Vietnam Company Annual Compliance Requirements and Fees
This guide provides a summary of the various maintenance and compliance requirements for the Vietnam Company that incorporated in accordance with the Vietnam Investment Law 2014 and an estimation of the costs likely to be incurred to comply with those requirements.
Section 1 is about the preparation of the monthly financial statement of the Vietnam Company. Every Vietnam Company is required to prepare a financial statement every month and submit the financial statement to the Department of Taxation in Vietnam.
Section 2 and Section 3 describes the information of Corporate Income Tax (CIT) and Value-Added Tax (VAT) of the Vietnam Company.
Section 4 of this guide states the requirement of the Annual Audit for the Vietnam Company.
Section 5 states the requirements to employ employees in Vietnam, including the introduction of social insurance, medical insurance, unemployment insurance, etc.
Section 6 lists out the cost estimated to be incurred by a Vietnam Company annually, so as to maintain a Vietnam Company.
This guide does not cover all the compliance requirements imposed on a company by other law in Vietnam. If any issue interested is not covered in this guideline, please contact our firm professional CPA for further consultation.
Every Vietnam Company will need to prepare a monthly financial statement in accordance with the Vietnam Accounting Law. The declaration should complete before the 20th of the following month. The Vietnam financial statements stipulate that the accounting record should set the monetary unit as the Vietnamese Dong (VND). If the foreign transaction is often occurred by a company, the company could choose another currency as the main monetary unit.
The accounting vouchers and accounting books can be kept by paper documents or electronic media. If the accounting vouchers and accounting books keep in the electronic media, no printing is required. If the Vietnam competent authority requires inspection, the electronic vouchers and the accounting books will need to print out, signed or stamped by the legal representative and the accountant. The accounting vouchers and the accounting books shall keep for at least 10 years.
Generally, the Vietnam Company accounting period is twelve full months according to the calendar year. If the accounting period of the Vietnam Company is a non-calendar year, they shall notify the tax authority. The first year of the company registered is count from the date receiving the business registration certificate until the December 31st of the same year, it will be the first accounting year. If the first annual accounting period is shorter than 90 days, it could allow adding the first period to the subsequent annual accounting period for counting as an annual accounting period.
The Vietnam Company will need to pay for the corporate income tax according to the tax rate stipulated in Vietnam Tax Law, all taxes are imposed at the global level. The standard corporate income tax (CIT) rate is 20%, preferential CIT rates of 17%, 15% or 10% are available when certain criteria are met. For other industries such as the industry of oil and gas, the industry of natural resources is subject to a CIT rate of 32% to 50%.
Vietnam provides the Foreign Invested Companies preferential CIT rates, for the terms of 10 to 15 years, from the year that the companies gaining profits.
(1) The investment cases involved in the Economic Zones, High-tech Parks, Areas with especially difficult socio-economic conditions, Large Scale Manufacturing (Preferential CIT rates of 10% for 15 years)
(2) Social impact projects: Environmental protection/ Renewable energy, Biotechnology, Software products, Composite materials, Light construction materials, Rare materials, etc. (Preferential CIT rates of 10% for 15 years)
(3) Registered in the area with difficult or especially difficult socio-economic conditions (Preferential CIT rates of 10%)
(4) Production of Steel, Energy-saving products, Industry of Agricultural Machinery and Equipment (Preferential CIT rates of 17% for 10 years)
If there are operating losses of the companies, the losses may be carried forward for a maximum of five years, carry back of losses is not permitted. The general losses could offset the revenue not applicable to preferential CIT, the losses occurred during the transfer of real property and joining property investment, the losses could offset the profit from the main business activities.
The provisional quarterly corporate income tax payment is required in accordance with the Vietnam Tax Law. The quarterly provisional corporate income tax payments based on estimates. The CIT Return should be completed and submitted within 90 days after the end of the accounting year.
The goods, services and imported goods for the purposes of production, trading and consumption in Vietnam will need to levy on Value-Added Tax (VAT). The calculation of the VAT can be divided into deduction method (the difference between output tax and input tax) and direct method (calculate according to the VAT tax rate for the transaction).
The VAT rate in Vietnam could be divided into four levels, there are tax free, 0%, 5% and 10%. The standard VAT rate is 10%.
The export of goods or services applicable to 0% tax rate, including the export of goods to the overseas or non-tariff area, the goods or services that consumed out of the territory of Vietnam or non-tariff area, processed goods for export and domestic export, the export of duty free shops goods, certain export services, construction and installation services provided to the companies of processed goods, international transportation services by air, sea, etc.
The 5% tax rate applicable to the areas involving the life essentials products and services, including the cleaning supplies, teaching materials, books, non-processed foods, medicine and medical equipment, various agricultural products and services, technology services, sugar, art and sports products, etc.
The Vietnam Company shall submit the monthly VAT returns before the 20th of the following month. For the companies that annual turnover is below VND 50 billion, could submit the VAT return quarterly.
Vietnam Company could print out the invoices or electronic invoices by themselves. The tax invoices contents must include the items stipulated by law, and they shall register at the local tax authority.
The financial statement of the Vietnam Company shall audit by the local accounting firm in Vietnam. The audited financial statement generally shall be approved by the legal representative and the accountant, and it must be completed within 90 days after the end of the fiscal year. The listed company should prepare an interim financial statement and it shall be audited, the interim financial statements shall be completed within 45 days, after the end of the first 6 months of the fiscal year.
The audited financial statements shall submit to the Ministry of Industry and Trade, Ministry of Finance, Local Tax Department, and other competent authorities in accordance with the law in Vietnam.
According to the Vietnam Labour Law, the employer and the employee shall sign for a labour contract, the employee could sign a contract with a specified term for only 2 times, after that, the labour contract shall sign without a specified term.
The working hours are 8 hours a day and 6 days per week. Besides the public holiday with paid leaves, the employee will have 12 days of annual leave a year. For the service year of every 5 years in each company will increase one-day annual leave. The Vietnam Social Insurance Law systems will replace the severance pay. If the employer signs a contract with the employee for more than 1 month, the employer shall provision of social insurance, medical insurance, unemployment insurance, etc.
Foreign employees are compulsory to participate in social insurance and medical insurance, they could not participate in unemployment insurance. If the Vietnam Company fails to insure employees, the Vietnam government may impose a fine of more than VND 500,000 and less than VND 1 million against the employers and employees.
As previous mentioned, in order to let you understand the cost to maintain a Vietnam Company, Kaizen hereby lists out the maintenance fee incurred by Vietnam Company for every year in the following table.
|Tax Declaration, Accounting and Bookkeeping Service Fee|
|1||Accounting, bookkeeping and the tax declaration fee (the initial stage after company registered) / year||1,200 up|
|2||Audit fees (the initial stage after company registered) / year||1,000 up|
|3||Accountant Service / year||800|
|Other Service Fees|
|1||Payroll services, includes the preparation of payroll slips to the company and the Vietnam Labour Bureau||200|
|2||Apply the social insurance number (One-time)||100|
|3||Calculation of the social insurance (If there is an employee)||120|
|4||Application of a foreigner’s work visa||800|
|5||Registered address service / year||2,880|
It shall be noted that the fees listed above are for reference only and the actual cost may be higher than listed.