Taxation Vietnam (F6) : Nguyễn Thị Thanh Hoài November 29, 2023

TAXATION VIETNAM (F6)
Associate Professor., Ph.D.

Nguyen Thi Thanh Hoai
1 Nguyễn Thị Thanh Hoài November 29, 2023

Subject Addressed
1. AN OVERVIEW OF TAXATION AND THE VIETNAMESE TAX
SYSTEM AND ITS ADMINISTRATION
2. PERSONAL INCOME TAX
3. CORPORATE INCOME TAX
4. VALUE ADDED TAX
5. FOREIGN CONTRACTOR TAX

REFERENCES
 Taxation – A university textbook
 Lecture notes
 Lecture outlines
 Legal documents
http://www.accaglobal.com/uk/en/student/exam-support-
resources/fundamentals-exams-study-resources/f6/
examinable-documents/vietnam.html
 ACCA past exams
http://www.accaglobal.com/uk/en/student/exam-support-
resources/fundamentals-exams-study-resources/f6/past-
exam-papers/vietnam.html
 Other concerning documents
LEARNING AND TEACHING METHODS
November 29, 2023 Nguyễn Thị Thanh Hoài 4

CHAPTER 1
AN OVERVIEW OF TAXATION AND THE VIETNAMESE

TAX SYSTEM AND ITS ADMINISTRATION

CHAPTER 1
1.1. The overall function and purpose of taxation
1.2. Characteristics of a good tax system
1.3. Principle of taxation
1.4.Tax avoidance and tax evasion
1.5. Overall structure of Vietnamese tax system
1.6.Tax administration
1.7.Transfer Pricing

CHAPTER 1
1.1. The overall function and purpose of taxation
1.1.1. Concepts and characteristics of taxes
1.1.2. The objective of taxation
1.1.3. Tax classification
1.1.4. Basic elements of a tax law

CHAPTER 1
- Definition of tax?
+ Who pay taxes?
+ To whom taxes are paid?
+ What are taxes used for?
+ Is it compulsory or voluntary?
Taxes are parts of income which are legally stipulated and

compulsorily paid by citizens to the government in order to
finance the public expenditures.

CHAPTER 1
- Characteristics of taxes
1) A compulsory payment
 What does a compulsory payment mean?
 Why does it need to be compulsory?
 From this feature, point out the differences between tax and
other revenues of the state.
2) An indirect compensation payment
 Why isn't it a direct compensation payment?
 Point out the signs of indirect compensation.

CHAPTER 1
1.1.2. Objectives of Taxation
1.1.2.1.To generate the government’s revenues
Why is it an important revenue of the state budget
Names of countries where tax isn't an important revenue of the
state budget.

CHAPTER 1
1.1.2.2. Macroeconomic activities adjustment
To contribute to regulate economic cycle
- State 4 stages of economic cycle
- Name some worst recessions in history
- Point out the way that tax help to regulate economic cycle
 To contribute to balance the labor market and control inflation
Describe the way that taxes can help to balance the labor market
and control inflation?

CHAPTER 1
 To stimulate the economy to develop in accordance with
government’s directions
-Which elements of a tax is often used to stimulate the economy
to develop in accordance with government’s directions
-Where and when should the tax rate be high? Give example.
-Where and when should the tax rate be low? Give example.
-Where and when should incentives are used?

CHAPTER 1
Domestic production protection
-Describe the way that tax can help to protect the domestic
production
-State the advantages and disadvantages of protectionism
-Give some examples to demonstrate the use of tax to protecting
the domestic production in Vietnam in recent years
-How does this role change in the context of global integration

CHAPTER 1
 To correct problems caused by negative externalities
- Give some examples of negative externalities of production
- Describe the way that tax can help to correct market failure
-How does environment tax affect the producers who pollute the
air, rivers, lakes and oceans?
-Can only tax help to protect the environment? If no, state some
other instruments used to protect the environment.

CHAPTER 1
1.1.2.3.To reduce the unfairness in income distribution
-What is equity? Give some examples of inequity.
-How taxes can help to reducing inequity in income distribution?

