Before 1999, Vietnamese laws on tax still provided discriminination among state owned economic entities with other economic entities. However, current trends of highly developed economy require the state to respect and implement anti-discrimination policies. Current laws and policies on tax provide equality among economic entities as well as among domestic and foreign investors. Especially many tax policies demonstrate preferences in order to attract more investment by the government of
Value added tax which is specified in the 1997 VAT law is an indirectly collected tax added to products or services generated from process of production or transportation to customers. VAT is applied at wide scales of organizations, business individuals, businesses, services and products and other individuals or business involved in importing taxed products. The law also stipulates non-tax items to 28 products (tax free) such as planting, husbandry, aquaculture and medical services etc.
Tax rates are consistently divided into 3 rates of 0%, 5% and 10% of which tax rate of 10% considered as a standard rate is applied to normal products and services while rate of 5% is applied to products and services which are encouraged for more investment into and development; and tax rate of 0% is applied to export products and services.
Special consumption tax
Special consumption tax is applied to a number of special services and products which requires strong interventions in production and consumption. This type of tax is applied to main 8 categories of products (tobacco; cigars; alcohol; beers; automobiles less than 24 seats; all types of petrol, nap-ta, recycled products and other materials for petrol production; air conditioners from capacity of 90,000BTU; game cards, traditional burned papers for praying) and 5 services (discotheques, massages, karaoke; casino and games using jackpot; entertainments with deposits; golf business including selling of golf tickets or golf membership; lottery)
For individual types of services and products, tax rates are applied differently, however it is rather high. For instance the tax rate of 75% is applied to whisky with 40o upwards, tobacco with imported materials, imported cigars; cars with 5 seats apply tax rate of 80% and discotheque, massages and karaoke apply tax rate of 30% etc.
Import and export tax
This type of tax is applied to products imported or exported through custom gate or borders of
The import and export tax is calculated based on the two main types of 1) for products applying percentage tax calculation (%) based on quantity of actual import/export products indicated in the custom form and taxed prices for individual products and tax rate for individual categories 2) for products applying definite tax rate, tax is based on quantity of actual export/import products indicated in the custom forms and the definite tax rate applied to a product unit.
Organizations, business individuals, enterprises and services shall be required to pay enterprise income tax. Households, individuals, cooperatives or agricultural collectives gaining income from plantings, husbandry, and aquaculture activities shall not be required to pay enterprise income tax except for households or peasants who have high production volume with high income.
Tax is calculated based on taxed income and tax rate. Tax rate for small business is 28%; for enterprises involving in surveying or exploring of natural and precious resources, tax rates are from 28% to 50% depending on individual projects and enterprises.
Personal income tax
Vietnamese law stipulates the collection of personal income tax for people with high income. Personal income tax is calculated based on taxed income and tax rates which include regular and irregular incomes. For the irregular incomes, tax rate is calculated based on total taxed income; tax rate of 5% is applied to income from technology transferee; and tax rate of 10% is applied to income gained from lottery, promotions or prizes. For regular incomes, tax rates based on progressive principle are applied e.g. income of 5 million to 15 million per month, income tax rate is 10%, more than 15 million to 25 million per month, income tax rate is 20%; more than 25 million to 40 million the income tax rate is 30 % and more than 40 million dong applying the income tax rate of 40%.
Foreigners with residency in Vietnam for more than 183 days within 12 consecutive months is eligible for personal income tax based on regular income gained in abroad and irregular income gained in Vietnam with the income tax rate of 10% for the income of 8 million dong to 20 million dong per month. Income tax rate is getting higher if a person gains higher incomes. If a person has more than 120 million dong of income per month, income tax rate is 50%; for foreigners who are not residents in Vietnam and staying in Vietnam for less than 183 days within 12 consecutive months, personal income tax is calculated based on regular and irregular incomes gained during staying in Vietnam with the tax rate of 25% of the total income.
Land related income tax
There are 3 types of tax rates relating to land use in
Agricultural land use tax is applied to all organizations and individuals using land for agricultural production including lands for planting, land covered with aquaculture production and forestry. Tax on agricultural land use is calculated based on area, types of lands and tax rate using kilogram of rice for a specific land unit. In the
Housing-land tax: Organizations and individuals who have land-use rights shall be required to pay housing and land tax. Tax calculation is based on land areas, quality of land and tax rates. Tax rates are identified with 3 levels of agricultural land tax i.e. land in town, small cities and cities, land tax is 25 times higher than the agricultural land tax; while land tax applied to mountainous areas is similar to agricultural land tax in the same category and in central highlands or low mountainous areas, land tax is as 1,5 times as higher and 2 times higher for land in mainland areas compared to the agricultural land with the same quality in the region.
Land-use rights transfer tax. In accordance with the Vietnamese law, organizations, households and individuals who have land-use rights including lands and house or architectural materials on, shall be entitled to pay tax on land-use rights transfer. Tax on land-use rights transfer shall be calculated based on land areas, taxed land prices and tax rates. Taxed prices are regulated by the provincial or municipal people committee on every January 1st, tax rate is applied from 5% upwards depending on land-use rights transfer and can be reached at 40% in cases of transferring land-use rights for agricultural purposes into non-agricultural purposes.
Tax on natural resources
Tax on household business
Tax on household business is annual tax collected from business to support the government in controlling and managing economic entities at various areas. Tax rates on household business are calculated based on total registered capital in the business certificate or investment certificate. For enterprises or businesses, tax on household business is divided into 4 rates of 3 million Vietnamese dong (applied to registered capital of more than 10 billion dong), 2 million VND (registered capital of 5 to 10 billion dong); 1,5 million VND (for registered capital of 2 to 5 billion dong) and 1 million VND (for registered capital of less than 2 billion dong). For households tax on household business is calculated based on monthly revenue, yet the minimum tax rate is 50,000 VND per year for revenue of less than 300,000VND per month and a maximum tax rate of 1 million VND per year for revenue of more than 1,5 million per month.
Taxes on capital transfer
Tax on capital transfer is one type of tax on business or enterprise’s profit gained from capital transfer from a foreign investor. Taxed profit is calculated based on selling prices compared with the original values of capital share and any transfer fees. Tax rate applied is 25%.