21Mar

Annual Tax Finalization and Remittance in Vietnam

Prior to transferring profits back to their home markets, foreign companies maintaining operations and taking in revenue in Vietnam must fulfill certain annual compliance requirements. These involve a statutory audit, audited financial statements, and tax finalization filings. Annual compliance procedures are not only required by law but are also a good opportunity to conduct an internal financial health check.

Pursuant to compliance, all foreign-invested entities are required to have their annual financial statements audited by an independent auditing firm. Statutory audits in Vietnam are performed in accordance with the Vietnam Standards on Auditing while financial reporting must be conducted in accordance with Vietnamese Accounting Standards (VAS). Standards in Vietnam can often differ significantly from those utilized in a company’s home market and should, therefore, be studied closely to ensure that all aspects of reporting and review are in compliance. During this process, the manner in which reporting and review are conducted should also be considered in the context of any and all reporting and finalization requirements that a company may have in its home market.

Filling deadlines

Audited financial statements and tax finalization filing must be done within 90 days from the end of each financial year. After fulfilling these obligations, and giving notice to local managing tax offices at least seven working days in advance, foreign investors may remit profits abroad. It should be noted that annual compliance for ROs is different from that for other foreign-invested entities. An RO is required to report on its activities to a local department of trade prior to the last working day of January of the following year.

Reporting compliance

As part of the reporting process, all of the applicable forms outlined below should be submitted in relation to the operations of a given company. The company will also be required to file forms related to any corporate income tax (CIT) incentives that are claimed or other deductions that the company has utilized during the fiscal year.

Late payment and tax evasion penalties

A taxpayer who pays tax later than the deadline is to pay the outstanding tax amount plus a fine equal to 0.03 percent of the tax amount for each day the payment is late. Taxpayers that make incorrect declarations, thereby reducing taxes payable or increasing refundable tax amounts are to pay the full amount of the under-declared tax or return the excess refund, and will also pay a fine equal to 20 percent of the under-declared or excess refunded tax amounts together with a fine for late payment of the tax. A taxpayer that commits acts of tax evasion or tax fraud is liable to pay the full amount of tax and a fine between one and three times the evaded tax amount.

Optimizing annual compliance

While Vietnam is one of ASEAN’s rising stars, the nation is also stuck with among the most complex and time-consuming tax systems within the region. Although many aspects of taxation can be complex, annual finalization places a particularly significant burden upon many investors. To the credit of Vietnam’s government, there have been substantial improvements to the compliance process in recent years, however, there is still significant room for improvement. On top of this, the swiftly maturing nature of tax and compliance have and will continue t0 add to a degree of uncertainty in the years to come.

To maintain compliance with Vietnamese law, and ensure that profits can be remitted without issue, it is advisable for companies to direct any and all inquiries to Vietnam’s Ministry of Finance or professional service firms operating within the country. Both parties will be able to clarify the nature of prevailing compliance and often can provide a level of practical nuance that is not available within legislation or official guidance that has been issued to date.


This article was first published March 2017.
Since its establishment in 1992, Dezan Shira & Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India and emerging ASEAN, we are your reliable partner for business expansion in this region and beyond.

For inquiries, please email us at .(JavaScript must be enabled to view this email address). Further information about our firm can be found at: www.dezshira.com

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13Jun

China’s New NGO Law and its Impact on FDI into the Higher Education Industry

China’s recently released law to regulate the activities of foreign non-governmental organizations (NGOs) has raised fresh doubts regarding foreign investment into China’s higher education industry. Set to come into effect in January next year, the law contains provisions that will further regulate education institutions with operations in the...

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13Jun

Employing Women in the Indian Workplace

The female workforce in India remains much smaller compared to the opposite gender. Some estimates reveal that while 80 percent of men are in jobs or are looking for employment, only 32 percent of women remain in the workforce. Some of this can be attributed to cultural attitudes and social norms. Despite...

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13Jun

An Introduction to Rules of Origin for Vietnamese Exports

An Introduction to Rules of Origin for Vietnamese Exports For businesses seeking to take advantage of tariff free exports and low labor costs, Vietnam is the place to go. In 2015, industry and construction made up a third of its national GDP and with the recent signing of several free trade...

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07Jun

Layoff Violations Under Vietnam’s Updated Criminal Code

Recently implemented, an updated version of Vietnamese criminal code raises penalties for illegal termination of employees. Effective from July 01 2016, Code No. 100/2015/QH13 lays out punishments, including serious fines and even jail time, for those found to be terminating or coercing the termination of employees illegally. In order to reduce exposure...

