Corporate Income Tax
The current corporate income tax rate is 22%, which will be reduced to 20% from 2016 onwards. Enterprises operating in the oil and gas and natural resource sectors are subject to taxes of 32% to 50%, depending on the project.
Income Tax Rate
- 0 – VND 5,000,000: 5%
- VND 5,000,001 – 10,000,000: 10%
- VND 10,000,001 – 18,000,000: 15%
- VND 18,000,001 – 32,000,000: 20%
- VND 32,000,001 – 52,000,000: 25%
- VND 52,000,001 – 80,000,000: 30%
- Above VND 80,000,001: 35%
Resident individuals are taxed on their worldwide income, while non-residents are only taxed on Vietnamese-sourced income.
Individuals are considered Vietnamese residents for tax purposes if he/she:
- Resides in Vietnam for an aggregate of 183 days or more in a calendar year or in a continuous 12-month period, beginning on the first date of arrival. In calculating the number of days, the arrival and departure dates are counted as one day in total.
- Persons having a permanent residence in Vietnam, including a registered residence that is recorded on the Permanent or Temporary Resident Cards of foreigners.
- Persons having a house lease that has a total term of 183 days or more. The total term of a lease equals the sum of the lease terms for different leased locations in a tax year, including hotels, motels, working places and offices.
Individuals are subject to Vietnamese personal tax on income from the following categories:
- Income from business
- Income from employment
- Income from capital investment
- Income from capital transfers
- Income from transfers of real property
- Income from royalties
- Income from franchising
- Income from winnings or prizes
- Income from the receipt of inheritances
- Income from the receipt of gifts
VAT is imposed on the supply of taxable goods and services in Vietnam. Taxable persons charge VAT on their taxable supplies (output tax) and are charged with VAT on goods which they receive (input tax).
The current standard rate of VAT imposed on taxable goods and services is 10%, with reduced rates of 0% (exports) or 5% (essential goods/services).
Vietnam imposes withholding tax (WHT) on certain classes of income earned by non-residents:-
- Dividends: No WHT applies unless paid to an individual, where a 5% WHT would apply.
- Royalties: 10%
- Interest: 5%
Foreign contractor tax on the provision of goods and services from overseas organisations (except for pure trading transactions), which comprises corporate income tax and VAT at a total combined rate: Ranges from 0.1-15%
A reduced rate may be available under an applicable Double Tax Treaty.
Income Tax (Personal Allowance)
- The resident individual that has a labour contract will be subjected to the following rates. Current PIT personal relief is 9,000,000VND, and dependent relief is 3,600,000VND
- The resident individual who has no labour contract will be subjected to the PIT rate of 10%
- The non-resident individual will be subjected to the PIT rate of 20%
Time to prepare and Pay Taxes
Employers Social Security and statutory contributions
Employers are required to make the following contributions: 18% to social insurance, 3% to health and 1% for unemployment.
Employees Social Security and statutory contributions
Employees are required to make the following contributions: 8% to social insurance, 1.5% to health and 1% for unemployment. Foreign employees are only required to contribute to health insurance.
Foreign companies operating in Vietnam may find it challenging to deal with the complexities of the country’s tax system. The primary concerns for a foreign company that needs to comply with tax laws in Vietnam are: Individual income tax (IIT) for employees in Vietnam, social security costs, VAT, withholding tax, business tax and permanent establishment concerns.
A remote payroll in Vietnam is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Vietnam. This applies to both local and foreign employees. One option for a non-resident company to payroll its employees (local and foreign) in Vietnam is to use a fully outsourced service like a GEO or PEO which will employ and payroll the staff on their behalf.
Local Payroll Administration
In some cases, a company will register their business in Vietnam under one of the forms available but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.
Larger companies with a commitment to Vietnam may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete the incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Vietnam payroll and can fulfil all tax, withholding tax and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Vietnamese employment laws.
Setting up payroll in Vietnam
Vietnamese dong, ₫
Social Security Registration
The Social Department provides social security protection to employees and their dependents through social security schemes and by increasing awareness of occupational safety and health for the well being of employees and their families.
Invoice / Payslips required
Yes. Monthly available as pdf.