CHAPTER 1
1.1.3.1. Based on ways to levy
- Direct tax? Indirect tax?
-Give some examples of direct tax
-Give some examples of indirect tax
-Which tax, direct or indirect one, is easier to collect?
-Which one is more equitable?

CHAPTER 1
1.1.3.2. Based on bases of taxes
-Consumption tax? Income tax? Property tax?
-Give some examples of consumption tax
-Give some examples of property tax
-Give some examples of income tax
-Which of the above three kinds of tax is unfair?

CHAPTER 1
1.1.3.3. Based on the proportion between tax and income
- Progressive tax? regressive tax? Proportional tax?
-Which tax, progressive or regressive, takes more from the rich?
Which takes more from the poor?
-Give example of progressive tax?
-Give example of regressive tax?
-Give example of Proportional tax?

CHAPTER 1
1.1.3.4. Based on the the power to levy
-Where doesn’t federal tax and local tax exist?
-Where does federal tax and local tax exist?
-Point out some countries where federal tax and local tax exist?
-In an autonomy system, can a local authority decide any tax they
like and any tax rate they like?

Tax classification

1.1.4. Basic Elements of a tax law
Name of a tax • Specific rate

• Ad valorem rate
• Single specific
Taxpayer rate
• Proportional rate
Tax base
• Progressive rate
Tax rate
• Exemption
• Tax holiday
Iincentives • Preferential rates
• Tax credit
• Double deduction
Procedures
Punishment
CHAPTER 1
1.2.1. Equity
-Horizontal equity?
-Vertical equity?
-How to measure the ability to pay?
1.2.2. Efficiency
-Two aspects of efficiency?
-What does “efficiency in tax administration” mean?
-What does “efficiency in socio-economic impact” mean?
1.2.3. Stability
-Why should a tax system be stable?
-What should a government do in enacting a tax law to get this standard?

CHAPTER 1
1.2.4. Adaptability
-Why should a tax system be adaptable?
-What should a government do in enacting a tax law to get this
standard?
1.2.5. Transparency
-What does transparency mean?
-Why should a tax system be transparent?
-What should a government do in enacting a tax law to get this
standard?

CHAPTER 1
1.3.1.Benefit-received principle
-What is the root of this principle?
-What does this principle mean?
-In what circumstances can we apply this principle? In what not?
1.3.2. Ability-to-pay principle
-What is the root of this principle?
1.3.3. Origin principle
-In what circumstances can we apply this principle?

CHAPTER 1
1.3.4. Destination principle
1.3.5. Source principle
1.3.6. Resident principle

CHAPTER 1
1.4. Tax avoidance and Tax evasion
There are 2 ways in which tax can be reduced: legally

and illegally
Tax minimization = reducing tax by using legal
means ( Tax planning techniques?)
Tax evasion = reducing tax by using illegal means
It is note that: tax avoidance = illegal activities intended
to reduce tax
CHAPTER 1
1.5. Overall structure of Vietnamese tax system
 Value added tax;
 Excise duty;
 Customs duty;
 Environmental protection tax;
 Corporate income tax;
 Personal income tax;
 Agricultural land use tax;
 Non-agricultural land use tax;
 Natural Resources tax.

TAX LAW ( NA)
TAX DECREE( Government)
TAX CIRCULAR ( MOF)

CHAPTER 1
1.6.The system of registration, the making of return and the payment
of tax
Legal documents
The Law No. 38/2019/QH14 dated June 13, 2019 on Tax
Administration
 Decree No. 126/2020/ND-CP dated 19/10/2020 on Tax
Administration
Decree No. 125/2020/ND-CP dated 19/10/2020 on Tax Penalties
Circular No 80/2021/TT-BTC dated 29/9/2021 on tax Administration
Circular No 105/2020/TT-BTC dated 03/12/2020 on tax registration

CHAPTER 1
1.6.1. The system of registration, the making of return and the
payment of tax
- Tax registration
- The submission of information and claims
- The making of returns and the payment of tax liabilities

