Tax & Accounting

Annual Tax Finalization and Remittance in Vietnam

Posted on by

By: Dezan Shira & Associates
Editor: Maxfield Brown

Prior to transferring profits back to their home markets, foreign companies maintaining operations and taking in revenue in Vietnam must fulfill certain annual compliance requirements. These involve a statutory audit, audited financial statements, and tax finalization filings. Annual compliance procedures are not only required by law but are also a good opportunity to conduct an internal financial health check.

Pursuant to compliance, all foreign-invested entities are required to have their annual financial statements audited by an independent auditing firm. Statutory audits in Vietnam are performed in accordance with the Vietnam Standards on Auditing while financial reporting must be conducted in accordance with Vietnamese Accounting Standards (VAS). Standards in Vietnam can often differ significantly from those utilized in a company’s home market and should, therefore, be studied closely to ensure that all aspects of reporting and review are in compliance. During this process, the manner in which reporting and review are conducted should also be considered in the context of any and all reporting and finalization requirements that a company may have in its home market. 

DZS RELATED: Dezan Shira & Associates’ Business Advisory Services

Screen Shot 2017-03-10 at 1.41.05 PM

Filling deadlines

Audited financial statements and tax finalization filing must be done within 90 days from the end of each financial year. After fulfilling these obligations, and giving notice to local managing tax offices at least seven working days in advance, foreign investors may remit profits abroad. It should be noted that annual compliance for ROs is different from that for other foreign-invested entities. An RO is required to report on its activities to a local department of trade prior to the last working day of January of the following year.

Reporting compliance

As part of the reporting process, all of the applicable forms outlined below should be submitted in relation to the operations of a given company. The company will also be required to file forms related to any corporate income tax (CIT) incentives that are claimed or other deductions that the company has utilized during the fiscal year. 

Screen Shot 2017-03-13 at 5.35.47 PM

Late payment and tax evasion penalties

A taxpayer who pays tax later than the deadline is to pay the outstanding tax amount plus a fine equal to 0.03 percent of the tax amount for each day the payment is late. Taxpayers that make incorrect declarations, thereby reducing taxes payable or increasing refundable tax amounts are to pay the full amount of the under-declared tax or return the excess refund, and will also pay a fine equal to 20 percent of the under-declared or excess refunded tax amounts together with a fine for late payment of the tax. A taxpayer that commits acts of tax evasion or tax fraud is liable to pay the full amount of tax and a fine between one and three times the evaded tax amount.

Optimizing annual compliance

While Vietnam is one of ASEAN’s rising stars, the nation is also stuck with among the most complex and time-consuming tax systems within the region. Although many aspects of taxation can be complex, annual finalization places a particularly significant burden upon many investors. To the credit of Vietnam’s government, there have been substantial improvements to the compliance process in recent years, however, there is still significant room for improvement. On top of this, the swiftly maturing nature of tax and compliance have and will continue t0 add to a degree of uncertainty in the years to come.

To maintain compliance with Vietnamese law, and ensure that profits can be remitted without issue, it is advisable for companies to direct any and all inquiries to Vietnam’s Ministry of Finance or professional service firms operating within the country. Both parties will be able to clarify the nature of prevailing compliance and often can provide a level of practical nuance that is not available within legislation or official guidance that has been issued to date. 


About
 Us

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email vietnam@dezshira.com or visit www.dezshira.com.

Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.

Related Reading Icon-VB

dsa brochureDezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.

DSA_Doing Business in Vietnam 2017_cover_126x90px

An Introduction to Doing Business in Vietnam 2017
An Introduction to Doing Business in Vietnam 2017 will provide readers with an overview of the fundamentals of investing and conducting business in Vietnam. Compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, this guide explains the basics of company establishment, annual compliance, taxation, human resources, payroll, and social insurance in this dynamic country.

VB_2016_12_en_Managing_Contracts_and_Severance_in_Vietnam_-_Cover (1)

Managing Contracts and Severance in Vietnam
In this issue of Vietnam Briefing, we discuss the prevailing state of labor pools in Vietnam and outline key considerations for those seeking to staff and retain workers in the country. We highlight the increasing demand for skilled labor, provide in depth coverage of existing contract options, and showcase severance liabilities that may arise if workers or employers choose to terminate their contracts.

