(a) The standard corporate income tax rate is 20%. However, tax incentives are available (see Section B). Enterprises operating in the oil and gas industry are subject to corporate income tax rates ranging from 32% to 50%, depending on the location and specific project conditions. Enterprises engaging in prospecting, exploration and exploitation of mineral resources (for example, silver, gold and gemstones) are subject to corporate income tax rates of 40% to 50%, depending on the project’s location.
(b) Gains derived from sales of capital or shares in entities are subject to tax at a rate of 20%. Transfers of securities by foreign investors are subject to presumptive tax of 0.1% on total sales proceeds, regardless of whether the transfer is profitable.
(c) See Section C.
B. Taxes on corporate income and gains
Corporate income tax. The following types of enterprises are subject to corporate income tax:
• Enterprises established under the Law on Enterprises, the Law on Investment, the Law on Credit Organizations, the Law on Insurance Business, the Law on Securities, the Law on Oil and Gas, the Trade Law and other legal entities including joint stock companies, limited liability companies, partnerships, private businesses, law offices, private public notary offices, parties to business cooperation contracts, parties to oil and gas product sharing contracts, and joint operation companies
• Public and non-public organizations engaged in business
• Organizations established under the Law on Cooperatives
• Businesses established under foreign laws that have a permanent establishment in Vietnam
• Other organizations conducting production and business activities that generate taxable income
Rates of corporate income tax. The standard corporate income tax rate is 20%. However, tax incentives are available (see Tax incentives).
The rate of corporate income tax applicable to activities of exploration and exploitation of oil, gas and other precious natural resources ranges from 32% to 50%, depending on the project.
Tax incentives
Preferential tax rates of 5%, 7%, 9%, 10%, 15% or 17% may be available to eligible projects meeting certain criteria or in industries or locations that are encouraged by the government.
Common incentive tax rates are discussed below.
A 10% rate for the 15-year period beginning with the first year of revenue may be available for the following:
• Income from new investment projects in areas with especially difficult socioeconomic conditions, and in economic zones and high-technology zones
• Income from new investment projects that are engaged in the following:
— Scientific research and technological development
— Application of high technologies in the list of prioritized high technologies provided by the Law on High Technology
— Cultivation of high technologies
— Cultivation of high-technology enterprises
— High-risk investment in the development of high technologies in the list of prioritized high technologies provided by the Law on High Technology
— Construction investment and commercial operation of establishments nursing high technologies
— Investment in development water plants, power plants, water supply and drainage systems, bridges, roads, railways, airports, seaports, river ports airfields, stations and other particularly important infrastructure facilities determined by the prime minister — Software production
— Production of composite materials, light building materials, rare materials, renewable energy, clean energy and energy from waste destruction
— Development of biological technology
• Income of new investment projects in the field of environmental protection, including manufacturing of equipment for treating environmental pollution and equipment for environmental observation and analysis, environmental pollution treatment and protection, collection and treatment of wastewater, exhaust and solid wastes, and recycling and reuse of wastes
• Income of high-technology enterprises and agricultural enterprises that apply high technologies according to the Law on High Technology
• Income from new investment projects that make products supportive of the high-technology industry in line with the Law on High Technology or products supportive of certain industries, including textile and garment, footwear, electronics, information technology, automobile assembly and mechanics, and that are not domestically produced or meet the quality standard of the European Union or an equivalent standard
• Income from new investment projects in the production sector (except for projects producing goods subject to special sales tax and mineral exploitation projects) that have investment capital of at least VND6 trillion, if the capital is disbursed within three years from the date of the investment certificate and if either of the following conditions is satisfied:
— The project’s total revenue reaches VND10 trillion per year within three years from the first year of revenue.
— The project employs more than 3,000 employees.
• Large-scale manufacturing projects (excluding projects manufacturing products subject to special sales tax or exploiting mineral resources) if all of the following conditions are satisfied:
— The investment capital must be at least VND12 trillion.
— The technology used must be certified in accordance with the Law on High Technology and the Law on Science and Technology.
— The capital disbursement must be made within five years of the licensing date.
These large-scale manufacturing projects may be considered for an extended period for the corporate income tax incentive rate of a maximum of 15 years (that is, a maximum of 30 years of the 10% corporate income tax rate).
