the tax authority on the application of Vietnamese Accounting System including:

- Framework: Vietnamese Accounting System.

- Language: Vietnamese language is required in accounting records, but this can be combined with a commonly used foreign language.

- Financial year: An accounting period is generally 12 months in duration and the enterprises can select the fiscal year end. This could be either at the end of the calendar year or at the end of each quarter (i.e. 31 March, 30 June and 30 September).

- Currency accounting records: are generally required to be maintained in VND. Entities that receive and pay mainly in a foreign currency can select the foreign currency to be used for their accounting records and financial statements if they meet all the stipulated requirements.

- Chief accountant: An entity is required to appoint a chief accountant who must satisfy the criteria and conditions stipulated by the Law on Accounting and guiding regulations. If a chief accountant cannot be appointed, the entity can either temporarily appoint a person in-charge of accounting (maximum of 12 months) who meets the criteria and conditions as required by the regulations or outsource the chief accountant position from a competent accounting service company.

1.5. Accounting records

- Accounting documents: Accounting vouchers and accounting books can be stored either as hard documents or electronically. If stored electronically, the accounting vouchers and accounting books only need to be printed if requested by the competent authorities for the purpose of testing, inspection, monitoring and auditing.

- Retention period: (1) five years for those documents used for management or operation of the enterprise; (2) ten years for accounting data, accounting book; (3) unlimited time for documents that are important in terms of the economy, national security and defense.

1.6. Annual Financial Statements

a) The basic set of financial statements that must be prepared under VAS and Circular 200 comprises of the following:

- Balance sheet, including a separate schedule for off balance sheet items.

- Income statement.

- Cash flow statement.

- Notes to the financial statements.

b) The annual financial statements must be approved by the chief accountant and the legal representative and a copy of the financial statements must be submitted to the local authorities within 90 days of the end of the financial year.

c) For statutory reporting, entities using a currency other than VND as their accounting currency must convert their financial statements prepared under that currency into VND in accordance with certain regulations.

d) Foreign invested entities are required to have their annual financial statements audited. Those entities must appoint an audit firm from a list of auditors approved and published by the MOF annually.

2. Taxation

2.1. Tax regime in Vietnam

All taxes are levied at a national level. The following taxes are relevant for entities looking to invest in Vietnam:

Classification	Taxes
Major taxes	Corporate Income Tax (CIT) Value Added Tax (VAT) Personal Income Tax (PIT) Foreign Contractor Withholding Tax (FCT)
Other taxes	Special Sales Taxes Natural Resources Tax Environment Protection Tax License Fee and others

Major taxes

Corporate Income Tax (CIT)

Value Added Tax (VAT)

Personal Income Tax (PIT)

Foreign Contractor Withholding Tax (FCT)

Other taxes

Special Sales Taxes

Natural Resources Tax

Environment Protection Tax

License Fee

and others

2.2. Tax compliance timeline - Submission schedule for tax returns

Declaration basis	Deadline	CIT	VAT	PIT	FCT
Monthly	20th day of the following month		X	X	X
Quarterly	The last day of the month following the end of the quarter	X	X	X
Annually/Finalization	The last day of the 3rd month following the end of the tax year	X		X
Upon occurrence (*)	10th day from the occurrence of tax obligations	X	X	X

(*) (i) For CIT filing: real estate transfer declared by taxpayers that are not real estate companies, or by real estate companies that choose this approach; or by any foreign organization that does business in Vietnam or earns income in Vietnam from capital transfer but its operations do not comply with regulations of the Law on Investment or the Law on Enterprise. (ii) For VAT filing: real estate transfer transactions of enterprises registered VAT under direct method having VAT liability or VAT incurred at import stage; (iii) for PIT filing: PIT declared by an individual or by an organization on behalf of such individual on income from capital transfer; real estate transfer; capital investment; inheritance, gifts; overseas income from copyrights, franchises, prizes; or PIT declared on rental income or business income of business individuals or households without fixed business location and regular business activities; (iv) For FCT: If an enterprise incurs FCT many times in a month, it shall file on a monthly basis instead of filing upon each occurrence.

Source: Article 44, Law on Tax Administration No. 38/2019/QH14, dated 13 June 2019, issued by the National Assembly of Vietnam; Article 8, Decree No. 126/2020/ND-CP, dated 19 October 2020, issued by the Government providing detailed regulations for some Articles of the Law on Tax Management.

2.3. Corporate income tax

2.3.1. Tax calculation

- CIT Payable = Assessable Income * Tax Rate (*)

- Assessable Income = Total Revenue – Deductible Expenses (**) + Other Incomes - Loss Carried Forward (***)

(*): The current standard corporate income tax rate is 20%, except in the following cases: (1) The CIT rate for enterprises in exploration and mining of petroleum, gas and other rare and precious natural resources ranges from 32% to 50% depending on the location and type of project; (2) The CIT rate for other specific enterprises enjoying preferential tax rates is 10% and 17%.

(**): To be deductible an expense must satisfy 4 conditions: (1) Incurred and in relation to business activities; (2) supported by proper documents; (3) payments greater than VND 20 million must be supported by non-cash payment (e.g. bank transfer); and (4) mus t not be in the list of non-deductible expenses specified by the applicable regulations.

(***): Losses can be carried forward for 5 years. There are specific rules and restrictions around offsetting losses against profits from different types of business activities.

2.3.2. Non-deductible expenses

1) Employment costs not actually paid or not clearly stipulated under a labor contract, collective labor agreement or company’s policies.

2) Employee welfare expenses exceeding the cap of one-month average monthly salary.

3) Depreciation of fixed assets not used for business purposes or exceeding the regulated depreciation rates.

4) Interest on loans from non-economic and non-credit organizations exceeding 1.5 times the interest rate announced by the State Bank of Vietnam.

5) Interest on loans corresponding to the portion of charter capital not yet contributed in accordance with registered contribution schedule.

6) Periodical accrued expenses not paid or not fully paid at the end of the period.

7) Provisions for financial investment losses, inventory devaluation, bad debts, product warranties or construction works, not in accordance with regulations.

8) Unrealized foreign exchange losses due to the year-end revaluation of foreign currency items other than account payables.

9) Overhead cost allocated to the Permanent Establishment by foreign companies exceeding the amount determined based on the revenue-based allocation ratio.

10) Contribution to voluntary pension insurance, life insurance for employees exceeding VND3 million/ person/month.

11) Administrative penalties, fines, late payment interest, etc.

12) Donations other than certain donations for education, health care, natural disaster or building charitable homes among other things.

13) Certain expenses related to the issuance, purchase and sale of shares.