Tax registration
Nguyễn Thị Thanh Hoài November 29, 2023

CHAPTER 1
1.6.1. The system of registration, the making of return and the
payment of tax
-The submission of information and claims
- Principle?
-The deadline for submission tax returns:
+ monthly tax declaration?
+ quarterly tax declaration?
+ annual tax declaration?
+ annual tax finalization dossier?
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+….Nguyễn Thị Thanh Hoài November 29, 2023
CHAPTER 1
1.6. Tax administration
1.6.1.The system of registration, the making of return and the
payment of tax
- The making of returns and the payment of tax liabilities
+ The deadline for tax payment
+ The authorities receiving the tax payment
1.6.2. The procedure relaiting to enquires, appeals and disputes

CHAPTER 1
1.6. Tax administration
1.6.3. Tax penalties and fines
1.6.3.1. Priority order for payment of taxes and fines
1.6.3.2. Tax penalties and fines

1.6.3.1. Priority order for payment of taxes and fines
Present
Nguyễn Thị Thanh Hoài

1.6.3.2. Tax penalties & fines

CHAPTER 1
1.7.1. Legislation
 The Law No. 38/2019/QH14 dated June 13, 2019 on
Tax Administration
 Decree No. 132/2020/ND-CP dated 05/11/2020 on
Tax Administration applicable to enterprises having
related party transactions.

CHAPTER 1
1.7.2. Scope of application
1.7.3. Definition of related parties
1.7.4. Transfer pricing method
1.7.5. Tax administration

CHAPTER 2
PERSONAL INCOME TAX

CHAPTER 2
2.1. OVERVIEW OF PIT
2.2. THE SCOPE OF PIT
2.3. INCOMES SUBJECT TO PIT
2.4. COMPUTATION OF PIT LIABILITIES
2.5.TAX REDUCTION AND TAX EXEMPTION
2.6.TAX DECLARATION AND PAYMENT

CHAPTER 2
2.1. OVERVIEW OF PERSONAL INCOME TAX
 What is PIT?
 Prove that PIT is a direct tax
 Why is PIT personal income tax is high progressive

CHAPTER 2
2.2. THE SCOPE OF PERSONAL INCOME TAX
2.2.1. Taxpayer
Individuals living in Vietnam (resident taxpayers) and individuals
who do not live in Vietnam but receive income from Vietnam
(non-resident taxpayers) are liable to pay income tax
Resident individual?
Non-resident individual?

CHAPTER 2
2.2. THE SCOPE OF PERSONAL INCOME TAX
2.2.2. The scope of tax liabilities to resident and non resident
taxpayers
2.2.3. Basic of assessment
For resident individual
- Annual tax declaration
- Declaring tax when an income is earned (Transaction)
For non – resident individual

CHAPTER 2
2.3.1.Types of incomes subject to PIT
 Students read texbook and identify 10 types of taxable
incomes
(1) Business income
(2) Income from salaries and wages. (Note:Special-treatment
income of benefit- in-kind)
(3) Income from capital investment
(4) Income from capital transfer
(5) Income from the transfer of immovable properties

CHAPTER 2
2.3.1.Types of incomes subject to PIT
(6) Income from winning prizes
(7) Income from copyrights
(8) Income from franchising
(9) Income from the inheritance
(10) Income from the gifts

CHAPTER 2
2.3.2. Allowances, benefit and receipt not subject to PIT
 What are they?
 Reason why?
2.3.3. Exempt incomes
 What are exempt incomes?
 Point out the rationale of exempt incomes?

CHAPTER 2
2.4.1. For resident taxpayers
2.4.2. For non- resident taxpayers

1. Business income:
PIT payable = Revenue subject to PIT x Tax rate
- Revenue?
- Tax rate
2. Income from salary and wages
PIT payable= Assessable income x PIT rate
- Base(Assessable) income?
- PIT rate: progressive tax rate

Assessa = Taxable - Compulsory - Family - Contributions

ble income or voluntary deduction to charity and
income insurance humanitarian
premiums purposes

Deduction for compulsory or voluntary insurance premiums
- Compulsory insurance includes: Social insurance, health care
insurance, unemployment insurance, insurance of occupational
responsibility under the Law on Social insurance and the Law
on Health care insurance of Vietnam.
- Deduction for voluntary insurance premium is only applicable to
voluntary retirement fund premium.