Continue reading…

Vietnam to Implement Landmark Transfer Pricing Update in Convergence with BEPS

Posted on by

By: Dezan Shira & Associates
Editor: Maxfield Brown

Following a general trend of convergence with Base Erosion Profit Shifting (BEPS) guidelines within the Association of South East Asian Nations (ASEAN), Vietnam has introduced groundbreaking transfer pricing rules with significant implications for companies conducting related party transactions. Announced February 24, changes outlined under Decree No.20/2017/ND-CP are set to become effective May 1, replacing previously standing guidance stipulated in Circular No. 66/2010/TT-BTC. 

Broadly speaking, transfer pricing (TP) rules focus on the monitoring and regulation of transactions between entities deemed to be related to one another, through the ownership of one company by the other. Often, TP regulations are used to prevent companies from utilizing inflated or deflated transaction costs as means of minimizing tax exposure.

For foreign companies choosing to incorporate subsidiaries in Vietnam, the many benefits that these corporate profiles afford often come with the added cost of exposure to TP regulation and compliance. However, with a firm understanding of regulations, it will be possible to understand the law and to ensure compliance effectively. 

Given the rapidly changing nature of transfer pricing regulation in Vietnam, it is of utmost importance that investors employ stringent monitoring of Vietnamese legislation and direct questions to the Ministry of Finance or professional service firms operating within the country. 

Continue reading…

Investing in Hanoi’s Hoa Lac High-tech Park

Posted on by

By Alexander Chipman Koty

Established in 1998, Hanoi’s Hoa Lac High-tech Park (HHTP) was Vietnam’s first high-tech park and is currently the country’s largest. While Vietnam has over 190 industrial parks and plans to increase this number to 500 by 2020, HHTP is one of only three national-level high-tech parks, alongside Saigon High-tech Park and Danang High-tech Park. The HHTP was created with the intention to become Vietnam’s leading high-tech industry cluster for manufacturing, research and development, and innovation.

Due to start-up difficulties and incomplete infrastructure, the park initially struggled to attract high profile investors. However, Vietnam has rapidly industrialized since the park’s establishment, becoming a leading recipient of foreign direct investment and an increasingly prominent electronics manufacturer. As a result, the HHTP has become equipped with higher quality infrastructure, and is beginning to fulfill its promise as a tech hub. While Ho Chi Minh City has pulled ahead as Vietnam’s most popular area for investment, Hanoi can be particularly advantageous for operations with supply chains in China due to the city’s proximity to the border.

Continue reading…

Taxation of Export Processing Enterprises in Vietnam

Posted on by

By Dezan Shira & Associates
Editor: Harry Handley

It is becoming easier to trade across borders from Vietnam, according to the World Bank’s Doing Business Guide. Due in large part to Vietnam’s proximity to China and the country’s access to the ASEAN free trade area, exports of goods added up to over US$170 billion in 2016. The government expects export sales to be one of the key drivers for economic growth in 2017, and is targeting a 6.7 percent increase in the value of exports this year.

The presence of a number of Export Processing Zones (EPZs), which offer tariff-free trade, and low cost labor make Vietnam an ideal location for Export Processing Enterprises (EPEs). Due to their location within EPZs, these businesses benefit from unique tax treatment, which has recently been amended and will be discussed below. Firstly, it is important to understand the definition of an EPE.

Continue reading…

Accounting and Bookkeeping in Vietnam – New Issue of Vietnam Briefing Magazine

Posted on by

The latest issue of Vietnam Briefing magazine, titled “Accounting and Bookkeeping in Vietnam“, is out now and available to subscribers as a complimentary download in the Asia Briefing Publication Store.

In this issue:

  • Navigating VAS: A Guide to Vietnamese Accounting Standards
  • VAS and the IAASB: Understanding Key Differences
  • Expert Advice: Optimizing Bookkeeping in Foreign Investment Projects

Managing accounting and bookkeeping in Vietnam can prove to be a time consuming and constantly changing area of compliance, even for those well-versed in investment within the country. Shifting regulations, changing interpretations of existing legislation, and convergence with international norms all coalesce to form a compliance environment with significant costs.