14) Net interest expenses exceeding 30% EBITDA (for enterprises having related party transactions). The excess amount may be carried forwarded for five consecutive years.

2.3.3. Tax payment

The provisional CIT payments for four quarters must be at least 80% of the total CIT finalization amount. Otherwise, the tax payment interest will be applied.

2.3.4. Tax incentives

Organizations are entitled to varies tax incentives based on many factors, including location, sector and business scale. If organizations are entitled to a number of different tax incentives they may choose to apply the most favorable one.

In general, the preferential tax rate under the incentive regime is applicable from the first year of revenue generation. Any tax holiday is applicable from the first profit-making year or the fourth year of revenue generation, whichever comes first.

For high-tech enterprises, agriculture enterprises applying high technologies, enterprises as prescribed by the Law on High Technology, the preferential tax rates are applicable from the year in which they are granted the Certificates of High-tech Enterprise or Certificate of Agriculture Enterprise Applying High Technologies.

The following table summarises the incentive regime in Vietnam.

By Location

Activities	Level of CIT incentives
Activities	Tax rate	Tax holiday
a) With especially difficult socio-economic conditions. b) Economics zones. c) High-tech zones, including concentrated information technology parks established under the Prime Minister’s decision	10% for 15 years	4 years of tax exemption; and 50% reduction for the next 9 years
With difficult socio-economic conditions	17% for 10 years	2 years of tax exemption;and 50% reduction for the next 4 years
Industrial park (not located in a favorable socio-economic location)	Not applicable	2 years of tax exemption;and 50% reduction for the next 4 years

By Sector

Activities	Level of CIT incentives
Activities	Tax rate	Tax holiday
a) High-tech enterprises/ Application of high technologies enterprises. b) Investment and development of water plants, power plants, water drainage and supply system, bridges, roadway, railway, ports, etc.). c) Software production. d) Production of composite materials, lightbuilding materials, rare materials, production of renewable energy, clean energy, energy from waste destruction and biotechnology development. e) Environmental protection. f) Supporting industries	10% for 15 years	4 years of tax exemption; and 50% reduction for the next 9 years
Socialized projects in regions with difficult/especially difficult socio-economic conditions	10% for whole project’s duration	4 years of tax exemption; and 50% reduction for the next 5 years
Socialized project not located in difficult or especially difficult socio-economic regions	10% for whole project’s duration	Tax exemption and reduction under incentives for location (if applicable)
Farming, husbandry, processing of agriculture and aquaculture in difficult regions; forestry in difficult regions; production of plant varieties, animal breeds; production of salt; preservation of agriculture products, aquaculture products and foods, etc.	10% for whole project’s Duration	4 years of tax exemption; and 50% reduction for the next 5 years
Farming, husbandry, processing of agriculture and aquaculture products not located in difficult and especially difficult regions	15% for whole project’s duration	Not applicable
Manufacturing of steel, energy saving products, machinery and equipment serving agriculture, forestry, fisheries and salt production, traditional crafts, etc.	17% for 10 years	Not applicable

By Business scale

Activities	Level of CIT incentives
Activities	Tax rate	Tax holiday
VND6,000 billion capital projects or VND12,000 billion capital projects.	10% for 15 years	4 years of tax exemption; and 50% reduction for the next 9 years
VND3,000 billion capital projects or VND30,000 billion capital projects.	5% for 37.5 years	6 years of tax exemption; and 50% reduction for the next 13 years

Extension of incentive scheme

For investment projects of a large scale and utilizing high or new technologies, which are considered in need of particular attraction, the duration of the 10% tax rate may be extended up to 30 years based on a proposal by the Minister of Finance and approval of the Prime Minister.

2.4. Value added tax

2.4.1. VAT liabilities

In general, VAT liabilities must be paid to the local tax authorities where the business activities take place while for imported goods, VAT liabilities will be collected by the customs authorities prior to actual importation.

2.4.2. Declaration method

There are two methods for VAT declaration including the credit method and the direct method. The conditions for adoption of a declaration method are based on annual revenue, business sector, accounting systems and business intentions.

the condition for credit method and direct method

Conditions	Credit Method	Direct method
Annual revenue	More than VND1 billion of revenue subject to VAT	Less than VND1 billion of revenue subject to VAT unless voluntarily registering for the credit method
Business sector	Voluntarily register for VAT declaration under credit method	Engaging in trading gold, silver and precious stones Business individuals and households
Accounting systems	Maintaining complete books of account, invoices and documents in accordance with relevant accounting, tax regulations	Not required to maintain proper books of account and foreign organizations/ individuals carrying out business not regulated under the Law on Investment

Annual revenue

More than VND1 billion of revenue subject to VAT

Less than VND1 billion of revenue subject to VAT unless voluntarily registering for the credit method

Business sector

Voluntarily register for VAT declaration under credit method

Engaging in trading gold, silver and precious stones

Business individuals and households

Accounting systems

Maintaining complete books of account, invoices and documents in accordance with relevant accounting, tax regulations

Not required to maintain proper books of account and foreign organizations/ individuals carrying out business not regulated under the Law on Investment

2.4.3. Tax rate

Tax rate (Credit method)

Export goods and services

International transportation

Aviation and maritime services either directly for foreign entities or through agents

Clean water, pesticide services for digging, embanking, dredging of canals, agricultural machinery and equipment, sugar and byproducts, medical equipment, teaching aids, artistic, sport activities

10%

Standard VAT rate, applicable to goods and services other than those mentioned above

Tax rate (Direct method - per revenue)

| 1% | Distribution; supply of goods | | 2% | Other cases | | 3% | Manufacturing; transportation; services attached to the supply of goods; construction, including supply of materials | | 5% | Services; construction excluding supply of materials |

2.4.4. Non-taxable income

- Unprocessed or preprocessed products from farming, breeding, and aquaculture; breeds of livestock, plant varieties, including eggs, breeds, seeds, stems, tubers, semen, embryos, genetic materials.

- Transfer of right to use land.

- Human insurance; agriculture insurance services; insurance for ships and instruments for fishing; reinsurance.

- Finance, banking, and securities services including loans, bank/insurance guarantee, finance lease, issuance of credit cards, brokerage, capital transfer, FX trading, derivatives, collateral and related financial instruments.

- Public postal and telecommunications services, and public Internet services provided by the government, postal and telecommunications services from abroad (inbound).

- Education and vocational training according to prevailing regulations.

- Machinery and equipment not locally produced, imported for specific purpose.

- Temporarily imported goods.

- Goods and services traded between a foreign party and a free trade zone, or among free trade zones.

