Tips for Filing Taxes in Vietnam

Here are a few tips from our Coporate Accounting manager, Vinh Le, on how to file taxes in Vietnam. 

When are annual financial statements and tax finalization reports due?

Annual finalization of financial statements, corporate income tax and personal income tax are due on the 90th day of the following year. For the year 2018, finalizations are due on Monday April 1, 2019.

What are the main taxes that need to be paid by companies and individuals in Vietnam?

The four main taxes paid by companies in Vietnam are value added tax, corporate income tax, personal income tax (borne by employer and paid on behalf of employee when withholding), and business license tax. 

CIT, set at 20 percent for most businesses, tends to be the biggest tax expense for corporations. Meanwhile, individuals are required to pay personal income tax, either directly to tax authorities or indirectly if withheld by their employer.

What is the most common mistake made when finalizing taxes?

One of the most common mistakes we see is when companies pay in cash for invoices of VND 20 million and above. Transactions of VND 20 million and above cannot be paid in cash, and non-compliance leaves companies vulnerable to penalties. 

A mismatch between expenditure and revenues, as well as recording revenue and expenditure in the wrong time period, also regularly occur. 

Lastly, many international companies engage in related-party transactions without compiling the adequate transfer pricing documentation.

What is the most efficient way to reduce your tax burden?

A rapidly growing country, Vietnam often changes its tax legislation and incentives to attract investment and achieve its development objectives. Companies can benefit from significant tax burden reductions by setting up within regions with favorable tax incentives. 

Keeping up to date on changes in tax laws is equally important. We recommend using professional tax consulting and accounting services, with experience elaborating strategies geared towards each business’ needs, to reduce your company’s tax liabilities.