VIETNAM Law and Practice Contributed by: Thang Nguyen, Minh Nguyen and Nguyet Le, ACSV Legal
Tax Rates The general tax rate is 20% and applies to all companies (however, from 1 October 2025, a tax rate of 15% will be applied to companies with an annual total revenue not exceeding VND3 billion, and a tax rate of 17% will be applied to compa - nies with an annual total revenue between VND3 billion and VND50 billion) except for those pros - pecting, exploring and extracting oil, gas and other rare resources which are subject to higher tax rates. Tax incentives of a 10% or 17% CIT rate may be applied under certain conditions. Calculation CIT is calculated based on the taxable profit of a company. The elements needed for this calcula - tion are: • total revenue that is domestic or foreign- sourced; • deductible expenses; • non-taxable income; and • carry-forward losses and other assessable income. For expenses to be deductible, the following cri - teria need to be satisfied: • the expenses arose from and are related to the activities of production and business of the enterprise; and • the expenses are supported by complete invoices, source vouchers and/or bank state - ments as stipulated by law – note that it is necessary to provide non-cash payment source vouchers if the expenses reach or exceed VND20 million. Fines, penalties and taxes are not deductible. Under certain conditions, and sometimes lim - ited to a maximum duration, start-up expenses, charitable contributions, payments to foreign
affiliates (royalties, loan interest and service fees), depreciation and amortisation of tangible and non-tangible assets, and interest expenses can be deducted; net operating losses can be carried forward for a certain amount of time. Capital Gains Tax It is important to realise that under Vietnamese law, gains on the disposal of capital or securities in a Vietnamese entity, such as an LLC or JSC, are subject to CIT or PIT. For a corporate entity disposing of capital or securities in a Vietnamese entity, the gain is treated as other income and will be taxed at the standard rate of 20%. However, for a foreign corporate entity that has not had a permanent establishment in Vietnam, performs business in Vietnam for a period of under 183 days, or has not adopted Vietnamese accounting regimes or been issued with a tax code, the CIT tax rate is 0.1% of the proceeds when disposing of securities of a JSC; and when capital of an LLC is disposed, CIT on gains from transfers of capital will be levied at a rate of 20% on the respective income. An emerging trend is the introduction of taxation not only on the transfer of interests in Vietnam - ese entities but also on the transfer of interests in overseas parent companies (both direct and indirect) of Vietnamese companies. Foreign Contractor Tax Foreign organisations and individuals carry - ing out business in Vietnam or deriving income raised in Vietnam may be subject to foreign con - tractor tax (FCT). Generally, FCT is composed of CIT and VAT. The FCT tax rates, and the income used for calculating FCT, vary depending on the transaction and taxpayers’ tax filing status.
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