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07Jun

Accessing China’s Third Party Mobile Payments Market: A Comparison of WeChat and Alipay

The Chinese Central Bank has announced significant regulatory change to the operation of online payments, widely affecting service providers and their millions of users in China. From July 1, 2016, third party online payment service providers must ensure that all user accounts bear the real name of the account holder. In addition,...

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07Jun

Two Years into the Modi Government – How are Things Shaping Up for India?

The National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi marked its two year anniversary on May 26 of this year. Given its overwhelming mandate in the 2014 general elections, the Modi government has been held to a high standard. A bounty of electoral promises has also resulted in big...

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07Jun

Setting Sail in the Sea of Java: An Introduction to Indonesian Aquaculture

As the world’s largest archipelago, Indonesia is among the most important producers of aquaculture globally. In 2001, Indonesia ranked fourth in aquaculture output and has since increased its fishery exports to US $4 billion in 2015. Though Indonesia’s aquaculture industry has begun to make strides, it is still far from realizing...

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23May

Dissecting the India-Mauritius Amended Tax Treaty

India’s Central Board of Direct Taxes (CBDT) issued a press release on May 10, notifying of a new Protocol amending the 33-year-old India Mauritius Double Taxation Avoidance Agreement (DTAA). The Indian government is now starting talks with Singapore to introduce similar amendments in its DTAA with the nation. The two...

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23May

Mass Fish Deaths and the Future of Environmental Regulation in Vietnam

Environmental laws are on the agenda after public criticism has put the government on the back foot for failing to protect the environment from industrial pollution. Rare protests have demanded more environmental accountability on business activities and the government has suggested there may be retroactive regulatory measures taken. The recent...

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23May

Internet Censorship and China’s New Online Publication Law

China’s new Online Publishing Service Administrative Rules became effective on March 10, 2016. The law, which aims to “regulate the criteria of and promote the healthy development of internet publishing services”, has already curbed the online activity of several Western MNCs – including Apple’s iTunes and Disney’s DisneyLife – but what...

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23May

Rodrigo Duterte’s Economic Vision: The Punisher’s Plans for the Philippines

As Philippine president-elect Rodrigo Duterte prepares to take office on June 30, investors and business people both at home and abroad are wary of how the audacious politician will impact the country’s booming economy. Under President Aquino, the Philippines enacted several liberal macroeconomic reforms and experienced an average GDP growth...

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16May

Labor Mobility in ASEAN: Current Commitments and Future Limitations

With the establishment of the ASEAN Economic Community (AEC) at the end of 2015, ASEAN achieved a significant milestone in the region’s growing political, economic, and cultural integration. As set out in 2007’s ASEAN Economic Blueprint, the AEC seeks to “transform ASEAN into a region with free movement of goods,...

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16May

China’s New NGO Law: Navigating the Restrictions and Application Procedures

A change of address for a business is sometimes a necessary step towards securing long-term gains. A company’s address is a core element of registered information (along with its business scope, registered capital, and company name, etc.), and making changes to this information can be a somewhat complex process....

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16May

FATCA Leads to Stricter Reporting and More Taxation for Non-U.S. Mutual Funds

In July we reported that India and the United States signed an agreement to implement the Foreign Account Tax Compliance Act (FATCA). The agreement is designed to increase transparency between the two nations on tax matters and took effect September 30, 2015.  We are now seeing the results of this agreement...

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16May

Managing Corporate Name Infringement in Vietnam

In the midst of attracting record investment from all corners of the globe, Vietnam has a nasty secret – intellectual property (IP). Not only does the nation rank 88th out of 140 economies in terms of IP protection, but policy instability is increasingly cited by investors as a concerning aspect of doing...

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09May

Vietnamese Growth Slows to 5.46% in Q1 2016

Following explosive growth in 2015, Vietnam’s Q1 economic data shows signs of cooling. Not only has growth slowed, but published figures fail meet the annual targets set out by authorities. Although garnering significant media attention and representing salient risks for particular industries, it is clear that not all sectors face...

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09May

Changing Registered Company Address in China: Effects of the New Integrated Business License

A change of address for a business is sometimes a necessary step towards securing long-term gains. A company’s address is a core element of registered information (along with its business scope, registered capital, and company name, etc.), and making changes to this information can be a somewhat complex process....

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09May

How to Establish a Startup in India

A host of incentives have been unveiled by the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) government that seek to promote the growth of startups in India. Economic goals are at the core of the government’s reforms, which include ease of doing business, job creation, promotion of...

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