All taxes are imposed at the national level. The standard corporate income tax (CIT) rate is 20%. Enterprises operating in the oil and gas industry are subject to CIT rates ranging from 32% to 50%, depending on the location and specific project conditions. Enterprises engaging in prospecting, exploration, and exploitation of mineral resources (e.g. silver, gold, gemstones) are subject to CIT rates of 40% or 50%, depending on the project’s location.
Particularly, to support enterprises being affected by Covid-19, the Government has introduced a 30% CIT reduction for 2020 under Decree 114/2020, which took effect on 3 August 2020 and is applicable to taxpayers that have total revenue in 2020 of not exceeding VND 200 billion.
There is no concept of tax residency for CIT. Business organisations established under the laws of Vietnam are subject to CIT and taxed on worldwide income. 20% CIT shall be applicable to foreign income. There are no provisions for tax incentives for such income.
Foreign organisations carrying out business in Vietnam without setting up a legal entity in Vietnam and/or having Vietnam-sourced income are considered foreign contractors, irrespective of whether the services are performed inside or outside Vietnam. Payments to foreign contractors are subject to Foreign Contractor Tax (FCT), which consists of value-added tax (VAT) and CIT elements. See the Withholding taxes section for more information.
Preferential CIT rates of 10%, 15%, and 17% are available where certain criteria are met. See the Tax credits and incentives section for more information.
Calculation of taxable profit
Taxable profit is the difference between total revenue, whether domestic or foreign sourced, and deductible expenses (see the Deductions section), plus other assessable income.
Taxpayers are required to prepare an annual CIT return, which includes a section for making adjustments to accounting profit to arrive at taxable profit.
Local income taxes
There are no local, state, or provincial income taxes in Vietnam.