 Family deduction:
- Self deduction: VND 11 million per month (VND 132 million per
annum).
- Dependant deduction: Each dependant is deducted VND4.4
million per month.
Principles for dependant deduction:
+ Taxpayer must have TIN
+ Each dependant is assessed once for one taxpayer
Who is dependant? Condition?

 Deduction for contributions for charity and humanitarian
purposes:
- Contributions made to organizations and foundations which
provide money for children with special difficult situations,
handicapped persons, and helpless elders;
- Contributions made to charity, humanitarian funds and
scholarship funds.

3. Income from capital investment
PIT payable = Assessable income x Tax rate of 5%
Exempt:
- Interest from bank deposit
- Interest on bonds issued by the Vietnamese
Government

4. Income from capital transfer
- For income from transferring contributed capital
PIT payable = Assessable income x Tax rate of 20%
Assessable income = Selling/tranfer price - buying price
- Reasonable expenses directly related
- For income from Securities transfer
PIT payable = Assessable income x Tax rate of 0,1%

5. Income from immovable properties transfer
Personal income tax payable = Transfer price x Tax rate
of 2%

6. Income from Prizes, royalties’ income, franchising, inheritances
and gifts
Taxable come X
Less: VND 10 million (X)
Assessable income X
Taxpayable : @ Tax rate X
(Tax rate: Royalties income and franchising income: 5%;
Income from prizes, inheritances and gifts: 10%)

CHAPTER 2
2.4.2. For non- resident taxpayers
- Formula of defining PIT liabilites?
- Explain the factors of the formula?
- Distinguish the differences in tax liabilities between resident
taxpayers and non-resident taxpayer?

CHAPTER 2
2.5.TAX REDUCTION AND TAX EXEMPTION
2.6.TAX DECLARATION AND PAYMENT
2.6.1. Registration
2.6.2. Declaration, payment and finalization
- Deadlines
- Places and procedures and
- Currency for tax payment

CHAPTER 3
CORPORATE INCOME TAX

CHAPTER 3
3.1. OVERVIEW OF CIT
3.2. THE SCOPE OF CIT
3.3. THE COMPUTATION OF CIT
3.4. TAXABLE INCOME
3.5. EXEMPT INCOME
3.6. LOSSES CARRIED FORWARD
3.7. DEDUCTION OF SCIENCE AND TECHONOLOGY FUND
3.8. TAX RATES
3.9. TAX INCENTIVES
3.10. TAX DECLARATION AND PAYMENT

CHAPTER 3
3.1. OVERVIEW OF CIT
 What is CIT?
 What is the core part of the base of CIT?
 Point out characteristics of corporate income tax?
 Point out strong points and weak points of CIT as being a direct
tax?
 Why CIT is dependent on the profitability of the taxpayers’
business?
 Prove that CIT is less sensitive than PIT?
 In what case, CIT is regarded as a withholding tax of PIT? In what
case not?

CHAPTER 3
3.2. THE SCOPE OF CIT
3.2.1. Taxpayer
Who is liable to pay corporate income tax in Vietnam?
3.2.2. Tax period
Calendar year or the fiscal year
3.2.3. Incomes subject to CIT
Incomes derived in Vietnam and overseas incomes.

