{"id":65140,"date":"2025-04-02T15:53:41","date_gmt":"2025-04-02T08:53:41","guid":{"rendered":"https:\/\/maisonoffice.vn\/en\/?p=65140"},"modified":"2025-04-22T10:38:55","modified_gmt":"2025-04-22T03:38:55","slug":"vietnam-tax","status":"publish","type":"post","link":"https:\/\/maisonoffice.vn\/en\/legal\/vietnam-tax\/","title":{"rendered":"Vietnam Tax System: What Foreigners Need to Know"},"content":{"rendered":"

The Vietnam tax system can feel like a maze for foreigners, but understanding its basics is key to succeeding in this fast-growing economy. From personal income tax to foreign contractor obligations, taxation in Vietnam offers both challenges and benefits for newcomers. This guide breaks down the essentials of taxation in Vietnam, from personal income tax to foreign contractor obligations.<\/span><\/p>\n\n\n\n
\"Find<\/a><\/td>\n\"Find<\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Summary of tax rates in Vietnam<\/b><\/h2>\n\n\n\n\n\n\n\n\n\n
Type of tax<\/b><\/td>\nTax rate<\/b><\/td>\nNotes<\/b><\/strong><\/td>\n<\/tr>\n
Corporate Income Tax (CIT)<\/b><\/td>\n20% (standard rate)<\/span><\/td>\nApplies to most businesses. Higher rates (32%-50%) for oil, gas, and rare mineral industries<\/span><\/td>\n<\/tr>\n
Value Added Tax (VAT)<\/b><\/td>\n0%, 5%, or 10%<\/span><\/td>\n0% for exports, 5% for essential goods\/services, 10% is the standard rate for most transactions<\/span><\/td>\n<\/tr>\n
Personal Income Tax (PIT)<\/b><\/td>\n5% – 35% (residents); 20% (non-residents)<\/span><\/td>\nProgressive rates for residents; flat 20% for non-residents on Vietnam-sourced income<\/span><\/td>\n<\/tr>\n
Foreign Contractor Tax (FCT)<\/b><\/td>\nVaries (VAT: 1%-10%; CIT: 0.5%-10%)<\/span><\/td>\nDepends on the nature of services\/goods provided by foreign entities<\/span><\/td>\n<\/tr>\n
Special Consumption Tax (SCT)<\/b><\/td>\nVaries (e.g., 10%-150%)<\/span><\/td>\nApplies to luxury or non-essential goods like tobacco, alcohol, and gasoline<\/span><\/td>\n<\/tr>\n
Business License Tax (BLT)<\/b><\/td>\nVND 1 million – VND 3 million per year<\/span><\/td>\nAnnual fee based on registered capital of the business<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Vietnam tax rates may vary depending on the business sector, investment region, and applicable trade agreements. The system of taxation in Vietnam requires businesses and foreign investors to comply with strict reporting, accounting, and tax declaration procedures.<\/span><\/p>\n

Overview of Vietnam’s tax system<\/b><\/h2>\n

Corporate Income Tax (CIT)<\/b><\/h3>\n

Corporate Income Tax (CIT) is one of the most important components of the Vietnam tax system. It applies to all entities conducting business and generating taxable income in Vietnam, including foreign-invested enterprises (FIEs) and branches of foreign companies.<\/span><\/p>\n

The standard Vietnam tax rate for CIT is 20%. However, preferential rates of 10% or 17% may apply to businesses operating in encouraged sectors such as high-tech, education, healthcare, or in underdeveloped geographical areas.<\/span><\/p>\n

Features of CIT in the context of taxation in Vietnam:<\/span><\/p>\n

    \n
  • Taxable income includes profits from production, trading, and service activities.<\/span><\/li>\n
  • Deductible expenses must be supported by proper invoices and documents as required by Vietnamese accounting standards.<\/span><\/li>\n
  • Losses can be carried forward for up to 5 consecutive years.<\/span><\/li>\n
  • Transfer pricing and related-party transactions are closely monitored under Decree 132\/2020\/ND-CP.<\/span><\/li>\n<\/ul>\n