Continue reading…

Introduction to Personal Income Tax in Vietnam

Posted on by

By: Dezan Shira & Associates

Editor’s Note: This article was first published on October 13, 2013, and has been updated as of November 18, 2016

Vietnam’s National Assembly issued the Law on Personal Income Tax (PIT) on November 21, 2007, which came into effect on January 1, 2009 and was subsequently amended in 2012 and 2014. The law in its current form applies to individuals earning income, including those doing business who were previously included under corporate income tax.

According to the PIT Law, PIT is levied on the worldwide income of Vietnam residents and on Vietnam-sourced income of non-residents, irrespective of where the income is paid. The tax calculation and finalization procedure for Vietnamese locals and expatriates is the same, but different for residents and non-residents.

Continue reading…

Vietnam Set to Update Transfer Pricing Thresholds from 2017

Posted on by

By: Dezan Shira & Associates

Vietnam’s Ministry of Finance released a draft circular on October 11th which, if passed, is set to become the largest change to transfer pricing (TP) regulation since the implementation of Circular 66/2010/TT-BTC in 2010 – which the draft updates. Touching on conditionality of TP exemption and thresholds for defining related entities, the draft has significant implications for a variety of enterprises operating within Vietnam. Currently receiving public feedback, the circular is widely expected to become effective at the top 2017. Those operating or considering establishment within Vietnam should therefore review the draft and any subsequent changes closely. The brief below outlines key changes proposed by the draft and highlights the increasing risk of non-compliance with TP regulation in Vietnam.

Continue reading…

Vietnam to Introduce Environmental Incentives From September 23

Posted on by

By: Dezan Shira & Associates

Vietnam is set to extend export tax relief to a number of goods including products and machinery used in the treatment of waste, as well as goods registered under Vietnam’s emerging Green Label certification. Outlined by the Ministry of Finance (MOF) under Circular 128/2016/TT-BTC, incentives are set to come into effect as of September 23rd, 2016. 

Current Export Tariffs

Vietnam currently applies export tariffs on a variety of products leaving its boarders. The main targets of these taxes are products used in the extractives industry or other exports that are deemed to have a significant impact on Vietnam. Depending on the impact that a given industry or export is deemed to have, taxes can range from 0-45 percent. 

Continue reading…

Vietnam’s Tax Outlook in 2016 and Beyond

Posted on by

Vietnam DebtBy Kurt Nguyen

Faced with conflicting pressure to upgrade infrasture and boost investment, the Vietnamese government finds itself in a precarious financial position in 2016. The TPP and EVFTA are still a way out, and there is little doubt that adjustment of taxes or spending will likely occur before investment inflows bolster government coffers. From an investment standpoint, the way in which the interim is handled is set to have substantial ramifications for taxation throughout the country and set a precedent regarding future revenue generation.  

Continue reading…

Vietnam Outlines Customs and Tax Plans to Enhance Competitiveness

Posted on by

vietnam_futureBy: Dezan Shira & Associates
Editor: Eugenia Lotova

In response to growing concerns over lagging competitiveness, Vietnamese authorities have begun the process of revamping numerous aspects of their investment environment. The most recent reform is Decision No. 1134/QD-BTC, issued by Vietnam’s Ministry of Finance on 23 May 2016. This document details Vietnam’s national strategy to implement Resolution No. 19/NQ-CP and No. 19-2016/NQ-CP, which are earlier versions of the government’s plan to update the way business is conducted and thereby improve the status of the Vietnamese market in relation to its regional competition by 2020.

The resolution heavily focuses on simplifying the customs and tax code, switching to electronic databases, and identifying the logistics of the one-stop mechanism. If successfully carried out, these proposals will drastically decrease the cost and time involved in doing business in Vietnam.

Continue reading…

Dezan Shira & Associates

Meet the firm behind our content. Dezan Shira & Associates have been servicing foreign investors in China, India and the ASEAN region since 1992. Click here to visit their professional services website and discover how they can help your business succeed in Asia.

News via PR Newswire

Scroll to top