- Technology transfers according to the Law on Technology Transfer; intellectual property right transfers according to the Law on Intellectual Property (except exported software).

2.4.5. Income that does not need to be declared

- Monetary compensation, financial income.

- Services provided by a business that does not have a permanent establishment in Vietnam.

- Project of investment transfer.

- Transfer of assets within a company and dependent units.

- Capital contribution of assets.

- Commission for some agent services.

- Payment on behalf (including income from undertaking payments on behalf of government authorities).

2.4.6. VAT Refund

List of cases can claim VAT refunds

Cases	Main conditions
New projects investment	Adopting VAT credit method. Under pre-operation investment period. Total accumulated input VAT exceeds VND300 million (some exceptions may apply).
Exporting activities	Adopting VAT credit method. Total accumulated input VAT for export production (after offsetting the VAT liabilities of domestic activities) exceed VND300 million (capped at 10% of export revenue). (*) Nonrefundable: Goods that are imported and then exported outside a customs-controlled area or goods that are exported outside the customs-controlled area in accordance with the customs regulations
Business	Business transfer, conversion, merger, consolidation division, dissolution, bankruptcy or shutdown
Other cases	Projects and programs financed by ODA grant, grant aids or humanitarian aids. Entities granted diplomatic immunity and privileges as per relevant laws Those cases eligible for refund as defined in international treaties that the Socialist Republic of Vietnam has entered into.

2.4.7. From 1 July 2022, e-invoices must be used by most enterprises except in very specific cases.

2.5. Foreign contractor tax

2.5.1. Taxpayers

FCT applies to foreign contractors doing business and earning income from Vietnam under a contract, agreement or undertaking. In addition, from 1 July 2020, under the new Law on Tax Administration, overseas service providers providing electronic commerce, digital business and other services provided by overseas providers without permanent establishments in Vietnam shall directly apply or authorize representatives to apply for taxpayer registration, and declare and pay tax in Vietnam in accordance with the regulations of the MOF. Deemed tax (both CIT and VAT of FCT) on revenue earned will be applied.

2.5.2. Taxable and non-taxable transactions

Transactions applied FCT and non-FCT

Transactions	FCT	Non-FCT
Services	Services provided or consumed inside Vietnam.	Services provided and consumed outside Vietnam.
Goods	Supply of goods attached with services in Vietnam. Supply of goods in which the final delivery points is inside Vietnam.	Supply of goods not attached with services in Vietnam and the final delivery point is outside Vietnam.
Others (*)	Construction & installation Interest Royalties Penalty/Compensation Income from transportation

Services

Services provided or consumed inside Vietnam.

Services provided and consumed outside Vietnam.

Goods

Supply of goods attached with services in Vietnam.

Supply of goods in which the final delivery points is inside Vietnam.

Supply of goods not attached with services in Vietnam and the final delivery point is outside Vietnam.

Others (*)

Construction & installation

Interest

Royalties

Penalty/Compensation

Income from transportation

(*) No dividend withholding tax applies to corporate shareholders

2.5.3. Declaration methods and calculation

The filing and calculation of FCT is based on one of three methods: (i) Deemed method (default); (ii) Hybrid method; and (iii) Declaration method.

Methods	Filing	Calculation	Revenue/ Profit remittance
Deemed method	Vietnamese Party	VAT = Taxable income x deemed rate CIT = Taxable income x deemed rate	Tax liability shall be withheld before remittance
Declaration method	Foreign Contractor	VAT = Output VAT - Input VAT Credit method CIT = Taxable income x rate same as a domestic corporation	No detailed requirement
Hybrid method	Foreign Contractor	VAT = Output VAT – Input VAT Credit method CIT = Taxable income x deemed rate	No detailed requirement

Deemed method

Vietnamese Party

VAT = Taxable income x deemed rate

CIT = Taxable income x deemed rate

Tax liability shall be withheld before remittance

Declaration method

Foreign Contractor

VAT = Output VAT - Input VAT

Credit method

CIT = Taxable income

x rate

same as a

domestic corporation

No detailed requirement

Hybrid method

Foreign Contractor

VAT = Output VAT

– Input VAT

Credit method

CIT = Taxable income

x deemed rate

No detailed requirement

The Deemed Method is the default method, and the most common method. The Declaration method and Hybrid method must be selected and can only be chosen if the following conditions are met:

- The taxpayer is conducting a business in Vietnam under a contract with a duration of 183 days or more.

- The taxpayer has a registered Permanent Establishment in Vietnam (e.g. Project Office).

- The taxpayer applies the Vietnamese Accounting Systems.

2.5.4. Tax rates

For the deemed method, different tax rates apply depending on the type of business activity.

Business activities	VAT rate	CIT rate
Supply of goods in Vietnam or the goods are associated with services rendered in Vietnam (including on-spot export and import, distribution of goods in Vietnam or delivery of goods where the seller bears the risks relating to delivery of the goods within Vietnam).	Exempt	1%
Services	5%	5%
Supply of goods attached to services where the value is separated (Income from goods)	Exempt	1%
Supply of goods attached to services where the value is separated (Income from services)	5%	5%
Supply of machinery and equipment with services attached where the value is not separated	3%	2%
Construction, installation inclusive of raw materials, machinery and equipment	3%	2%
Construction, installation exclusive of raw materials, machinery and equipment	5%	2%
Loan interest	Exempt	5%
Royalties (in accordance with the Law on Intellectual Property)	Exempt	10%
Royalties (not in accordance with the Law on Intellectual Property)	5%	10%
Software	Exempt	10%
Software Services	Exempt	5%
Other cases where the value of different activities is not separated	Highest rate applicable

Source: Article 12 and 13, Circular No. 103/2014/TT-BTC, dated 6 August 2014, issued by the Ministry of Finance

2.6. Personal income tax

2.6.1. Tax residency status

Determination of tax residency status in Vietnam

Stay in Vietnam for 183 days or more in a calendar year or 12-consecutive month period from the 1st arrival date to Vietnam?

a) Yes, Tax resident.

b) No, Have a regular place of residence in Vietnam?

(Having rented accommodation(s) (hotel, rented house, working place, etc.) with total rental terms >= 183 days in a tax year; Holding temporary/permanent resident card or having a registered permanent address in Vietnam)

b.1) No, Tax nonresident.

b.2) Tax resident of another country, evidenced by tax resident certificate, etc.?

b.2.1) Yes, Tax non-resident.

b.2.2) No, Tax resident.

