WHAT TYPES OF TAXES MUST FOREIGN INVESTED COMPANIES PAY TO THE STATE BUDGET
QUESTION
Dear TLK Law Firm, I hope that your company will answer to the following problem: I have just established a foreign-invested enterprise, I have questions about the tax obligations payable to the state budget. So let me ask, what taxes do foreign invested companies have to pay to the State Budget? We look forward to receiving support from your company. I look forward to receiving detailed information on this matter. Thank you!
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Thank you for your trust and sending questions to TLK Law Firm. Based on legal regulations and practical solutions, we would like to send you the following consulting content:
LEGAL BASIS
1. Document consolidating the Law on Personal Income Tax No. 15/VBHN-VPQH passed by the National Assembly on December 11, 2014;
2. Document consolidating the Law on Value Added Tax No.: 01/VBHN-VPQH passed by the National Assembly on April 28, 2016;
3. Document consolidating the Law on Corporate Income Tax No. 14/VBHN-VPQH passed by the National Assembly on July 15, 2020;
4. Decree No. 139/2016/ND-CP issued by the Government on October 4, 2016 regulating license fees;
5. Other legal documents providing relevant guidance.
CONSULTATION CONTENT
When foreign investors contribute capital to establish businesses in Vietnam, they are concerned about the taxes the company will have to pay to the State Budget. In this case, determining the specific tax type and tax rate applicable to a foreign company in Vietnam will be based on the type of business, industry and current tax laws. In this article, we will provide detailed information about "Taxes that foreign invested companies must pay to the State Budget".
Photo 1. What types of taxes must foreign invested companies pay to the State Budget._Hotline: 0972118764
I. SOME IMPORTANT LEGAL ISSUES RELATED TO TAXES FOREIGN INVESTED COMPANIES MUST PAY TO THE STATE COLLECTION
1. What is tax?
Up to now, there is still no unified concept of tax in the world. From different perspectives, different economists have a different concept of taxes.
One of the popular concepts about tax is "Tax is a mandatory, non-compensated revenue collected directly by the State from organizations and individuals to meet the State's spending needs for the benefit of the State shared".
Additionally, a tax is a mandatory financial charge or some other tax imposed on a taxpayer (an individual or legal entity) to pay to a government entity to finance other public expenditures.
2. Taxes that foreign invested companies must pay to the State Budget
(1) License fees (taxes)
According to the 1983 Industrial and Commercial Tax Ordinance, license fees are an amount of money that businesses must pay annually when starting production and business, based on the amount of charter capital recorded on the certificate of establishment of the business or enterprise collection (for households and individual businesses).
All operating businesses must pay license fees, except for the following cases: Small-scale businesses or newly transferred from business households are exempted from license fees for a period of 03 years from the date of issuance of the certificate.
(2) Value Added Tax (VAT)
According to the 2008 Value Added Tax Law, value added tax is a tax calculated on the added value of goods and services arising in the process from production, circulation to consumption. To calculate the amount of VAT each business must pay, it must be based on 02 declaration methods:
Case 1: Enterprise declares VAT using the direct method. Usually, businesses that apply this method operate in the fields of buying and selling, manufacturing jewelry, gold, silver, and gemstones, and their operating businesses have an annual VAT taxable revenue of less than 1 billion or less 1 billion. There are currently inadequate accounting, invoices, and documentation regimes as prescribed by law;
Case 2: Enterprise declares using the deduction method. This method will be suitable for businesses that fully implement accounting regimes, invoices, and related documents according to regulations, have annual revenue of 1 billion or more, and voluntarily register to declare VAT according to the deduction method.
(3) Corporate income tax
According to the Law on Corporate Income Tax 2006, taxable income includes:
a) Income from production and trading of goods and services;
b) Other income, including:
- Income from capital transfer, transfer of capital contribution rights;
- Income from real estate transfer, investment project transfer, transfer of rights to participate in investment projects, transfer of rights to explore, exploit and process minerals;
- Income from property use rights, property ownership rights, including income from intellectual property rights according to the provisions of law;
- Income from transfer, lease, and liquidation of assets, including valuable papers;
- Income from interest on deposits, loans, foreign currency sales; Revenues from bad debts that were written off are now recoverable;
- Revenue from liabilities whose owner cannot be identified;
- Omitted income from previous years' business and other income, including income from production and business activities outside Vietnam.
