After successfully setting up company in Vietnam, one of the key issues that every entreprener must be aware about is the accounting system of the company as it is impossible to operate in Vietnam if the company does not have Chief Accountant, or Accounting Service Provider.
With the ambition to provide our clients with one-stop service, ExportHelp Asia not only offers company formation service but also assist clients in all their ways of doing business in Vietnam, and our Tax & Accounting service is one of our support services for Clients.
The Vietnamese taxation system has the following forms of taxes:
• Corporate income tax;
• Personal income tax of Vietnamese and expatriate employees;
• Various withholding taxes;
• Capital assignment profits tax;
Vietnam personal income tax rates are progressive to 35%. Nonresidents are taxed at a flat tax rate of 20%. Nonemployment income is taxed at rates from 0.1% to 25%.
Corporate income tax
The standard corporate tax rate is 22 percent with effect from 1 January 2014 (previously the rate was 25 percent). The standard corporate tax rate will further reduce to 20 percent from 1 January 2016. Preferential tax rates can be obtained for encouraged projects. See “Other incentives” section for further details. Certain industries may have a higher tax rate applied (e.g. oil and gas operations and natural resources industry − 32 percent to 50 percent).
1. Statutory requirements
A newly established company is required to appoint a chief accountant, who meets the qualifications prescribed under the Accounting Law, within the first fiscal year. During this period, a qualified accountant appointed by the FIE shall be responsible over all accounting activities. All Fies operating in Vietnam are required to apply the Vietnamese Accounting Standards and System (VAS) as statutory financial reporting framework. Provided the VAS is applied without modifications, the registration for the use of VAS with the MoF is not required.
Methods of Payment
Most foreign firms exporting to Vietnam conduct business on a documentary basis and use various methods of payment, such as letters of credit (L/Cs), drafts and wire transfers. All foreign businesses dealing with Vietnam should insist on using confirmed, irrevocable L/Cs when initiating relationships with new importers and distributors. Vietnamese companies often will resist the use of confirmed L/Cs, because of the additional cost and collateral requirements required by Vietnamese and international banks.
Through two sets of indicators, Doing Business assesses the legal rights of borrowers and lenders with respect to secured transactions and the sharing of credit information. The depth of credit information index measures rules and practices affecting the coverage, scope and accessibility of credit information available through either a public credit registry or a private credit bureau. Credit information systems mitigate the 'information asymmetry’ in lending and enable lenders to view a borrower’s financial history (positive or negative), providing them with valuable information to consider when assessing risk.