What is tax? Current taxes in Vietnam

Any individual or organization, regardless of gender or profession, is obliged to pay taxes according to state regulations. So what is a tax? Learn about current taxes in Vietnam in the article below of SMART SOLUTION FOR BUSINESS COMPANY LIMITED (S4B Vietnam)

1. What is tax?

Tax is a mandatory payment to the state, whether in the form of money or goods, that must be made by individuals and organizations engaged in production or business activities. It serves as a compulsory source of revenue for the state from all citizens and entities. Taxes are instituted by the government to achieve specific objectives, and generally, each tax is formulated based on factors such as its name, the entities subjected to the tax (tax users), the tax base (objects impacted by a tax policy), and the tax rate (a critical element of any tax).

Each tax performs unique functions, yields distinct effects, and applies to specific taxable objects. Importantly, taxes are interrelated and collaborate rather than oppose each other, working together to ensure the overall functionality of the entire tax system.

Guide to taxes in Vietnam

>>>Read more: Preparing for Tax Inspection: Essential Steps and Documents

2. Each tax is composed of the following elements

  • Name: The name of each tax represents the impact of the tax or the objective of applying that tax.
  • Taxpayers and TaxExempt Subjects: This factor definitively establishes the obligations of organizations and individuals to declare and pay this particular tax, or conversely, identifies the organizations and individuals exempt from the requirement to declare and pay this type of tax.
  • Tax Base: This factor clearly defines what the tax is calculated on. Depending on the purpose and nature of each tax, the tax base can be the income received during the tax period of a certain organization or individual.
  • Tax Level, Tax Rate: Tax level, tax rate is the most important element of a tax; it reflects the requirements and level of encouragement of the State on a tax basis.
  • Tax Exemption and Reduction Regime: Specifies the cases in which taxpayers are allowed to be exempt from tax or have their tax obligations reduced compared to normal.
  • Responsibilities and Obligations of Taxpayers: This element stipulates the responsibilities and obligations of taxpayers in the process of implementing tax laws.
  • Procedures for Declaring, Collecting, and Paying Taxes: Clearly stipulate forms of collection and payment, procedures for collecting and paying taxes, declaring and finalizing taxes, and time for collection and payment.

3. Current Taxes in Vietnam

Currently, Vietnam has a comprehensive regulatory framework for taxes, encompassing various types as detailed below:

3.1. Excise Tax:

Collected annually at the beginning of the year, the license tax captures statistics on individual business households, businesses, private companies, cooperatives, and other economic organizations. Recorded in Enterprise Management expenses.

3.2. V.A.T. Tax (Value Added Tax):

The V.A.T. Tax (Value Added Tax) is calculated based on the added value of goods and services throughout their production, circulation, and consumption.

3.3. Personal Income Tax:

A direct tax collected on the income of high income earners. Taxpayers include Vietnamese citizens in the country or abroad with high income and foreigners with income in Vietnam.

3.4. Corporate Income Tax:

A direct tax collected on the final production and business contract results of enterprises.
Corporate Income Tax is applicable to all organizations and individuals engaged in producing and selling goods and services.

Vietnam’s Taxes on Business

3.5. Registration Tax:

Applied in cases of transfer of ownership or use of real estate, means of transport, etc, Registration Tax must be paid when transferring ownership of any asset, recording an increase in the original price of the asset.

3.6. Special Consumption Tax:

Levied on the business of specific goods and services, mostly consumed by individuals with high incomes.

3.7. Import and Export Tax:

Also known as a tariff barrier, this tax contributes to the management of import and export activities, it helps promote the expansion of foreign economic relations and protects domestic consumer production while increasing state revenue.

3.8. Resource Tax:

A property tax contributing to the management and protection of the exploitation and use of natural resources to ensure economic, reasonable, and effective utilization, providing revenue for the state budget.

3.9. Income Tax for HighIncome Individuals:

A direct tax promoting social justice and encouraging highincome individuals to contribute to the state budget.

3.10. Housing Tax:

A type of property tax that, along with contributing to the state budget, manages the use of residential land and construction land.

3.11. Land Use Right Transfer Tax:

A direct tax contributing to the state budget and managing autocratic land use activities.

3.12. Agricultural Land Use Tax:

Targeted at organizations and individuals allocated land for agricultural production by the state.

SMART SOLUTION FOR BUSINESS COMPANY LIMITED (S4B Vietnam)

  • Address: Unit 602A, Tower A, Handi Resco Office Building. 521 Kim Ma Street, Ba Dinh District, Hanoi
  • Tel: + 84 24 3974 4181
  • Email: service@s4b.com.vn

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