A 10% or 15% rate applies for the entire period of operation for enterprises in the sectors of education and training, occupational training, health care, culture, sports, environment, social housing, forestry, agriculture, aquaculture, salt production and publishing. However, this incentive is subject to detailed conditions provided separately by the prime minister.
Capital gains. Gains derived from sales of shares or assignments of capital in enterprises are subject to tax, as part of annual taxable income, at a rate of 20%. The taxable income equals the transfer price less the sum of the purchase price of the transferred capital and expenses incurred with respect to the transfer.
Foreign investors transferring “securities” (this is a specified term, which includes shares of public companies) are subject to presumptive tax at a rate of 0.1% on total sale proceeds, regardless of whether the transfer is profitable.
Administration. Enterprises normally use the calendar year as their tax year. Enterprises that have their own particular characteristics of operational organization may choose a financial year of 12 months according to the Gregorian calendar and they must notify the local authorities of such year.
Enterprises must pay their quarterly income tax due by the 30th day of the following quarter. Enterprises must file a final income tax return and pay any balance of income tax due no later than the last day of the third month after the ending date of a calendar year or a financial year.
The total amount of provisional quarterly corporate income tax paid in a tax year must not be less than 80% of the total corporate income tax liability for the year. Any shortfall is subject to late payment interest at a fixed rate of 0.03% per day, counting from the deadline for payment of the fourth-quarter provisional corporate income tax liability.
An under declaration is subject to only a late-payment fine if it is self-corrected by the taxpayer. Otherwise, a penalty of 20% of the under declared tax is imposed. Late payments of tax are subject to interest at a rate of 0.03% of the unpaid amount per day.
Tax audits are performed on an ad hoc or selected basis. Any tax under declaration identified by the tax auditor is penalized at 20% (or 100% to 300% if considered to be tax evasion) and subject to a prevailing interest rate of the tax liability for each day late, calculated from the statutory deadline to the date of actual payment.
Dividends. Dividends paid to corporate shareholders and branch remittances are not subject to withholding tax.
Withholding taxes on interest and royalties. The rate of withholding tax on interest paid under loan contracts is 5%.
A withholding tax at a rate of 10% is imposed on royalties paid to foreign legal entities with respect to technology transfers and licensing.
Foreign tax relief. Vietnam has signed tax treaties with several countries that provide relief from double taxation (see Section F).
C. Determination of taxable income
General. The taxable income of an enterprise is the income shown in the financial statements, subject to certain adjustments. Taxable income includes income derived from business operations and other activities.
An enterprise may deduct expenses if the following conditions are satisfied:
• The expenses are actually incurred and related to the production and business activities of the enterprise.
• The expenses are accompanied by complete invoices and source vouchers as required by law.
• Expenses of VND20 million or more must be supported with cashless payments (for example, bank transfers and payments with cards).
• The expenses are not on the list of nondeductible expenses shown below.
Certain expenses are not deductible in determining taxable income, including the following:
• Provisions that do not conform to the regulations of the Ministry of Finance (MOF).
• Accrued expenses not corresponding to taxable turnover that has been recognized.
• Bonuses and life insurance expenses for employees that are not clearly stated in the labor contracts, the collective labor contracts, the financial regulations of the company or the reward regulations promulgated by the chairman of the board of management.
• Interest payments on loans corresponding to equity that is not contributed.
• Interest payments on loans borrowed from lenders that are not credit institutions or economic organizations that exceed 150% of the basic interest rate quoted by the State Bank of Vietnam at the time of the loan agreement.
• Under recently enacted transfer-pricing regulations, for companies having related-party transactions, loan interest expenses in excess of 30% of the total net profit generated from business activities plus net interest expenses (that is, interest expense after being offset against deposit interest income and loan interest income) and amortization costs arising in the period. Such nondeductible interest expenses can be carried forward for deduction for up to five years from the following year.
• Expenses sourced from other funding and expenses paid from the Science and Technology Development Fund of the enterprise.
• The portion of business management expenses allocated by a foreign company to its resident establishment in Vietnam (for example, head office charges allocated to the Vietnam branch) that exceeds the level allowed under the regulations.
• Depreciation of fixed assets that are not used for business activities and/or supported by ownership documents.
• Employees’ fringe benefits that exceed the cap of an average one month’s salary cost (calculated by dividing the yearly wage fund by 12) in the tax year.
