One of the most attractive incentives for foreign investors who set up businesses in Vietnam is the taxation system. According to recent surveys, Vietnam is one of the best countries to open a company in from a taxation point of view because it has some of the lowest taxes imposed at corporate level. However, the companies tax is not the only levy imposed in Vietnam.
Below our Vietnam company formation consultants explain the taxation system in this country.
The main taxes imposed in Vietnam
The main and most important taxes imposed to individuals and companies in Vietnam are:
– the persona income tax;
– the corporate income tax;
– the value added tax.
There are also other taxes imposed at individual and company levels in Vietnam, such as withholding taxes imposed of dividend, interest and royalties payments. It should be noted that the withholding tax rates vary as Vietnam has signed double tax treaties which provide for specific rates imposed to these incomes.
Our Vietnam company registrations specialists can offer more information on the taxation of companies here.
Tax rates in Vietnam
As mentioned in the beginning, Vietnam imposes some of the lowest taxes in the world. The tax rates applicable to companies and individuals in Vietnam are:
– the personal income tax rates are variable and start at 5%; the maximum rate is 35%;
– the corporate tax rate is 20%;
– the standard value added tax rate is 10%.
With respect to companies, foreign investors should know that there is no concept of tax residency in Vietnam.
Other taxes in Vietnam
Foreign investors and individuals operating through companies, respectively living and working in Vietnam will be imposed a foreign contractor tax which is made up of the corporate and the value added taxes.
With respect to companies, these can benefit from reduced tax rates if they operate in certain Vietnamese industries or if they are registered in special economic zones in the country.
Tax deductions and allowances are also available in Vietnam under certain conditions.
For full information on the taxation system applicable in Vietnam, do not hesitate to contact us. You can also rely on our local representatives for assistance in opening a company in Vietnam.