CHAPTER 3
3.3.1. The comprehensive computation of CIT
CIT amount payable = (Base income -Deduction of Science and
Technology Fund) x CIT rate
Base = Taxable - Exempt - Lossescarried
income/Assess income incomes forward
able income

CHAPTER 3
3.3.1. The comprehensive computation of CIT
Taxable = Base - Deductible + Other incomes

income turnover expenses
3.3.2. Templates for computation of CIT

there are 2 templates:
Template 1: Based on components of formulas for CIT
Template 2: based on steps when make CIT finalization( from
Accounting Profit before tax make Adjustments comes
Taxable income)
64 November 29, 2023
Template 1
Turnover X
Less: Deductible expenses (X)
Add: Other income X
---------------------
Taxable income X
Less: exempt income (X)
Less: Loss c/f (X)
-----------------------
Assessable income X
Less: Science & Technology fund allocation (X)
Net Assessable income X
65
CIT Nguyễn
payable @ CIT rate %
Thị Thanh Hoài
X
November 29, 2023
Template 2
Accounting Profit before tax X
Add:
Adjustments that increase turnover X
Expenses of the reduced turnover X

Income tax paid on the overseas income X
Non-deductible expenses expenses X
Other adjustments that increase profit before tax X
Less:
Turnover that was taxed previous years (X )
Expenses of the increased turnover (X)
Other adjustments that reduce accounting profit before tax (X)
Taxable income X

Template 2
Taxable income X
Less:
Exempt income
Losses carried forward (X)
Deduction of Science & technology fund (X)
Income from transfer of real estate X
Assessable income from trading and production X
Tax payable @ 20% X
Less:
Tax reduction due to tax rate lower than 20%
(X )
Tax liability that is exempted/reduced (X )
Tax paid on overseas income (to be restricted to the amount of tax payable
in accordance with Vietnam laws) (X)
Tax liability for production and trading in goods and services X
Template 2
Tax liability for production and trading in goods and services X
Add: tax on income from transfer of real estate (if any) X
 Total tax liability X
 Paid amount for the first 3 quarters
X
 Tax payable
X
 75% of tax liability
X
 Difference between 75% of tax liability and paid amount X

3.3.3. The computation of CIT for overseas income
- What information need to be clarified when calculate

CITpayable in Vietnam?
- How to determine CIT payable in Vietnam?

CHAPTER 3
3.4.TAXABLE INCOME
3.4.1 Base turnover
 What is base turnover under CIT?
 What are excluded out of base turnover?
 What is the time of booking turnover for CIT
purpose?
 The turnover for calculating taxable income in a
some cases

CHAPTER 3
3.4.TAXABLE INCOME
3.4.2.Deductible and non-deductible expenses for
determining taxable income
3.4.2.1. Conditions for deductible expenses
What are conditions for deductions as CIT purpose?
Describe them?

CHAPTER 3
3.4.2.1. Conditions for deductible expenses
 Conditions for deductions as CIT purpose:
Expenses are deductible if they are not in the list of non -
deductible expenses stipulated by legislation and meet the
following conditions:
a, Actual expenses used for generating income or for the purpose
of business
b, Legitimate invoices and vouchers
c,There is proof of non-cash payment for each invoice for
purchase of goods/ services of VND 20 million or over
(including VAT).
CHAPTER 3
3.4.TAXABLE INCOME
3.4.2.Deductible and non-deductible expenses for determining
taxable income
3.4.2.2. Non-deductible expenses
 How many kinds of non – deducible expenses are there
under the Act of CIT of Vietnam?
 Find deductible expenses that cannot exceed a ceiling
imposed by law?

CHAPTER 3
- Expenses that do not meet all of the conditions for deductions
as CIT purpose
- Expenses covered with other sources; expenses covered by the
enterprise’s science and technology fund; Purchase of golf
membership; golfing expenses.
- Payment of fines for administrative violations,
- Provisions exceed the level allowed by legislation

CHAPTER 3
- Depreciation of fixed assets in one of the following cases:
+ Depreciation of fixed assets that are not used for business operation.
+ Depreciation of fixed assets without proof of ownership of the enterprise
(except for fixed assets under a lease purchase contract).
+ Depreciation of fixed assets that is not recorded in the accounting books
under applicable accounting regulations.
+ Depreciation beyond the limit imposed by the Ministry of Finance
+ Depreciation of fixed assets that have been fully depreciated

CHAPTER 3
- Expenditure on consumption of raw materials, fuel, energy, and goods
beyond limits on reasonable expenses imposed by the State.
- In-kind expenditure on employees’ clothing without invoices. Monetary
expenditure on employees’ clothing that exceeds VND 05
million/person/year.
- Rewards for ideas and innovations without specific regulations, without a
council to assess ideas and innovations.

