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The Main Taxes and Tax Rates in Vietnam
As a member of the WTO, Vietnam applies a unified tax standard for both domestic and foreign-invested enterprises. Different tax rates and preferential periods are implemented for projects in various sectors. The main taxes in the current tax system include Corporate Income Tax (CIT), Value-Added Tax (VAT), import and export duties, Special Consumption Tax (SCT), Personal Income Tax (PIT), Resource Tax, Agricultural Land Use Tax, Non-Agricultural Land Use Tax, Environmental Protection Tax, Property Tax, Stamp Duty, and Registration Tax, among others.
1. Corporate Income Tax in Vietnam
The current corporate income tax rate in Vietnam is generally 20%. For income derived from the exploration, development, and exploitation of petroleum, natural gas, and precious rare resources, the applicable income tax rate ranges from 32% to 50%. Foreign-invested enterprises that meet relevant conditions may enjoy preferential income tax rates of 10-17% and preferential policies such as "four years of exemption and nine years of halved tax" or "six years of exemption and thirteen years of halved tax." For large-scale investment projects with high technological content, upon approval by the Prime Minister, the maximum preferential policy of halved income tax for up to 30 years can be granted.
2. Value-Added Tax (VAT) in Vietnam
According to the “Value-Added Tax Law” and relevant regulations, Vietnam currently has three VAT rates: 0%, 5%, and 10%. Export processing enterprises are exempt from VAT on their exported products.
3. The Special Sales Tax (SST) in Vietnam
According to the “Law on Special Sales Tax” and relevant regulations, Vietnam imposes a Special Sales Tax (SST) on certain products, imported goods, and services. For example, tobacco products are subject to a 75% SST. Alcoholic beverages are taxed at 35% or 65% depending on the alcohol content (with beer being taxed at 65%). Passenger cars with fewer than nine seats are subject to an SST ranging from 35% to 150% based on engine displacement. Hybrid vehicles using new energy are taxed at 70% of the rate applicable to cars with the same engine displacement. Biofuel vehicles are taxed at 50% of the rate applicable to cars with the same engine displacement. Entertainment business operations such as karaoke lounges, casinos, and golf courses are subject to an SST ranging from 15% to 40%.
4. Personal Income Tax in Vietnam
Starting from July 1, 2020, the personal income tax exemption threshold in Vietnam was increased from a monthly income of 9 million VND to 11 million VND. Families with monthly incomes exceeding the exemption threshold are required to pay personal income tax, which is levied at a progressive rate ranging from 5% to 35%. Non-resident foreigners are only taxed on income sourced in Vietnam, with a tax rate of 25% in the first year, and subsequently subject to the applicable tax rates for foreign residents in subsequent years. Residents of countries that have signed a Double Taxation Avoidance Agreement with Vietnam, who are non-resident taxpayers in Vietnam and meet certain conditions, may be exempt from personal income tax.
5. The doorplate fee in Vietnam
Namely, the business license fee. Enterprises are exempt from paying the business license fee in the first year of engaging in production and operation. After that, they need to pay corresponding fees annually according to the amount of registered capital. For enterprises engaged in commodity production, operation, and service provision, if the registered capital is over 10 billion Vietnamese dong, they need to pay 3 million Vietnamese dong per year; if it is less than 10 billion Vietnamese dong, they pay 2 million Vietnamese dong per year. Representative offices, offices, public institutions, and other economic organizations pay 1 million Vietnamese dong per year. Self – employed individuals and household businesses pay the corresponding business license fees according to their annual business income.
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