Source: Clause 1 and 2, Article 1, Circular No. 111/2013/TT-BTC, dated 15 August 2013, issued by the Ministry of Finance providing guidelines for implementation of the Law on Personal Income Tax, the Law amending, supplementing a number of Articles of the Law on Personal Income Tax and Decree No. 65/2013/ND-CP of the Government making detailed provisions for a number of Articles of the Law on Personal Income Tax, the Law amending, supplementing a number of Articles of the Law on Personal Income Tax.

Tax resident and tax non-resident

	Tax resident	Tax non-resident
Taxable income	Worldwide income	Vietnam-sourced income
Deductions to employment income	Family relief Compulsory insurances Voluntary pension fund/ insurance (capped at VND1 million/month) Donations to charitable, humanitarian, study encouragement funds	No
Tax rate on employment income	Progressive tax rates (5%-35%) (*)	Flat rate of 20%
Tax finalization on employment income	Required	Not required
Double taxation elimination	Foreign tax credit on foreignsourced income	Tax exemption if conditions stated in the tax treaty are satisfied (a notification to the tax authority is required)

(*) Upon paying income of VND2 million or more to a tax resident who does not sign a labor contract or signs a labor contract with term of less than 3 months, the Vietnam-based income payer shall withhold PIT at 10% unless the income payee provides a valid commitment on under-taxation-threshold-income. The progressive tax rates shall still be applied on total annual employment income of the tax residents upon their tax finalizations.

2.6.2. Tax year

First tax year

Number of presence days in the first calendar year (day in & day out are counted as one day):

a) >= 183 days:

a.1) Citizen of country signing DTA with Vietnam: first tax year is the calendar year starting from the first arrival month to Vietnam.

a.2) Citizen of country not signing DTA with Vietnam: first tax year is the calendar year starting from 1 January.

b) < 183 days but >= 183 days in the 12 consecutive month period from the first arrival date to Vietnam:

First tax year: 12 consecutive month period from the first arrival date to Vietnam.

Second tax year onwards: calendar year.

2.6.3. Employment income

All salary, allowances, bonuses and benefits in-kind are taxable unless specifically excluded.

The following are some examples of benefits not subject to PIT:

- One-off relocation allowance for expatriates to reside in Vietnam, Vietnamese employees to work overseas or Vietnamese employees who have long-term residence overseas to return to work in Vietnam.

- Meal allowance in-kind (uncapped) or in cash (capped at VND730,000/month).

- Clothing allowance in-kind (uncapped) or in cash (capped at VND5 million/year).

- Mobile phone allowance.

- Wages for working at night or overtime in excess of the normal wages.

- Non-compulsory insurance without accumulated premium (e.g. health, accident insurance) for employees.

- Training fees relevant to employees’ profession or in line with the employers’ plan.

- Tuition fees for the children of expatriates working in Vietnam to study in Vietnam and children of Vietnamese working abroad to study abroad from kindergarten to high school level.

- Transportation for conveying employees from their residence to their workplace and vice versa.

- Allowance for marriage and condolences for funeral of the employees and their family members (capped at average one month salary).

- Air ticket for home leave of expatriates working in Vietnam or Vietnamese employees working overseas limited to one trip per year.

- Per diem and business trip expenses.

- Severance allowance paid in line with the labor regulations.

- Social insurance allowance paid by the social insurance authorities.

- Health care, entertainment, beauty services for collective employees without mentioning any specific employee.

The following are examples of some benefits which are subject to concessional PIT treatment:

- Accommodation and electricity, water and associated services provided and arranged by the employer to the employee is taxed at the lower of the actual expenses and 15% of the total taxable income (exclusive of house rental and utilities expenses).

- Life insurance premiums paid by an employer for an employee is taxed at a flat tax rate of 10%.

2.6.4. Deductions

Tax relief for tax residents:

a) Family relief.

- Self relief: VND11 million/month.

- Dependent relief: VND4.4 million/dependent/month ((registration of dependents and submission of supporting documents are required).

b) Compulsory insurances.

c) Voluntary pension contribution. Capped at VND1 million/month on the contributions by both employer and employee.

d) Charity/humanitarian contributions.

2.6.5. Tax rates

Tax rates on employment income

Monthly assessable income (VND)	*Residents ()**	Non-residents
≤ 5,000,000	5%	20%
≤ 10,000,000	10%
≤ 18,000,000	15%
≤ 32,000,000	20%
≤ 52,000,000	25%
≤ 80,000,000	30%
> 80,000,000	35%

Tax rates on non-employment income

Types of income	Residents	Non-residents
Business income	0.5% - 5% (based on type of business income)	1% - 5% (based on type of business income)
Income from capital investment	5%	5%
Income from capital contribution transfer	20% (on net gain)	0.1% (on sales proceeds)
Income from security transfer	0.1% (on sales proceeds)	0.1% (on sales proceeds)
Income from real estate transfer	2% (on sales proceeds)	2% (on sales proceeds)
Income from winning prize (*)	10%	10%
Income from commercial franchises and copyright (*)	5%	5%
Income from gifts and inheritance (*)	10%	10%

(*) PIT is imposed on the income amount portion in excess of VND10 million.

2.6.6. Tax declaration deadline

Description	Deadlines
Tax registration	Within 10 working days from the date the individual incurs tax obligation
Monthly tax filing and payment	By the 20th day following the reporting month
Quarterly tax filing and payment	By the end of the month following the reporting quarter
Year-end finalization filing and payment (withholding tax return)	By the last day of the third month from the end of the tax year
Year-end finalization filing and payment (direct filing)	By the last day of the fourth month from the end of the tax year (for tax year being the calendar year) By the last day of the third month from the end of the tax year (for other tax years)
End of assignment finalization and payment	Prior to leaving Vietnam or within 45 days from the repatriation from Vietnam in case of authorization
Submission of dependent registration (direct family)	By the finalization due date
Submission of dependent registration (others)	By 31 December of the year

2.7. Transfer pricing

The tax authorities have the power to adjust the value of purchases, sales, exchanges and accounting records of goods and services of taxpayers if that value is not in accordance with the arm’s length principle.

The Vietnamese transfer pricing requirements are broadly consistent with those set out in the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. However, it is worth noting that the acceptable arm’s length price under Vietnam’s transfer pricing regulation is a value that falls within a range determined by the 35th to 75th percentile rather than the inter-quartile range, which is the traditionally accepted range.

The applicable transfer pricing methods under the Vietnam’s transfer pricing regulations include:

- Comparable uncontrolled price method.

- Resale price method.

- Cost plus method.

- Profit-split method or profit allocation method.

- Comparable profit method (referred to as Transactional net margin method in the OECD Transfer Pricing Guidelines).