• Payments above VND3 million per person per month for contributions to a voluntary pension fund or purchase of voluntary pension insurance for employees.
• Donations except for certain donations for education, health care, natural disasters; building charitable homes for the poor.
• Management expenses allocated to permanent establishments in Vietnam by the foreign company that are not in accordance with the regulations.
• Administrative penalties.
Nature of tax Rate
Unemployment insurance 0%
Foreign contractor tax; rate depends on type of business activity 0.1% to 10%
Land rent (land-use tax); imposed annually for the use of land; tax base is calculated by multiplying the amount of square meters of the land by land price rates, which vary by location; the higher land price rates apply to land in Hanoi, Ho Chi Minh City and other urban locations
Non-agricultural land use tax; taxable objects include residential land in all areas and land used for business purposes, except for certain cases
Various
Residential land 0.03% to 0.15%
Non-agricultural land used for business purposes 0.03%
Land not used in accordance with granted purposes 0.15%
Environmental Tax; taxable objects consist of petroleum, oil, lubricants, black coal, hydrochlorofluorocarbon (HCFC) solutions, taxable plastic bags, herbicide termite insecticides, forest products protective agents and warehouse insecticides; rates from 1 January 2019
Petroleum, oil and lubricants
Black coal
HCFC solution
Taxable plastic bags
VND600 to VND2,000 per liter/kilogram (Effective from 1 January 2024 to 31 December 2024)
VND15,000 to VND30,000 per ton
VND5,000 per kilogram
VND50,000 per kilogram
Herbicide (restricted use category) VND500 per kilogram
Termite insecticide
(restricted use category)
Forest products protective agents (restricted use category)
Warehouse insecticides (restricted use category)
VND1,000 per kilogram
VND1,000 per kilogram
VND1,000 per kilogram
Natural Resources Tax (NRT); payable by industries exploiting Vietnam’s natural resources; taxable objects include metallic minerals, nonmetallic minerals, products of natural forests, natural marine products, natural mineral water, other natural resources and petroleum; tax base for NRT calculation includes the output of royalty-liable natural resources, royalty-liable price of a unit of natural resource and royalty rate
Metallic
Nonmetallic
10% to 20%
6% to 27%
Nature of tax Rate
WW Products of natural forests 5% to 35%
Natural marine products 2% to 10%
Natural mineral water and natural water 1% to 10% Other natural resources 10% to 20% Crude oil Encouraged investment projects 7% to 23%
projects 10% to 29%
Natural gas and coal gas Encouraged investment projects 1% to 6%
projects 2% to 10%
E. Miscellaneous matters
Foreign-exchange controls. Enterprises with foreign-owned capital must open accounts denominated in a foreign currency or the Vietnam dong (VND) at a bank located in Vietnam and approved by the State Bank of Vietnam (SBV). All foreign-exchange transactions, such as payments or overseas remittances, must be in accordance with policies set by the SBV.
Enterprises with foreign-owned capital and foreign parties may purchase foreign exchange from a commercial bank to meet the requirements of current transactions or other permitted transactions, subject to the bank having available foreign exchange.
The government may guarantee foreign currency to especially important investment projects or assure the availability of foreign currency to investors in infrastructure facilities and other important projects.
Transfer pricing. The Vietnamese transfer-pricing regulations apply the arm’s-length principle to determine transfer prices of business transactions undertaken between related parties and is broadly consistent with the arm’s-length concept as set out in the Organisation for Economic Co-operation and Development’s Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD Transfer Pricing Guidelines). The applicable transfer-pricing methods under the Vietnamese transfer-pricing regulations closely resemble the methods provided by the OECD Transfer Pricing Guidelines and include the following:
• Comparable uncontrolled price method
• Resale price method
• Cost-plus method
• Profit-split method
• Comparable profit method (referred to as the transactional net margin method in the OECD Transfer Pricing Guidelines)
The Vietnamese regulations contain detailed transfer-pricing documentation requirements. The documentation must be prepared before the submission of the annual income tax return to substantiate the arm’s-length prices and submitted on the tax authority’s request in a timely manner.
Advance pricing agreement (APA) regulations are largely in line with the OECD Transfer Pricing Guidelines and APA regimes in other tax jurisdictions. An APA is a binding agreement between a taxpayer and the tax authority that determines in advance the basis