2017越南税务简报（英文版）

Summary of International Tax Highlights in Vietnam (2017)

Core Content Overview

This summary outlines the key aspects of the international tax framework in Vietnam as of 2017, covering corporate and personal taxation, withholding tax, value added tax (VAT), and related compliance and anti-avoidance rules.

Corporate Taxation

Basis of Taxation

• Residence: A corporation is considered a resident if it is incorporated in Vietnam.
• Taxable Income: Tax is imposed on a company's profits, including those of its affiliates and branches.
• Taxable Revenue: Includes income from goods sales, services, asset leasing/sale, property transfer, joint ventures, and financial operations.
• Dividends: Dividends paid by Vietnamese companies to corporate shareholders are not subject to tax.
• Capital Gains: Capital gains are taxed at the standard corporate tax rate of 20%.
• Losses: Losses can be carried forward for up to five years to offset taxable income. Carryback is not allowed. Losses from real property or investment projects can be offset against normal business profits in the same tax period.
• Tax Rates:
  • Standard corporate rate: 20%
  • Oil and gas/natural resource sectors: 32% to 50% depending on the project
• Foreign Tax Credit: Foreign taxes paid can be credited against Vietnamese tax, but only based on pretax income. The credit is limited to the amount of Vietnamese tax payable on the foreign income.
• Incentives:
  • 10% tax rate for 15 years on encouraged investment projects
  • 17% tax rate for 10 years on socio-economically disadvantaged locations
  • Tax holidays of up to 4 years and 50% tax reduction for up to 9 years from the first profit-making year or the fourth revenue-generation year
• Withholding Tax:
  • Dividends: No tax on overseas dividends unless paid to an individual, then 5% withholding tax applies
  • Interest: 5% withholding tax on nonresident interest, subject to treaty reductions
  • Royalties: 10% withholding tax on nonresident royalties, subject to treaty reductions
  • Technical Service Fees: 5% corporate tax and 5% VAT, potentially exempt under tax treaties
• Anti-Avoidance Rules:
  • Transfer Pricing: Follows OECD guidelines, with several permitted methods. Contemporaneous documentation is required, and tax authorities can adjust profits if pricing is not at arm's length.
  • Advance Pricing Agreements (APAs): Available to align transfer pricing with tax authorities.
• Compliance:
  • Tax Year: Fiscal year; companies must notify tax authorities if they differ from the calendar year
  • Filing:
    • Quarterly provisional tax payments based on estimates
    • Annual declaration within 90 days of fiscal year-end
  • Penalties:
    • 0.03% per day for late tax payments (from 1 July 2016)
    • 20% on underreported amounts
    • Up to 300% for tax evasion
  • Tax Rulings: Available for clarification on specific tax matters

Personal Taxation

Basis of Taxation

• Residents: Taxed on worldwide income
• Nonresidents: Taxed only on Vietnamese-source income

Residence Definition

• An individual is considered a resident if they:
  • Spend 183 days or more in Vietnam in a 12-month period
  • Maintain a residence in Vietnam
  • Lease a residence for 183 days or more, unless they can prove residence in another country

Taxable Income

• Employment Income: Fully taxable, including most employment benefits
• Other Taxable Income: Includes dividends (except interest on bank deposits, life insurance, and government bonds), capital gains from securities trading, private business income over VND 100 million, and income from franchising, inheritance, land use rights, gifts, and prizes (excluding casino winnings)

Deductions and Allowances

• Deductions are available for compulsory social security contributions
• Non-taxable: Severance allowances, redundancy compensation, and "non-accumulative" insurance premiums
• Other deductions include personal, dependent, voluntary retirement fund, and charitable contributions

Tax Rates

• Employment Income: Progressive rates from 5% to 35%
• Non-employment Income: Rates from 0.1% to 20%
• Capital Gains from Shares/Immovable Property: Taxed at 20%

Other Taxes and Compliance

Value Added Tax (VAT) and Special Sales Tax (SST)

• Taxable Transactions: Sale of goods and provision of services
• VAT Rates: 0%, 5%, and 10%
• SST Rates: 10% to 70%
• Registration: Required within 10 days of establishment for organizations and individuals engaged in taxable activities
• Filing:
  • Monthly filings by the 20th day of the following month
  • Quarterly filings allowed for certain taxpayers, due by the 30th day of the following quarter

Other Taxes

• Real Property Tax: Levied by municipal authorities (e.g., land rental tax, land use fees)
• Stamp Duty: Applies to property transfers at 0.5% to 20%
• Social Security Contributions:
  • Vietnamese employees: 8% SI, 1.5% HI, 1% UI
  • Foreign employees: Only HI applies

Compliance for Individuals

• Tax Year: Calendar year
• Filing and Payment: Tax on employment income is withheld by employers. Individuals must file tax returns and make final payments by 30 March of the following year
• Penalties: Same as for corporations, including 0.03% per day for late payments, 20% on underreporting, and up to 300% for evasion

Sources of Tax Law

• Tax Laws: Law on Tax Administration, Law on Corporate Income Tax, Law on Personal Income Tax, Law on Value Added Tax, Law on Special Sales Tax, Social and Health Insurance Laws
• Tax Treaties: Vietnam has signed over 70 income tax treaties

Tax Authorities

• Provincial Tax Departments
• General Department of Taxation

Contact Information

• Thomas McClelland: tmcclelland@deloitte.com

Deloitte is a global network of member firms, each independent and legally separate. This document provides general information and does not constitute professional advice. Always consult a qualified tax adviser before making decisions.