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Tax rates in Vietnam

Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT)
Tax Rate
10%
Reduced Tax Rate
There are two reduced rates:
- 0% on exported goods and services, including goods and services sold to overseas organizations or individuals outside Vietnam, as well as goods and services supplied to organizations or individuals in non-tariff areas; construction and installation carried out overseas or within export processing zones; international transportation
- 5% on water (except for bottled water); medicine and medical equipment (except for medicine included in medical service package); teaching tools; agricultural products; residential housing for sale or lease.

Several items are exempt from VAT, including livestock; aircraft, oil rigs and ships that are not yet locally produced and that are leased from overseas; land-use rights; credit activities, credit guarantees, financial leases and financial derivative services; capital transfers; securities transfers; life insurance services; health services, veterinary medicine services, including medical examination and treatment services for humans and animals; care services for elderly people and disabled people; education and vocational training; publication of newspapers, magazines and certain kinds of books; public transportation by bus and electric car; reinsurance services; technology transfers; public sewage services; foreign currency trading; credit card issuance; factoring; exported natural resources that are not processed or cover 51% into other products inclusive of energy cost.

Other Consumption Taxes
A special sales tax is levied on certain goods and services including: cigarettes, alcohol, spirits and beer, vehicles with less than 24 seats, petrol, playing cards, joss paper and some air conditioners.
An excise tax is levied on golf, night clubs, casinos, massage centres and karaoke.
An environment protection tax applies to the production and importation of certain goods deemed detrimental to the environment (especially petroleum and coal).
A natural resources tax is payable by industries exploiting Vietnam’s natural resources, with rates ranging from 1% to 40%.

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Corporate Taxes

Company Tax
The standard rate is 20%
Tax Rate For Foreign Companies
Resident companies are taxed on their worldwide income. Non-residents are taxed only on Vietnamese-source income.
Foreign-source income derived by residents is subject to corporation tax in the same way as income sourced in Vietnam.
Payments to foreign contractors are subject to Foreign Contractor Tax (FCT), which consists of value-added tax (VAT) and CIT elements. Click here for more info.
Vietnamese law defines a permanent establishment as “a fixed place of business through which a foreign enterprise carries out part or the whole of its business or production activities in Vietnam”.
Capital Gains Taxation
Capital gains are taxed as ordinary income at the corporate tax rate of 20%. The transfer value is based on the actual contract price; however,  if no contract price is available or if the price stated in the contract is deemed not to be at arm’s-length, a deemed fair market value may be used.
Gains earned by a foreign investor from selling securities are subject to corporate income tax at a deemed rate of 0.1% of the sales proceeds. The standard CIT rate will apply to any gains earned by companies not incorporated in Vietnam upon the sale of shares in a non-public, joint-stock company.
Main Allowable Deductions and Tax Credits
Depreciation of real estate, machinery, tangible and intangible assets is tax-deductible. Goodwill can also be amortised for tax purposes.
Start-up and miscellaneous expenses incurred prior to the launch of the business (advertising expenses, training, relocation costs, etc.) are deductible over a period of up to three years since the start of operations. Companies are required to provide proof of such expenses demonstrating that they were necessary and were legitimately done.
Interest charges are generally not deductible while bad debt provisions are only deductible if they have been granted according to the instructions of the Vietnamese Ministry of Finance.
Donations to charities, fines and taxes are generally not deductible. However, donations for education, health care, natural disasters, building charitable homes for the poor, or scientific research can be deducted.
Subject to conditions, companies are allowed to set up a tax-deductible R&D Fund, in which they can appropriate up to 10% of annual profits before tax (conditions apply).
Tax losses can be carried forward in full for up to five years. The carryback of losses is not permitted.
Other Corporate Taxes
A property tax is levied by municipalities on land used for commercial purposes at rates varying between 0.03% and 0.15% of the land price per square metre.
Stamp duties ranging between 0.5% and 15% are levied on certain types of assets, including real estate. Inheritances and gifts above VND 10 million are subject to income tax at 10%.
Employers contribute to social security, health insurance, and unemployment insurance at the following rates: 17%, 3%, and 1%; plus 0.5% for labour accident and occupational disease insurance contribution. Foreign employees are subject to health insurance contributions at a rate of 1.5% in certain circumstances and are subject to retirement and death fund contributions for social insurance at a rate of 8% as from 1 January 2022.
Please note that occupational diseases and accident funds (0.5%) from an employer’s contribution for both Vietnamese and foreign employees were temporarily waived from 1 July 2021 to 30 June 2022 as a COVID-19 relief measure.

