1. The importance of tax payment for businesses

Contribute to the construction and development of the country

• Taxes are the main source of revenue for the state budget, playing an important role in the construction and development of the country.
• Businesses paying taxes in full and on time contribute to fulfilling obligations and responsibilities to the community, while also demonstrating good citizenship spirit.

Creating a fair and transparent business environment 

• Tax payment ensures fairness in business practices, avoiding unfair competition. 
• Businesses that pay taxes fully will create trust among customers, partners, and investors.

Promote business development 

•  Timely tax payment helps businesses avoid administrative penalties, saving costs and time. 
• Businesses can utilize tax incentives for investment, business development, and enhancing competitiveness.

Enhance Business Reputation and Brand

•  Businesses that fully pay taxes on time will build a strong reputation and brand in the market. 
• This helps businesses attract customers, partners, and investors, enhancing their competitive position.

Avoid Legal Risks

• Inadequate or delayed tax payments can lead to legal risks such as penalties, tax recovery, and even criminal prosecution. 
• Businesses need to comply with tax laws to protect their rights and business  operations.

 2. Main Types of Taxes

a) Corporate Income Tax (CIT)

Concept: Corporate income tax (CIT) is a direct tax levied directly on the taxable income of businesses during a tax period. 

Taxpayers: Businesses with income from the production, trading of goods and services, and other income as prescribed by law.

Tax Rate: The standard tax rate for all businesses is 20%, except for a tax rate of 32% to 50% applied to oil and gas exploration, exploitation, and other rare resources in Vietnam as prescribed in Article 11 of the Law on Corporate Income Tax 2008 amended and supplemented in 2013.

Tax Base: Taxable income is the total revenue minus allowable expenses as prescribed by law.

Tax Calculation: The corporate income tax payable in a tax period is calculated by multiplying the taxable income by the tax rate.

Tax Due Dates:

• Monthly CIT on the 25th or 26th of each month.
• Quarterly CIT on the 25th or 26th of the first month after the quarter-end.
• Annual CIT on the 25th or 26th of April of the following year.

Tax Payment Procedures: Businesses can pay CIT through banks, post offices, or directly at tax offices.

Late Payment Penalties: Businesses that pay taxes later than the prescribed deadline are subject to penalties as prescribed in Article 10 of the Law Amending and Supplementing a Number of Articles of the Tax Administration Law 2007.

b) Value-Added Tax (VAT)

Concept: Value-Added Tax (VAT) is an indirect tax levied on the value added of goods and services during production, circulation, and consumption process.

Taxpayers:

• Goods and services: Produced and traded in Vietnam and imported into Vietnam.
• Businesses: Supplying taxable goods and services and importing taxable goods.

Tax Rates:

• 10% applied to most goods and services.
• 0% applied to specific groups of goods and services, such as: Education, healthcare, cultural, and sports services; Exported goods and services.
• 5% applied to specific groups of goods and services, such as: Domestic and industrial water supply; Unprocessed agricultural, livestock, and fishery products (excluding products subject to non-taxation).

Tax Base:

• Actual payment value: For goods and services supplied domestically.
• Customs value: For goods imported into Vietnam.

Tax Calculation:

• Output VAT: VAT charged by businesses to purchasers of goods and services.
• Input VAT: VAT paid by businesses when purchasing input goods and services.
• VAT payable: Output VAT minus input VAT.

Tax Due Dates:

• Monthly: Businesses with revenue of VND 100 billion or more.
• Quarterly: Businesses with revenue from VND 20 billion to under VND 100 billion.
• Annually: Businesses with revenue under VND 20 billion.

Tax Payment Procedures: Businesses can pay VAT through banks, post offices, or directly at tax offices.

Late Payment Penalties:  Businesses that pay taxes later than the prescribed deadline are subject to penalties as prescribed in Article 10 of the Law Amending and Supplementing a Number of Articles of the Tax Administration Law 2007.

c) Individual Income Tax (IIT) 

Concept: Individual Income Tax (IIT) is a direct tax levied directly on the taxable income of individuals arising during a tax period.

Taxpayers: Individuals with income from sources such as:

• Salaries, bonuses, wages
• Income from business and service activities
• Income from financial investments
• Income from the transfer of ownership of assets
• Income from winnings and prizes
• Income from other sources as prescribed by law

Tax Rates: IIT rates are applied according to income level as follows:

Tax Base: Taxable income is the total income from taxable sources minus deductions as prescribed by law.

Tax Calculation: The individual  income tax payable in a tax period is calculated by multiplying taxable income by the tax rate.

Tax Due Dates: Individuals pay IIT monthly or quarterly as prescribed by law.

Tax Payment Procedures: Individuals can pay IIT through banks, post offices, or directly at tax offices.

Late Payment Penalties:  Individuals that pay taxes later than the prescribed deadline are subject to penalties as prescribed in Article 10 of the Law Amending and Supplementing a Number of Articles of the Tax Administration Law 2007.

d) Business Registration Fee (License Fee)

Concept: The Business Registration Fee (also known as the License Fee) is a tax levied on organizations, households, and individuals engaged in business and service activities in Vietnam.

Taxpayers:

• Organizations: With headquarters or branches, representative offices in Vietnam, engaging in business and service activities and having chartered capital or investment capital of VND 10 billion or more.
• Households: With revenue from business and service activities of VND 500 million or more per year.
• Individuals: Engaged in business and service activities with revenue of VND 500 million or more per year.

Tax Rates: Business Registration Fee rates are prescribed in Article 4 of Decree 139/2016/ND-CP and Article 4 of Circular 302/2016/TT-BTC, specifically as follows:

• For Organizations:

• For Households and Individuals:

Tax Base:

• For Organizations: Chartered capital/investment capital of the organization at the time of tax payment.
• For Households and Individuals: Revenue from business and service activities of households and individuals in the tax year (calendar year).

Tax Calculation: The amount of Business Registration Fee payable = Tax rate x Adjustment factor.

Tax Due Dates:

• Organizations:

Pay within 30 days from the date of establishment or the date of granting a business license.

Pay within 30 days from the first day of the month following a change in chartered capital/investment capital.

• Households and Individuals:

Pay within 30 days from the date of commencement of business and service activities.

Pay within 30 days from the first day of the month following a change in revenue.

Tax Payment Procedures: Organizations, households, and individuals can pay the Business Registration Fee through banks, post offices, or directly at tax offices.

Late Payment Penalties: Organizations, households, and individuals  that pay the business registration fee later than the prescribed deadline are subject to penalties as prescribed in Article 10 of the Law Amending and Supplementing a Number of Articles of the Tax Administration Law 2007.