The Vietnamese regulations contain detailed TP documentation requirements

The documentation must be prepared before the submission of the annual CIT return. It does not need to be filed but must be submitted to the tax authority immediatelly upon request of the tax authority in a tax audit. Taxpayers are obliged to comply with the three-tiered TP documentation requirement, including:

- Master file.

- Local file.

- Copy of CbCR prepared by the overseas ultimate parent company in accordance with the laws of the respective parent company’s jurisdiction.

In addition, taxpayers are obliged to prepare and submit certain stipulated disclosure forms together with their CIT finalization returns. If transfer prices are found to be non-arm’s length or non-compliant, then the Vietnamese Tax Authorities may adjust the transfer prices and assess additional taxes and penalties. Companies seeking greater certainty may consider entering an APA. The APA period is three years with a renewal of a maximum three years.

2.8. Double taxation avoidance

Vietnam has signed 80 DTAs with jurisdictions that provide relief from double taxation.

a) DTA application notification procedures

Any benefit arising to a company under a DTA does not apply automatically. In order to take advantage of any relief under a DTA the taxpayer must submit a DTA application to the local tax authority 15 days before the tax payment due date. However, this is not strictly implemented in practice because a DTA application dossier may still be considered as long as it is within the three years time limit.

There are particular cases whereby the tax authority may reject the application under the DTA including:

- The application for exemption/reduction is submitted more than three years after the tax obligation arises.

- The transaction is solely for the purpose of enjoying DTA benefits.

- The applicant is not the true beneficiary of the tax payment being considered for exemption/reduction.

b) Mutual agreement procedures (MAP)

A MAP process is available. All DTAs concluded by Vietnam incorporate a provision on MAP. A MAP request has to be submitted within three years from the date of receiving the first notice from the tax authority leading to the tax treatment deemed by the complainant not to be in accordance with the provisions of the DTA. For this, the complainant must fulfil all tax obligations stated in the tax treatment decisions (which are tax administrative decisions, tax notices, etc.) issued by tax authority before and during the process of settlement of MAP request.

2.9. Special sales tax (SST)

SST is an indirect tax imposed on certain special goods produced, traded, or imported by enterprises in Vietnam.

a) Taxpayer

SST payers include producers and importers of goods and providers of services which are subject to SST. Exporters that purchase SST liable goods from producers for export and do not export but sell them domestically shall also pay SST.

b) Taxable objects and rates

List of tax rates applicable for goods and services:

Goods	Tax rate (%)
Cigarettes, other products derived from tobacco plants	75
Spirit/Wine	35-65
Beer	65
Automobiles having fewer than 24 sears	5-150
Motorcycles with cylinder capacity above 125cm3	20
Aircraft/Yacht	30
Gasoline	7-10
Playing cards	40
Air-conditioners of 90,000 BTU or less (Except for ones equipped on transport vehicles)	10
Votive papers and objects	70

Services	Tax rate (%)
Dancing club business	40
Massage, karaoke, betting business	30
Casino, electronic casino game business	35
Golf course business	20
Lottery business	15

2.10. Business license fee

There is a nominal tax (maximum amount VND3 million) on the registered capital (charter capital or invested capital) of an enterprise. It is collected annually.

3. Customs duty and procedures

3.1. Export duty

Most exported goods are exempt from export duty. Export duty is currently only charged on certain items such as natural resources, wood, metal scraps, etc. The rates range from 0% to 40%.

3.2. Import duty

For imported goods, the applicable import duty rates vary depending on the type of goods imported (i.e., the HS codes of the goods) and the originating countries.

In general, consumer goods, especially luxury goods, and goods that can already be produced in Vietnam are subject to high import duties, while machinery, equipment, materials and supplies necessary for production are subject to lower rates or even zero rated of import duties.

There are three types of import duty rates:

- Preferential rates (i.e., Most Favored Nation rates) for commodities imported from countries or territories that are WTO members or countries that have most favored nation commercial treatment with Vietnam.

- Special preferential rates for commodities imported from countries or territories having FTAs with Vietnam (see details in page 86).

- Ordinary rates which are mostly at 150% of the corresponding preferential rates (i.e., Most Favored Nation rates) applied to the same commodities.

Other additional import duties that may be applied to imported goods include anti-dumping tax, safeguard tax and anti-subsidy tax.

3.3. Dutiable value

The dutiable value of imported and exported goods is the customs value which is determined in compliance with the WTO Valuation Agreement.

3.4. Customs procedures

Registration of a customs declaration with the customs office is required within 30 days from the date the imported goods arrive at the Vietnam check-points. Regarding exported goods, the customs declarations must be registered with the customs office after the exported goods are available and must be at least four hours before the departure of the transport means or at least two hours before the departure of the aircraft where goods are exported via courier. In practice, the export customs declarations are registered with the customs office at least one day before the departure of the transport means.

Customs declarations are subject to a risk assessment which will trigger different levels of inspection by the customs authorities (generally referred to as red, yellow, and green lane).

3.5. Exemption

Exemptions from import duty are granted for certain imported goods, some of which include:

Sector:

- Parts, components, materials that are not yet produced in Vietnam imported for the assembly of automobiles.

- Certain goods imported for oil and gas or shipbuilding activities.

- Materials and supplies that cannot be produced in Vietnam and imported for direct use in production of IT products, digital contents and software.

- Certain goods imported/exported for environment protection activities.

- Goods imported for R&D or education purposes.

Projects entitled to investment incentives:

- Machinery and equipment, special means of transportation and construction materials which are not yet produced in Vietnam imported to form fixed assets of the projects.

- Materials and parts that are not yet produced in Vietnam imported to serve the manufacturing activity of the projects within 5 years from the date of production commencement.

Business scheme:

- Goods imported under toll manufacturing or contract manufacturing models (i.e. goods imported for the production of exported goods).

- Goods temporarily imported within a certain period of time and subsequently re-exported (with some exceptions).

Low value goods:

- Gifts within the respective prescribed limits for individuals and entities.

- Non-commercial goods, e.g., samples, pictures, videos, models and advertisement publications in small quantities.

3.6. Refunds

Import/export duties may be refunded in some cases such as:

- Import duties paid on imported goods which are later exported overseas or non-tariff zones.

- Export duties paid on exported goods which are later re-imported.

- Import duties paid on materials imported to produce goods that are subsequently exported.

- Import/export duties paid on imported/exported goods but the goods are actually imported/exported with a quantity smaller than the quantity on which duty was paid.

3.7. Authorized Economic Operator (AEO)

An AEO can enjoy certain benefits such as:

- Fast-track customs clearance procedures (e.g., all customs declarations are allocated into green lane).