CHAPTER 3
- Expenditures on wages and bonus for employees in one of the following
cases:
+ Expenditure on wages and other payables to employees that have been
included in operating costs in the period but are not actually paid or do not
have proof of payment as prescribed by law.
+ Wages, bonuses for employees that are not specified in one of the following
documents: employment contract, collective bargaining agreement, financial
regulation of the company,…

CHAPTER 3
- Expenditures on wages and bonus for employees:
+ Expenditures on wages, salaries, and allowances of employees that have not been
paid after the annual tax declaration is submitted, unless the enterprise has made
a provision for inclusion in the wage fund of the succeeding year. The annual
provision is decided by the enterprise, provided it does not exceed 17% of the
released wage fund.
+ Wages and salaries of the owner of a private company, a single-member limited
liability company (owned by an individual); wages of the founders, members of the
Board of members or the Executive Board who do not directly participate in
business administration

CHAPTER 3
- Expense in excess of the level of VND 3 million/month/person
for setting up the voluntary pension fund and buying
voluntary retirement insurance for employees; expense in
excess of the level prescribed by the laws on social
insurance and health insurance for setting up funds of social
security nature (social insurance and additional retirement
insurance), health insurance fund and unemployment
insurance fund for employees.

CHAPTER 3
- Payment of interest on loan serving business operation taken
from entities other than credit institutions or business
organizations which exceeds 150% of basic interest rate
announced by the State bank at the time of taking the loan.
- Payment of interest on loan equivalent to charter capital deficit
(or invested capital in case of private companies) according
to the capital contribution schedule, even if the enterprise is
already in operation.
- Payment of loan interest during investment phase which has
been included in value of assets or value of constructions
invested.
80
CHAPTER 3
- Provision of sponsorship for education for illegitimate
recipients or without documentation
- Provision of sponsorship for healthcare for illegitimate
subjects or without documentation.
- Provision of disaster recovery aid for illegitimate subjects or
without documentation

CHAPTER 3
- Provision of sponsorship for building gratitude houses, houses
for the poor, or great unity houses for illegitimate recipients
or without documentation
- Provision of sponsorship for scientific research against the law;
provision of sponsorship for beneficiaries of incentive policies
against the law; provision of sponsorship for extremely
disadvantaged areas State programs.

CHAPTER 3
- Input VAT that has been deducted or refunded;
- Input VAT of fixed assets being cars for the transport of 9
persons or fewer that exceeds the deductible limit prescribed in
legislative documents on VAT;
- CIT; personal income tax unless the employment contract
states that employees’ salaries are exclusive of personal
income tax
- ….

CHAPTER 3
3.4.TAXABLE INCOME
3.4.3 Other income
- What is other income?
- How many cases of other income?

CHAPTER 3
3.4.3 Other income
- Some cases:
+ Interests
Received interest > payable interest: other taxable income
Received interest < payable interest: Set off against
assessable income
+ Fines for breach of economic contracts
Received compensation > payable fines: other taxable
income
Compensation < payable fines: Set off against other
taxable income then assessable income

CHAPTER 3
3.4.3 Other income
- Some cases:
+ Property liquidation
Taxable income from liquidation= Liquidation turnover-
Liquidation expenses-Book value at the time of
liquidation
+…

CHAPTER 3
3.5. EXEMPT INCOME
- How many kinds of exempt income?
- Discover the rationale of exempt income?