A withholding tax on foreign contractors is levied on the supply of goods and services by entities located outside Vietnam. It includes corporate income tax and VAT at effective rates ranging from 0.1% to 15%.
A natural resources tax is payable by industries exploiting Vietnam’s natural resources, with rates ranging from 1% to 40%.
An environment protection tax is applicable to the production and importation of certain goods deemed detrimental to the environment (including petroleum, coal, plastic bags, certain chemicals, etc.). The rates range from VND 500/kg (for restricted use chemicals) to VND 50,000/kg (for plastic bags).
Other Domestic Resources
General Department of Taxation (GDT)
Consult Doing Business in Vietnam website (World Bank), Obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

  Vietnam East Asia & Pacific United States Germany
Number of Payments of Taxes per Year 6.0 23.4 10.6 9.0
Time Taken For Administrative Formalities (Hours) 384.0 195.1 175.0 218.0
Total Share of Taxes (% of Profit) 37.6 33.8 36.6 48.8

Source: Doing Business, Latest available data.

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Individual Taxes

Tax Rate

Individual Income Tax Tax rates from 5% to 35%.
Less than VND 60,000,000 per year 5%
Between VND 60,000,000 and 120,000,000 per year 10%
Between VND 120,000,000 and 216,000,000 per year 15%
Between VND 216,000,000 and 384,000,000 per year 20%
Between VND 384,000,000 and 624,000,000 per year 25%
Between VND 624,000,000  and 960,000,000 per year 30%
From VND 960,000,000 per year 35%
Income from sources other than employment from 0.1% to 20%
Non-resident employment income 20%
Allowable Deductions and Tax Credits
Social security, health insurance, and unemployment insurance are tax-deductible, as well as contributions to local voluntary pension schemes and to mandatory overseas insurance schemes.
Charitable contributions are generally deductible. Severance allowances, redundancy compensation, and “non-accumulative” insurance premiums are not taxable.
All tax resident individuals are automatically entitled to a personal allowance of VND 11 million per month; plus an extra VND 4.4 million per month per dependant.
Special Expatriate Tax Regime
Individual residents are subject to Vietnamese personal income tax on their worldwide income, non-residents are subject to a 20% flat tax rate on the employment income received as a result of working in Vietnam. Business income of non-residents is subject to rates from 1% to 5%, depending on the type of business income. Social security contributions paid by foreign employees differ from those that apply to nationals: they are subject to health insurance contributions at a rate of 1.5% in certain circumstances and are subject to retirement and death fund contributions for social insurance at a rate of 8% as from 1 January 2022.An individual is deemed as resident for tax purposes if he/she: stays in Vietnam for 183 days or more in either the calendar year or the period of 12 consecutive months from the date of arrival; or has a permanent residence in Vietnam and is unable to prove tax residence in another country.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of double taxation agreements signed by Vietnam.
Withholding Taxes
Dividends: 0% (paid to companies)/5% (individuals); Interest: 5%(paid to individuals or non-resident companies)/20% (paid to resident companies); Royalties: 5% (individuals)/10% (paid to non-resident companies)/ 20% (paid to resident companies).
Bilateral Agreement
The United Kingdom and Vietnam are bound by a double taxation treaty.

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Latest Update: December 2022

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