Vietnam is a very appealing investment destination as the number of foreign enterprisers opening companies here has increased spectacularly in the last several years. Among the reasons for setting up companies in Vietnam, most of the entrepreneurs have invoked the legislation favoring foreign investments and the taxation system.
From a taxation point of view, Vietnam is one of the most attractive jurisdictions in Southeast Asia as the dividend tax can be reduced based on the double tax treaties signed by the government with other countries. Our company formation consultants in Vietnam will explain how the dividend tax applies in this country.
What are the dividend tax rates applicable in Vietnam?
The dividend tax is a withholding tax applied to the distribution of a Vietnam company’s net profits to those who own shares in the business. The dividend tax is applied at local level to both natural persons and companies.
It should be noted that the dividends issued by local companies to corporate stakeholders, meaning to other companies holding shares in them, are exempt from the dividend tax in Vietnam. These exemptions also apply to foreign corporate stockholders.
The other tax rate on dividend payments is 20%, the same as the corporate tax, however, foreign citizens holding shares in a local company can benefit from a lower tax rate of 5%. Also, under Vietnam’s double tax agreements, deductions or exemptions are available for dividend payments.
Our Vietnam company registration agents can also help foreign investors who want to open companies here. The accountants at our accounting firm in Vietnam can offer payroll services to your company. Payroll is the process of paying employees of a firm, which involves keeping track of hours worked, figuring out salaries, and sending checks or direct deposits to employees’ bank accounts. Companies must undertake accounting tasks as well, though, to keep track of payroll, taxes deducted, bonuses, overtime compensation, sick pay, and vacation pay.
How are dividends paid in Vietnam?
There are three ways of paying the dividends of a company in Vietnam:
- in cash;
- by issuing other shares;
- in assets, such as real estate property.
The payment of the dividends is established upon the registration of the company and must be specified in the Articles of Association. Also, only dividends paid in cash are subject to the 5% tax rate. The Vietnam dividend tax is levied separately from the other taxes imposed to shareholders.
For full information on the taxation of dividends in Vietnam, please contact our local representatives. You can also rely on us if you want to open a company in Vietnam.