CHAPTER 3
3.6. LOSSES CARRIED FORWARD
 Carried forward since the subsequent year of loss
 Consecutive 5 years
 Losses carried forward: special case: transfer of real
estate

CHAPTER 3
3.7. DEDUCTION OF SCIENCE AND TECHONOLOGY
FUND
- Maximum amount of 10 percent of assessable income
- The business establishments have to use this fund to
cover all expenses related to scientific research and
technology innovation in Vietnam.
3.8. TAX RATES
- Standard rate: 20%
- Preferential rates: 10, 15 and 17%
- High rate: 32 to 50%
CHAPTER 3
3.9. TAX INCENTIVE
Conditions for application of enterprise income tax
incentives
Application scope of CIT incentives (location; business
field ; Large-scale production project
Forms of CIT incentives (Preferential rates;Tax
holidays and Other deduction)

CHAPTER 3
3.10.1. Tax Declaration
3.10.2. Tax payment

CHAPTER 4
VALUE ADDED TAX

CHAPTER 4
4.1. OVERVIEW
4.2. SCOPE OF VAT
4.3. TAX BASE
4.4. VAT METHOD
4.5. INVOICES
4.7. TAX REFUND

CHAPTER 4
4.1. OVERVIEW
4.1. Definition
What is VAT?
4.1.2. Characteristic
• Prove that VAT is a multi-phased consumption tax.
• Why is VAT a neutral tax?
• Prove that VAT is an indirect tax.
• Prove that VAT is a regressive tax.
Role of VAT?

CHAPTER 4
4.2. SCOPE OF VAT
4.2.1. Taxpayer
Point out main factors of Taxpayer?
Give some examples of Taxpayer?
4.2.2. Taxable objects
Which items are VAT taxable?
Give some examples of taxable goods and services?

CHAPTER 4
4.2. SCOPE OF VAT
4.2.3. Non-Taxable objects
 Point out characteristics of non-taxable goods and
services?
4.2.4. Cases not required to calculate and declare VAT
Explain the rational of cases not required to calculate
and declare VAT?

CHAPTER 4
4.3. TAX BASE
4.3.1. Base price
In principle, what is the base price?
What is the base price for imported goods?
Base prices in some special cases:
- For goods and services subject to other taxes
- For goods and services are consumed internally
- For goods and services used for promotion
- For services of leasing assets
- For goods sold on installment or deferred payment
- For specific documents such as freight tickets, lottery
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tickets…
CHAPTER 4
4.3. TAX BASE
4.3.2. Tax rates
How many rates are there? What are they?
The key word for the application of zero rate?
What transactions are applicable of zero rate?
Transactions those regarded as export?
What are conditions for zero rate?
Point out the exceptions of zero rate: cases of
exported goods and services where zero rate are not
applicable.
What is the purpose of zero rate?
CHAPTER 4
4.4. VAT METHOD
4.4.1. Credit method
Who has to apply this method?
Condition for applying Credit method?
Formula
VAT payable = Output VAT – Deductible input VAT
- Output VAT
+ What information need to be clarified when determine output
VAT?
+ How to calculate Output VAT?
+ Give an example to illustrate?
CHAPTER 4
4.4. VAT METHOD
4.4.1. Credit method
- Deductible input VAT
+ What information need to be clarified when determine
deductible input VAT?
+ Principles when determining deductible input VAT?
+ Conditions for deductible input VAT?
+ Give an example to illustrate?
In what case input VAT is not deductible?
CHAPTER 4
4.4. VAT METHOD
4.4.2. Direct method
- For gold, silver and gems trading busin esses: Direct on
added value
- For other cases: The payable VAT is calculated at a
deemed rate on gross turnover

CHAPTER 4
4.5. INVOICES
 Which type of taxpayers apply value added invoice?
 Which type of taxpayers apply sale invoice?
 Forms of invoice?
 Ways to use invoices in special cases?

CHAPTER 4
4.6.1. Tax declaration
4.6.2. Tax payment (deadlines, places and procedures and currency
for tax payment)
4.7. TAX REFUND
 How many cases where input VAT can be claimed for refund?
Describe each.
 Procedures and deadline for settlement of tax refund
 Explain the rationale of VAT refund?