(4) Personal income tax
According to the Personal Income Tax Law 2007, personal income tax is the tax paid by businesses to help employees, specifically regulating the responsibilities of organizations and individuals paying income and the responsibilities of taxpayers individuals residing as follows:
- Organizations and individuals paying income are responsible for declaring, deducting, paying taxes to the state budget and finalizing taxes for all types of taxable income paid to taxpayers;
- Individuals with taxable income are responsible for declaring and paying taxes to the state budget and finalizing taxes on all income in accordance with the law on tax administration.
Photo 2. What types of taxes must foreign invested companies pay to the State Budget._Hotline: 0972118764
II. SUMMARY OF ANSWER SECTION: TYPES OF TAXES FOREIGN INVESTED COMPANIES MUST PAY TO THE STATE COLLECTION
Dear Customers, from the above synthesis and analysis, TLK Law Firm would like to give the following answer:
According to the Enterprise Law 2020, taxes that foreign-invested companies must pay to the State Budget include:
(1) License fees (taxes);
(2) Value Added Tax (VAT);
(3) Corporate income tax;
(4) Personal income tax.
=> See more: Adding professions, increasing investment capital?
III. HOW SHOULD YOU BEST CHOOSE AN ORGANIZATION THAT PROVIDES LEGAL SERVICES?
An organization providing quality and reputable legal services should have the following criteria:
First: Must be an official legal organization with a legal operating license;
Second: It is better if the Board of Directors must be lawyers, experienced and have high degrees;
Third: Have a team of lawyers and a systematic, professional, and thoroughly trained human resources system;
Fourth: Friendly, dedicated and make every effort for the benefit of customers. Consider customer satisfaction and work quality as your own honor;
Fifth: Professional, thoughtful, flexible and logical service provision process to optimize work performance and save customers' time;
Sixth: Reasonable and competitive service prices;
Seventh: Rich services in both fields of supply and service packages in the same field for customers to choose the appropriate service package, as well as comprehensive support for customers throughout the operation process. movement;
Eighth: Have the ability to Connect - Promote commercial relationships for customers if customers have needs,...
Finding a comprehensive, professional and reputable legal consulting organization is what every customer wants. Because no one wants to risk losing both money and time while the results are not as expected. However, finding such an organization is not easy because the number of service providers in the Vietnamese market today is very large with varying quality.
A suggestion for you: Although our TLK Law Firm does not dare to claim to be the company providing the best legal services on the market, we satisfy all of the above criteria and more. will definitely be a good choice for you.
=> See more: What documents are included in the application for additional occupations for foreign-invested enterprises?
IV. SOME QUESTIONS RELATED TO TYPES OF TAXES FOREIGN INVESTED COMPANIES MUST PAY TO THE STATE COLLECTION
Question 1: What is the corporate income tax rate?
Reply:
Pursuant to the 2006 Law on Corporate Income Tax, regulations on tax rates are as follows:
The corporate income tax rate is 20%, except for those eligible for preferential tax rates in the 2006 Corporate Income Tax Law and in the case of corporate income tax rates for prospecting, exploration, and exploitation activities oil, gas and other rare resources in Vietnam from 32% to 50% suitable for each project and each business establishment.
Please note the tax rate to pay correct and full tax to the State Budget
Question 2: My company has a charter capital of 20 billion, how much is the license fee?
Reply:
Pursuant to Decree 139/2016/ND-CP amended by Decree 22/2020/ND-CP regulating fee collection rates, organizations with charter capital or investment capital of over 10 billion VND: 3,000,000 VND /year.
Therefore, your company must pay a license fee of 3,000,000 VND/year.
=> See more: Can foreign companies register new professions?
Above is some general advice that we would like to offer to our customers. As a service provider, we always understand and are ready to accompany and solve the needs and difficulties that customers are facing. If you still have questions or need more in-depth advice, please contact the hotline: 0972118764 to receive direct advice from a lawyer (completely free consultation).
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