1. Inconsistencies and frequent changes in tax regulations

Tax regulations in Vietnam are subject to constant changes and inconsistencies, making compliance and financial planning challenging. Investors need to stay updated on tax law changes to avoid legal and tax risks that could lead to investment budget losses. For FDI enterprises, selecting professional consulting services familiar with legal regulations is essential.

2. Revenue recognition risks

In the dental service sector, the primary source of customers is individuals, which can lead to risks such as not issuing invoices and not recognizing revenue from individuals. This significant potential risk could result in penalties if the business fails to recognize revenue and avoids corporate income tax.

3. Expense recognition risks

Determining taxable income and deductible expenses can be challenging due to the complexity and frequent changes in regulations. To be recognized as deductible, investors must ensure that expenses are recorded according to Vietnamese law, such as:

• Actual expenses incurred for business activities
• Complete and valid invoices and documents
• Payments over 20 million VND must be made via non-cash methods In the dental sector, aside from high-value equipment, there are many small expenses. Investors should be cautious in recognizing deductible expenses.

4. Value-Added Tax (VAT) risks

Medical services, including dental, may be exempt from VAT according to the law. However, determining which services are exempt and which are taxable can be complex and confusing. According to tax law, products used as artificial replacements for body parts, including long-term implants, crutches, wheelchairs, and specialized tools for the disabled, are exempt from VAT. Therefore, dental services like root canals, dentures, teeth cleaning, gum treatment, extractions, fillings, and endodontic treatment are VAT-exempt. However, cosmetic dental services that do not meet the VAT exemption criteria are subject to a 10% VAT rate.

5. Invoice issuance risks

For dental services, invoices should be issued at the completion of the service, regardless of whether payment has been received. If payment is received before or during service provision, the invoice should be issued at the time of payment (excluding deposits or advance payments for services such as accounting, auditing, financial, tax consulting, appraisal, supervision consulting, technical design, and construction project investment consulting). Dental services typically require multiple visits and long-term treatments, and different services may fall under different VAT categories, necessitating careful invoice issuance to avoid mistakes.

6. Accounting risks

The dental field includes a wide range of services, such as dental treatments (extractions, fillings, whitening, scaling), orthodontics, and cosmetic dental procedures like implants. Each service has specific cost standards tailored to individual needs, making cost accounting complex and requiring meticulous tracking by accounting personnel.

7. Tax inspection and audit risks

The Vietnamese tax authorities may conduct periodic inspections and audits, posing risks of detecting discrepancies in tax declarations and payments, leading to fines and interest on late payments. Investors need to maintain comprehensive, accurate, and transparent accounting and tax records to mitigate this risk.

Therefore, investors in the dental sector in Vietnam need a deep understanding of tax regulations and should implement risk management measures to ensure compliance and minimize legal and financial risks. Assistance from tax experts and legal advisors can help investors navigate these complexities effectively.

If you have any further questions, please contact TPM via our website: tpm.com.vn or Hotline: 090 298 1080 for the quickest support.