CHAPTER 5
FOREIGN CONTRACTOR TAX

CHAPTER 5
5.1. DEFINITION
 Who is a Foreign Contractor (“FC”)?
 What is foreign contractor tax?

Introduction
 FCT was first introduced in Vietnam in 1994, starting from
taxation of royalties
 FCT refers to a tax collection mechanism imposed on foreign
organizations and individuals doing business in Vietnam or
deriving income from Vietnam without an investment
certificate
 FCT comprises of direct tax (i.e. CIT and PIT for corporate
and individual, respectively) and indirect tax (i.e. VAT)
 FCT is common in the world under the name “withholding tax”

Contents
5.2. SCOPE OF APPLICATION
- What is subject to FCT?
- What is non- subject to FCT?
Criteria are used for determining scope of application:
+ Place of conducting bussiness activity?
+ Type of bussiness activity?
+ Who do bussiness activity?

Case 1
A
FCT
Producing/
processing $$
X
B
declare, $$$
deduct and
pay tax

Case 2
NO
E FCT
processing
Materials
G products
Processing

CHAPTER 5
- Who has to pay taxes under FCT regulations?
 Foreign contractors and sub-contractors who is eligible to
apply VAS method FCT declaration or Hybrid method FCT
declaration.
 Vietnamese contractual parties, who are liable to withhold
the taxes before making payments to foreign contractors or
sub-contractors.

CHAPTER 5
- Which taxes has to pay?
 Foreign contractors and sub-contractors being business
organizations: CIT and VAT;
 Foreign contractors and sub-contractors being business
individuals: VAT and PIT. If foreign individuals have income
on an employment basis, they are only subject to PIT

CHAPTER 5
 Value added taxable subject and Corporate income taxable
subjects?
 How to calculate FCT payable?
- Declaration method
- Direct Method
- Hybrid Method

Method 1 :Declaration method
FCT = VAT + CIT
VAT: deduction method in accordance with VAT Law
VAT VAT
VAT = - input
output
CIT: based on profit in accordance with CIT Law

Assessable
CIT = x CIT rate
income

Method 2: Direct method
FCT = VAT + CIT
VAT calculation
VAT- Deemed
VAT taxable VAT
= x
turnover rate
CIT calculation
CIT-
Deemed
CIT = Taxable x CIT rate
turnover

Method 3: Hybrid method
FCT = VAT + CIT
VAT: deduction method in accordance with VAT Law
VAT VAT
VAT = -
output input
CIT are withheld by Vietnamese party at deemed percentages of

taxable revenue
CIT-
Deemed
CIT = Taxable X CIT rate
turnover
Who pays FCT?
Deduction method (i.e. VAS foreign contractor)
Vietnamese party $$$ Foreign contractor
Tax department CIT & VAT

Who pays FCT? (con’t)
Direct method (i.e. non-VAS foreign contractor)
Vietnamese Foreign
$$$
party contractor
CIT
&
VAT
Tax department

Who pays FCT? (con’t)
Hybrid method (i.e. foreign contractor applying simplified VAS)
Vietnamese Foreign
$$$
party contractor
CIT
Tax department VAT

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Taxation Vietnam (F6) : Nguyễn Thị Thanh Hoài November 29, 2023

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TAXATION VIETNAM (F6)

Associate Professor., Ph.D.

1 Nguyễn Thị Thanh Hoài November 29, 2023

2. PERSONAL INCOME TAX

3. CORPORATE INCOME TAX

4. VALUE ADDED TAX

5. FOREIGN CONTRACTOR TAX

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November 29, 2023 Nguyễn Thị Thanh Hoài 4

AN OVERVIEW OF TAXATION AND THE VIETNAMESE

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Taxes are parts of income which are legally stipulated and

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Name of a tax • Specific rate

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There are 2 ways in which tax can be reduced: legally

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TAX DECREE( Government)

TAX CIRCULAR ( MOF)

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Nguyễn Thị Thanh Hoài

Nguyễn Thị Thanh Hoài

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PERSONAL INCOME TAX

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Assessa = Taxable - Compulsory - Family - Contributions