- Exemption from document submission and physical goods inspection.

- Monthly tax payment and submission of C/O (i.e. receive goods first and pay taxes later).

- Exemption from post-clearance audit (unless suspected of fraud).

Some of the conditions, among others, to be granted AEO status:

- Full compliance: no tax offence within two years before AEO application.

- High annual turnover of import/export volumes or being certified by the Ministry of Science and Technology as high-tech enterprises.

3.8. Export Processing Enterprise (EPE)

Enterprises that produce goods for export may register to be an Export Processing Enterprise. An EPE means a company established and operated within an Export Processing Zone or an enterprise specializing in manufacturing exported products within an industrial park or an economic zone. Goods which are imported into the EPE and consumed within the EPE are not subject to customs duty and VAT. Goods exported from the EPE to overseas markets are not subject to export duty.

In order to register as an EPE, the registrant company must satisfy the requirements for customs supervision, e.g. must have hard fences to separate the company with the outside area or must have 24/7 operating cameras.

3.9. Customs inspection and audits

Post-clearance audits are common in Vietnam as customs authorities like to facilitate the customs clearance process for companies’ exported and imported goods and the customs authorities conduct post-clearance audits to monitor companies’ compliance with customs regulations. Needless to say, customs inspection is also focused during customs clearance process based on risk management principles.

During customs audits, customs authorities focus on the following customs compliance areas:

- Inventory balance and the use of the duty-exempted imported goods.

- HS classification.

- Customs valuation.

- Goods’ origin.

- Eligibility for export-import duty exemption.

3.10. Free trade agreements (FTAs)

Vietnam is a signing member of the following FTAs:

FTAs	Signing members
ASEAN Trade in Goods Agreement (ATIGA)	10 ASEAN member countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam)
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)	Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam
ASEAN – Japan Comprehensive Economic Partnership (AJCEP)	10 ASEAN member countries and Japan
ASEAN - Korea FTA (AKFTA)	10 ASEAN member countries and Korea Republic
ASEAN – India FTA (AIFTA)	10 ASEAN member countries and India
ASEAN – China FTA (ACFTA)	10 ASEAN member countries and China
ASEAN- Hong Kong FTA (AHKFTA)	10 ASEAN member countries and Hong Kong
ASEAN - Australia - New Zealand (AANZFTA)	10 ASEAN member countries and Australia, New Zealand
Vietnam – Chile FTA (VCFTA)	Vietnam, Chile
Vietnam – Korea FTA (VKFTA)	Vietnam, Korea Republic
Vietnam – Japan Economic	Vietnam, Japan
Vietnam - Eurasian Economic Union FTA (VN-EAEU FTA)	Vietnam, Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia
Vietnam – European Union FTA (EVFTA) *Goods exported from Vietnam to the EU are still entitled to GSP benefits until 31	Vietnam, 27 EU member states
Regional Comprehensive Economic Partnership (RCEP)	10 ASEAN member countries and Australia, China Mainland, Japan, Korea Republic, and New Zealand
Vietnam – UK FTA (UKVFTA)	Vietnam, the United Kingdom

In addition to the FTAs, Vietnam has also signed trade agreements with Cambodia, Cuba, Laos.

3.11. Proof of origin

Proof of origin is required when exporters/importers claim special preferential duty rates under FTAs or trade agreements. Some commodities must be accompanied with proof of origin when they are imported into Vietnam even where preferential tariffs are not available for such commodities. Proof of origin can be in the form of a paper Certificate of Origin (C/O or COO), an origin statement or self-certification, or an electronic C/O. Each FTA has its own required form of proof of origin.

Generally exported goods are not required to have a proof of origin. Proof of origin for exported goods is applied by exporters for the importing partners to enjoy preferential import tariffs in importing countries.

G-Human resources and employment

1. Working time

The standard working hours should not exceed 8 hours per day or 48 hours per week.

An employer has the right to determine the daily or weekly working hours. However, the daily working hours should not exceed 10 hours per day or 48 hours per week where a weekly basis is applied.

Overtime hours of an employee should not exceed 50% of the normal working hours in a single day.

In case of weekly work, the total normal working hours plus overtime working hours should not exceed 12 hours a day or 40 hours a month.

The total overtime working hours should not exceed 200 hours a year, except in the following cases where an employer may request an employee to work overtime for up to 300 hours in a year provided the employer has first submitted a written notification to the provincial labor authority and obtained agreement from the employee:

- Manufacture, processing of textile, garment, footwear, electric, electronic products, processing of agricultural, forestry, aquaculture products, salt production.

- Generation and supply of electricity, telecommunications, refinery operation water supply and drainage.

- Works that require highly skilled workers that are not available on the labor market at the time.

- Urgent works that cannot be delayed due to seasonal reasons or availability of materials or products, or due to unexpected causes, bad weather, natural disasters, fire, hostility, shortage of power or raw materials, or technical issue of the production line.

- Other cases prescribed by the Government.

Leave days:

- Certain types of leave are paid for by the employer: Public holidays, Annual leave and Personal paid leave.

- Certain other types of leave are paid for by Social Insurance Agency.

Certain types of leave in Vietnam

- Public holidays (Vietnamese: 11 public holidays per year; Foreigners: 1 traditional New Year holiday and 1 Independence Day of their country, in addition to the mentioned 11 public holidays).

- Annual leave (From 12 to 16 working days per year for employees who have been working for an employer for 12 months, depending on their working conditions and type of work Annual leave shall be increased by 1 day for every 5 years of service).

- Leave paid by SI Agency (Pregnant check: 5 working days; Miscarriage: up to 50 days; Maternity leave: 6 months; Contraception: up to 15 days; Parental leave: from 5 to 14 working days; Child sickness (under 7 years old): up to 20 working days depending on child’s age; Self-sickness: up to 60 working days for short day and up to 180 days for long day; Convalescence: up to 10 days).

- Personal paid leave (Marriage: 3 working days; Marriage of child: 1 working day; Death of parents, spouse’s parents, spouse or child: 1 working day).

2. Summary of salary scale by region

Effective from 1 July 2022, the minimum salary by region ranges from VND3,250,000 to VND4,680,000 per month and varies for each city and province.

In addition to the monthly minimum salary, the hourly minimum wage is also applied with the same effective date for those who receive income in the form of an hourly salary payment. Accordingly, employees may earn a minimum hourly rate ranging from VND15,600 to VND22,500 depending on their region.