    Foreign investors setting up an FDI company should carefully plan their tax structure in alignment with Vietnam\u2019s CIT regulations to ensure compliance and long-term tax efficiency.<\/span><\/p>\n

    \"Corporate<\/p>\n

    Corporate Income Tax (CIT) is one of the most important components of the Vietnam tax system<\/span><\/i><\/p>\n

    Personal Income Tax (PIT)<\/b><\/h3>\n

    Personal Income Tax (PIT) is a core component of the Vietnam tax system, applying to both Vietnamese citizens and foreign expatriates earning income in Vietnam. Based on a progressive tax rate, the system ensures fairness across income levels. Tax residents benefit from deductions\u2014VND 11 million monthly for personal allowance and VND 4.4 million per dependent\u2014while certain income sources, such as agricultural earnings or overseas remittances, may be exempt. PIT is filed annually, with employers managing monthly declarations on behalf of employees.<\/span><\/p>\n

    For tax residents, the Vietnam tax rate on personal income is progressive:<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n
    Monthly Taxable Income (VND)<\/b><\/td>\nPIT Rate<\/b><\/td>\n<\/tr>\n
    Up to 5 million<\/b><\/td>\n5%<\/span><\/td>\n<\/tr>\n
    5 – 10 million<\/b><\/td>\n10%<\/span><\/td>\n<\/tr>\n
    10 – 18 million<\/b><\/td>\n15%<\/span><\/td>\n<\/tr>\n
    18 – 32 million<\/b><\/td>\n20%<\/span><\/td>\n<\/tr>\n
    32 – 52 million<\/b><\/td>\n25%<\/span><\/td>\n<\/tr>\n
    52 – 80 million<\/b><\/td>\n30%<\/span><\/td>\n<\/tr>\n
    Over 80 million<\/b><\/td>\n35%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    PIT applies to wages, salaries, bonuses, and other income such as stock options or rental income. Employers in Vietnam are responsible for withholding PIT from employees’ salaries and remitting it to tax authorities.<\/span><\/p>\n

    For foreign professionals or companies hiring expats, understanding PIT obligations is essential to ensure full compliance with Vietnam\u2019s labor and taxation system.<\/span><\/p>\n

    Value-Added Tax (VAT)<\/b><\/h3>\n

    Value-Added Tax (VAT) is a widely applied indirect tax within the Vietnam tax system, imposed on the sale of goods and services consumed in Vietnam. It\u2019s a key source of government revenue and affects most business transactions across industries.<\/span><\/p>\n

    Under taxation in Vietnam, VAT is levied at three main rates:<\/span><\/p>\n

      \n
    • 0% for exported goods and services;<\/span><\/li>\n
    • 5% for essential goods and services such as clean water, education, and medicine;<\/span><\/li>\n
    • 10% as the standard Vietnam tax rate applied to most other products and services.<\/span><\/li>\n<\/ul>\n

      Businesses registered for VAT must file declarations monthly or quarterly, depending on their revenue\u2014those with annual revenue exceeding VND 50 billion (approximately US$2 million) file monthly. VAT is an indirect tax, meaning it\u2019s ultimately borne by consumers but collected and remitted by businesses.<\/span><\/p>\n

      \"Value-Added<\/p>\n

      Value-Added Tax (VAT) is a key source of government revenue and affects most business transactions across industries<\/span><\/i><\/p>\n

      International Taxation<\/b><\/h3>\n

      Vietnam\u2019s international taxation framework plays a vital role in managing cross-border transactions and preventing double taxation for foreign investors. As part of the Vietnam tax system, international tax rules apply to both residents earning foreign income and non-residents generating income in Vietnam.<\/span><\/p>\n

      Profit Repatriation<\/b><\/h4>\n

      Profit repatriation refers to the process by which foreign investors transfer profits earned by their FDI company in Vietnam back to their home country. Under taxation in Vietnam, profit repatriation is allowed without additional withholding tax, provided all legal and financial obligations have been fulfilled.<\/span><\/p>\n

      To repatriate profits, a company must:<\/span><\/p>\n