Quarterly Value added tax (VAT) is declared quarterly in case turnover declared in the previous taxable year is less than 50 billion VND. Newly established companies can declare VAT quarterly too. Withholding tax for personal income tax (PIT) is declared quarterly in case a company declares VAT quarterly, irrespective of the withholding tax amount. And if a company declares VAT monthly and the amount of personal income tax which the company must pay is less than 50 million VND in the first month the Company incurs personal withholding tax, the company can file and pay personal income withholding tax quarterly. Monthly VAT is declared monthly in case turnover declared in the previous taxable year is 50 billion VND or more. Companies eligible for quarterly declaration can apply monthly declaration after informing tax authorities of applying monthly declaration in writing. Personal income tax is declared monthly in case the amount of personal income tax which the company must pay in the month tax obligations firstly arise is 50 million VND or more. Currently corporate income (CIT) tax return is not required to submit quarterly, but tax payment is still required if you have tax liabilities.
Corporate income tax (CIT): 22% (from January 2016, 20%) When the prior year revenue amount does not exceed 20 billion VND, the tax rate of 20% is applied. Personal income tax (PIT): Progressive rate from 5 to 35% is applied to salaries, wages and income from business for resident individuals. Flat rate of 20% is applied to salaries and wages for non-resident individuals. Value added tax (VAT): 10% (this standard rate is applied to goods and services other than items listed below) 5% (water services, medical and educational equipment, etc) 0% (export of goods and services, sales of goods and delivery of service to EPE, international transportation service etc) Exemption (land use right, financial service, computer software, education and training, etc)
The deadline for tax returns required to be submitted monthly is the 20th of the following month. For instance, if you declare value added tax return in July 2015, the deadline for submission is August 20, 2015. The deadline for tax returns required to be submitted quarterly is 30th of the following month. For example, your 2nd quarterly personal income tax return is due on July 30.
Following countries have tax treaties for the avoidance of double taxation: Australia, Austria, Bangladesh, Belarus, Belgium, Brunei, Bulgaria, Canada, China, Cuba, Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Republic of Korea, North Korea, Kuwait, Laos, Luxembourg, Malaysia, Mongolia, Morocco, Myanmar, Netherlands, New Zealand, Norway, Oman, Pakistan, Palestine, Philippines, Poland, Qatar, Romania, Russia, Saudi Arabia, Serbia, Seychelles, Singapore, Slovak Republic, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Tunisia, Ukraine, United Arab Emirates, United Kingdom, Uzbekistan and Venezuela.
If you are a citizen of a country or territory that has entered into an agreement on double taxation and prevention of tax avoidance with Vietnam, you are required to calculate personal income tax from the month you arrived at Vietnam (if you came to Vietnam for the first time) to the month in which the labor contract expires and you leave Vietnam. So, you do not need to include salary paid in your county prior to coming to Vietnam.
In general, moving expenses paid for foreign expatriates coming to Vietnam (not the expenses paid to go back to the home country) are non taxable. The house rent paid directly by the employer on behalf of the employee shall be included in the taxable income according to the actual amount paid, which must not exceed 15% of the total taxable income (excluding house rent). If the tuition is directly paid by the employer and meets certain requirements, the fee for children of foreign employees in Vietnam to study in Vietnam is not taxable. Please note that if such rent or tuition was paid by the employee and was reimbursed by the employer, such expenses are treated as taxable income of the employee.
VAT shall be declared on a monthly or quarterly basis. Every 3 years, the Company needs to reassess the filing method, which is based on the revenue in the base year. VAT is declared quarterly in case turnover declared in the previous taxable year is less than 50 billion VND. If turnover is 50 billion VND or more, monthly filing is required. Once the method is selected, it needs to be applied consistently for 3 years.
Expenses must meet the following 3 conditions in order to be deductible for tax purpose. – Actual expenses related to business activities – Expenses evidenced with VAT invoice and other supporting documents – Expenses with an evidence of payment for payments over 20 million VND (payments over 20 million VND need to be made via non-cash payment method, such as bank transfer.) You must obtain and keep VAT invoice, payment evidence, and other supporting documents such as contracts. Please keep in mind that regulations in Vietnam are much more strict in terms of level of detailed requirements in supporting documents as compared with other countries, such as in US.
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