The following are the statutory contribution rates for employers and employees with respect to social security, health insurance and unemployment insurance:

Vietnamese

	Employer	Employee	Total
Social Insurance	17	8	25
Health Insurance	3	1.5	4.5
Unemployment Insurance	1	1	2
Occupational diseases & accident fund	0.5 or 0.3	0	0.5 or 0.3
Total	21.5 or 21.3	10.5	32 or 31.8

Foreigner

	Employer	Employee	Total
Social Insurance	17	8	25
Health Insurance	3	1.5	4.5
Unemployment Insurance	0	0	0
Occupational diseases & accident fund	0.5 or 0.3	0	0.5 or 0.3
Total	20.5 or 20.3	9.5	30 or 29.8

Source: Article 5, Decision No. 595/QD-BHXH, dated 14 April 2017, issued by the General Director of Vietnam Social Security; Decree 58/2020/ND-CP, dated 27 May 2020, issued by the Government; Resolution No. 68/NQ-CP, dated 1 July 2021, issued by the Government; Resolution 116/NQ-CP, dated 24 September 2021, issued by the Government.

The social and health insurance contribution is calculated based on the salary or wage, allowance and additional payments stated in the labor contract. However, it is capped at 20 times the standard minimum salary provided by the Government. The current capped salary for the social and health insurance contribution is VND29,800,000 (VND1,490,000 x 20). The common minimum salary may change from year to year according to the government’s decision.

The unemployment insurance contribution is only required for Vietnamese employees and calculated based on the salary or wage, allowance and additional payments stated in the labor contract. However, it is capped at 20 times the regional minimum salary, which currently ranges from VND3,250,000 to VND4,680,000, effective from 1 July 2022.

In addition to the monthly minimum salary, the hourly minimum wage is also applied with the same effective date for those who receive income in form of hourly salary payment. Accordingly, employees may earn a minimum hourly rate ranging from VND15,600 to VND22,500 depending on their region.

Also from 1 July 2022, the provision on minimum salary higher than 7% for employees passing apprenticeship is removed as stipulated in the Decree 38/2022/ND-CP, dated 12 June 2022, issued by the Government. However, as per the Official 2086/BLDTBXH - TLDLDVN, dated 17 June 2022 on directing the implementation of Decree 38, issued by the Ministry of Labor, Invalids and Social Affairs – General Confederation of Labor of Vietnam, for the agreed and committed contents in labor contracts, labor agreements, or other legal agreements which are more favorable to employees than the regulations prescribed in Decree 38, shall continue to be implemented, unless otherwise agreed upon by the parties. Accordingly, the contents implemented including the salary regime paid to employees doing jobs and vocational training at least 7% higher than the minimum salary shall continue to be implemented, unless otherwise agreed upon by the two parties as prescribed by law.

Currently the social insurance applies for foreigners who sign labor contracts with Vietnamese entities with a term of 12 months or more and have a work permit or practice license or certificate.

4. Recruitment & Termination of employment

Recruitment, probation and labor contract

- Recruitment: Employers have the right to recruit employees directly or through employment agencies or dispatching agencies Employees shall not pay any recruitment cost.

- Probation: Only one probationary period is allowed for a job and shall not exceed: 180 days for enterprise executive position; 60 days for positions that require college degree or above; 30 days for positions that require a vocational certificate, technicians, and skilled employees; 6 working days for other jobs.

Labor contract: There are two types of labor contracts: An indefinite-term labor contract; A definite-term labor contract, with a duration of up to 36 months. A definite-term labor contract can be renewed only 1 time except for foreigners, directors of state-invested enterprises, elderly people, members of the management boards of the representative organizations.

Cases of Termination of employment

- The contract expires or the agreed work in the contract has been completed without agreement on extension, modification or amendment.

- Both parties agree to terminate.

- The individual employee dies; is declared by a court to have lost civil act capacity, be missing or dead.

- The employee is sentenced to imprisonment without suspended sentence or not in the case of being set free, is sentenced to death or is prohibited from performing the job stated in the labor contract under a legally effective judgment or ruling of a court.

- The individual employer dies; is declared by a court to have lost civil act capacity, be missing or dead. The employer who is not individual has been liquidated or the provincial business registration authority declared that the legal representative of the employer does not implement the rights and obligations in accordance with the law.

- The employer lays off the employee due to structural or technological changes or because of economic reasons, merger, consolidation or division of the enterprise, sale, lease, conversion of business type, transfer of ownership or rights to use other business asset.

- Employees/ Employers unilaterally terminate the labor contract in accordance with law.

- The employee is dismissed.

- Foreign employee working in Vietnam is deported under a legally effective judgment or ruling of a court, decision of relevant competent state agency.

- The work permit of foreign employee working in Vietnam is invalid.

- The employee fails to perform his/her tasks during the probationary period under the employment contract or gives up the probation.

Employer unilaterally terminates the contract

- The employee repeatedly fails to perform his or her work as agreed in the employment contract.

- The employee is sick or has an accident and remains unable to work after having received treatment for a period of 6-12 consecutive months or more than half of the duration of the contract in case of seasonal contract.

- In the event of a natural disaster, fire, major epidemic, hostility, relocation or downsizing requested by a competent authority, the employer has to lay off employees after all possibilities have been exhausted.

- The employee is not present at the workplace after the time limit of the temporary suspension of the employment contract.

- The employee fails to go to work without acceptable excuses for at least five consecutive working days.

- The employee fails to provide truthful information related to their name, date of birth, sex, education level, health condition, etc.

Employee unilaterally terminates the contract

- Is not assigned to the work or workplace or not provided with the working conditions as agreed in the employment contract.

- Is not paid adequately or on schedule as agreed in the employment contract.

- Is maltreated, assaulted, physically or verbally insulted by the employer in a manner that affects the employee’s health, dignity or honor; is sexually harassed in the workplace.

- The employee or their families are in difficult circumstances which prevent them from performing labor contracts (taking care of their families, relocating due to natural disasters, fires).

- The employee is elected to a full-time position in an elected body or is appointed to a position in the state apparatus.

- Is pregnant and has to stop working under confirmation from a competent health facility.

- The employee is sick or has an accident and remains unable to work after having received regularly treatment.

- Employees who suffer from sexual harassment in the workplace (sexual harassment is a sexual nature of any person to another person at work without being accepted).

- The employer fails to provide truthful information related to work, place of work, work hours, salary, insurance, etc.

- May unilaterally terminate the employment contract, subject to prior notice to the employer.

Source: Article 35, Labour Code No. 45/2019/QH14, dated 20 November 2019, issued by the National Assembly of Vietnam.

