Taxes, Fees, and Charges: Concepts, Similarities, and Differences

Concept of Taxes
According to Article 3 of the 2019 Law on Tax Administration, tax is defined as:

“Tax is a compulsory payment to the state budget made by organizations, households, household businesses, and individuals in accordance with tax laws.”

In other words, tax is a mandatory financial obligation that all organizations and individuals must fulfill to the State, without being directly tied to any specific public service.

Concept of Fees and Charges
According to Article 3 of the 2015 Law on Fees and Charges:

• Fee: a payment made by organizations or individuals to essentially cover costs, with a service-oriented nature, when a government agency, public non-business unit, or authorized organization provides public services.
• Charge: a fixed amount that organizations or individuals must pay when government agencies provide public services in administrative management, such as issuing passports, identity cards, or licenses.

Similarities Between Taxes, Fees, and Charges

• All are sources of state budget revenue.
• All are compulsory payments by organizations and individuals (unless exempted).
• The amount payable is prescribed by competent state authorities through legal documents.

Distinguishing Taxes, Fees, and Charges
Although all are compulsory contributions to the state budget, taxes, fees, and charges differ in several respects:

• Concept: Taxes are compulsory payments to the state budget, not directly linked to specific services provided. Fees are payments made to receive public services, essentially to cover costs. Charges are fixed payments when government agencies provide administrative services such as passports, certificates, or licenses.
• Legal documents: Taxes are regulated under the Law on Tax Administration and specific tax laws such as the Law on Personal Income Tax, the Law on Corporate Income Tax, and the Law on Export and Import Duties. Fees and charges are generally governed by the 2015 Law on Fees and Charges, with detailed collection levels and scope set out in decrees, circulars, or resolutions of local People’s Councils.
• Role: Taxes are the primary source of state budget revenue, ensuring the operation of government and funding socio-economic development. Fees and charges, in contrast, are secondary sources of revenue, mainly to offset costs of public services or administrative management.
• Scope of application: Taxes are applied uniformly nationwide to all taxpayers. Fees and charges may differ depending on locality or type of service, with collection levels often determined by provincial or municipal People’s Councils.
• Refundability: Taxes are not directly refundable; taxpayers benefit indirectly through social welfare, infrastructure, healthcare, and education. Fees and charges are directly refundable in the sense that the payer immediately receives the corresponding public service.
• Collecting authorities: Taxes are collected by tax authorities as prescribed by law. Fees and charges, besides some types collected by tax authorities, are mostly collected by the agencies or units providing public services or performing administrative management.

Conclusion

• Tax: compulsory payment, not directly linked to services, main source of state revenue.
• Fee: covers service costs, directly refundable through public services.
• Charge: linked to administrative procedures, fixed collection levels set by law.