Employment of foreigners

a) Requirements for employment of foreigners

Only employ foreigners to hold positions of managers, executive directors, specialists and technical workers with professional requirements which cannot be met by Vietnamese workers.

Recruitment of foreign employees in Vietnam is subject to written approval by competent authorities.

b) Work permit

The maximum duration of a work permit is two years. A work permit can only be extended one time with a maximum duration of two years.

After a work permit has expired, foreign workers have to ask for the grant of new work permit.

c) Labor contract

The duration of a foreign employee’s employment contract must not exceed that of the work permit.

A definite-term employment contract may be entered into multiple times with foreigners.

Source: Article 20, 151, 152 and 155, Labour Code No. 45/2019/QH14, dated 20 November 2019, issued by the National Assembly of Vietnam.

5. Work permit and visa application

Procedure and standard timeline for Work permit and Visa application

- Submit the demand for using foreign nationals:

Submitted by: sponsoring entity in Vietnam.

Received by: government body.

Deadline: at least 30 days before recruiting or transferring the foreign nationals to work in Vietnam.

- Submit work permit application:

Received by: local DOLISA.

Deadline: at least 15 days before the expected commencement date.

Processing time at the local authority: 5 business days.

- Submit temporary resident card application:

Received by: Immigration authority.

Only granted after the applicant enters Vietnam using the correct visa.

Processing time at the local authority: 5 business days from date of filing.

- Acceptance or refusal of the demand:

Approved by: local DOLISA

Received by: sponsoring entity in Vietnam.

Deadline: Within 10 business days after receiving the demand.

- Submit labor visa application:

Received by: Immigration authority.

Processing time at the local authority: 5 business days from date of filing.

Source: Decree No. 152/2020/ND-CP, dated 30 December 2020, issued by the Government; Law on Entry, exit, transit, and residence of foreigners in Vietnam No. 47/2014/QH13, dated 16 June 2014, issued by the National Assembly of Vietnam; Law No. 51/2019/QH14, dated 25 November 2019, issued by the National Assembly of Vietnam amending the Law on Entry, exit, transit, and residence of foreigners in Vietnam.

5.1. Entry Visas

All foreigners must have a passport or passport substitute papers that are valid for at least six months and a visa granted by the competent Vietnamese agencies, except for citizens of countries that have visa exemptions included in bilateral consular agreements with Vietnam, such as: ASEAN member countries and Kyrgyzstan) or unilateral agreements with Vietnam (Denmark, Finland, France, Germany, Japan, Korea [South], Italy, Norway, the Russian Federation, Sweden and the United Kingdom.

To legally enter Vietnam, foreigners must apply for a visa corresponding to the entry purpose and provide supporting documents. After the visa is granted, the foreigner is responsible for acting in accordance with the registered purpose of entry.

Foreigners entering Vietnam to work must submit the work permits or work permit exemption certificates in the visa application dossiers. Consequently, work permits or work permit exemption certificates must be obtained before the labor visa application dossiers are filed.

The validity of each visa type differs and corresponds to the supporting documents in the visa application. For example, the maximum duration of a working visa is 24 months, the maximum duration of an investor visa is 5 years, and the maximum duration of a business visa is 12 months.

The current processing time is five working days from the date of filing.

5.2. Work permits

A work permit is required for a foreign national to legally work in Vietnam, except for cases of work permit exemptions. This document is granted only to a foreign national who is sponsored by an entity in Vietnam. A foreigner who enters Vietnam for less than 30 days to work as a manager, executive director, specialist or technician and up to 3 times a year is not required to obtain a work permit. For those who come to work in Vietnam to settle an urgent issue, complicated technical or technological issue which (i) affects or threatens to affect business operation and (ii) cannot be resolved by Vietnamese experts or any other foreign experts currently in Vietnam are also not required to obtain a work permit.

Procedure and standard timeline.

The sponsoring entity in Vietnam must submit a document explaining the need to employ foreign nationals in Vietnam (known as “demand for using foreign nationals) to the competent authority at least 30 days before recruiting or transferring the foreign nationals to work in Vietnam. Within 10 business days from receiving the demand, the local DOLISA must respond to the sponsoring entity in writing regarding the acceptance or refusal of the demand. This letter is considered to be a pre-approval for using foreign employees in Vietnam. This pre-approval letter is one of the compulsory documents for application dossiers for the issuance or extension of a work permit.

A work permit application must be filed with the local DOLISA at least 15 days before the expected commencement working date. The current processing time at the local labor authority is five business days.

The supporting documents in a work permit application that are issued in foreign countries must be legalized in the country of issuance. Depending on the diplomatic relations between Vietnam and the country of issuance, the steps required to legalize the documents may vary.

Qualification requirements.

A foreign national who wants to work in Vietnam must meet the required qualifications for a pre-approval position. They must also be working in a management position or be a specialist or technician. In addition to the above qualifications, foreign nationals will generally fall into one of two major categories: intra-company transfer and local hires. An intra-company transfer must have worked for their home employer for at least 12 months prior to the work permit application. The local hire must sign a local employment contract with the sponsoring entity in Vietnam. Both intra-company transfers, and local hires must submit documentation proving that they meet the necessary criteria.

Work permit exemptions.

There are a number of work permit exemptions for example:

- A foreigner who is a contributing member or owner of a LLC with a capital contribution value of at least VND3 billion.

- A foreigner who is a member of the board of directors of a JSC with a capital contribution value of at least VND3 billion.

- A foreigner who comes to Vietnam for a period of less than three months to offer services.

- A foreigner who is an intracompany transferee of corporations operating within 11 service industries listed under Vietnam’s WTO commitments.

In general, to satisfy the work permit exemption, at least 10 days before the date the foreign national is supposed to begin work, the sponsoring entity must submit a work permit exemption application to the local labor authority.

The local DOLISA must issue a written certificate to the employer within five working days. A written response and explanation is provided if the work permit exemption application is rejected.

5.3. Temporary residence card

A temporary residence card serves as a multipleentry visa with a minimum term of one year. The maximum term of a temporary residence card is subject to the remaining term of the work permit, the work permit exemption certificate, the validity of the business license and the applicant’s passport (whichever is earlier).

A temporary residence card is granted to a foreigner who has a valid work permit or work permit exemption certificate with duration of over one year and their legal spouse and children under 18 years old. Documents proving the relationship between the principal applicant and the dependents must be legalized and translated into Vietnamese for the temporary residence card application.

This card can only be granted after the applicant has entered Vietnam using a valid visa. The current processing time at the local authority is five business days from the date of the filing of the application.

Issued date	Effective date	Expired date
30/12/2023	30/12/2023