Ensuring business compliance is extremely important once you have successfully set up a foreign-owned company in Vietnam. Therefore, we have compiled this detailed article, focusing on the one-year cycle of corporate compliance in order to help you plan ahead and easily meet all the requirements for business compliance in Vietnam.
Post Incorporation Business Compliance in Vietnam
Tax registration
After getting a Business Registration Certificate, your initial priority is to carry out tax registration at a local tax department. This essential step ensures that your company receives a unique company registration code, which simultaneously functions as the tax code number.
VAT invoices
In Vietnam, companies have the flexibility to utilize various types of invoices, including pre-printed, electronic, self-printed, or ordered invoices.
Pre-printed invoices are for companies employing the direct deduction method and are available for purchase through the Municipal Taxation Department. Additionally, you have the option to use electronic, self-printed VAT invoices, or ordered invoice templates. However, it is essential to note that these invoices must be registered with the Municipal Taxation Department, which can prolong the invoicing process by up to 10 days.
When you use MD Law Firm’s Tax & Accounting Service, you can easily avoid the worries of requesting or registering VAT invoices. We provide complete help with this to ensure your business compliance in Vietnam, allowing you to have a seamless and hassle-free experience.
Find more information in our previous article about accounting for Vietnam business owners.
Capital contribution
After you receive the Business Registration Certificate, you have 90 days to meet the capital contribution requirement. But if the amount of contributed capital ends up being different from what you initially registered, you will need to re-register your business license. This means you will have to update the capital contribution amount in the license documents to match the actual amount.
Year-round Business Compliance in Vietnam
Quarterly business compliance in Vietnam
Vietnam tax timeline
|
Type of Tax |
Quarterly Declaration and Payment Due |
|
Value-Added Tax |
No later than the 30th day of the following quarter |
|
Personal Income Tax |
No later than the 30th day of the following quarter |
|
Corporate Income Tax |
Paid on estimates, no declaration required Due: the 30th day of the following quarter |
Foreign labor use report
To follow the rules outlined in Circular 152/2020/ND-CP, when you hire foreign employees, you have to submit a report about their employment. This report needs to be filed every quarter and year, and it gives an overview of how many foreign workers you used in the previous quarter and throughout the whole year.
Biannual business compliance in Vietnam
Labor use report
Within 30 days after incorporation, it is mandatory to register all employees on your payroll in Vietnam. Additionally, the Municipal Department of Labor requires a biannual labor use report, providing an overview of employee numbers, positions, qualifications, and contract types.
Discover all the steps of how to hire staff in Vietnam and find additional information regarding updates to Vietnam’s Labor Law from our previous articles.
Annual business compliance in Vietnam
The yearly financial audit
According to the Law on Independent Audit, you need to submit audited financial statements within 90 days after the end of the fiscal year, which means by the end of the first quarter. The audit must be conducted by an independent auditing company based in Vietnam.
When submitting the statements, you will need to involve relevant authorities:
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The Provincial DPI/Export Processing
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Industrial Zone Department (for foreign-owned enterprises in industrial zones/export processing zones)
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Provincial-level tax departments, and statistical offices.
Foreign investment reports
It’s worth mentioning that foreign investors’ project reports need to be submitted at the start of the year. These reports give an overview of the profits, expenses, and losses incurred in the previous year.
Business license tax
New organizations in Vietnam are exempted from the business license fee for their first year (January 1st to December 31st). The deadline for Business License Tax (BLT) payment is January 30th of the following year. The tax amount is based on the registered capital of the company. If there are any changes to the capital contribution, you will need to submit a new business license application.
MD Law Firm’s tax service covers the annual payment of this tax. Feel free to contact us if you would like to learn more about how we can help you achieve business compliance in Vietnam.
Corporate income tax and personal income tax settlement report
Corporate Income Tax (CIT) and Personal Income Tax (PIT) reports are submitted once a year, within 90 days after the fiscal year ends. It’s important to note that any outstanding tax payments need to be fulfilled at the same time, including any additional tax or tax refunds.
Registering local and foreign employees
Registration for social insurance
According to Decree 143/2018/ND-CP, starting from 1 January 2022, employees in Vietnam are required to contribute 8% of their monthly salary to the retirement and survivorship fund.
The percentages differ for resident and foreign employees:
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Employees: 8%
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Employers: 17.5%
Work permits for foreign employees
According to the Labor Code 2019, the labor use report should be submitted biannually. However, in the case of employing foreign workers, immediate registration is mandatory.
Article 155 of the Labor Code introduces stricter regulations on recruiting foreign employees, with work permits now issued for a maximum duration of 24 months. Additionally, it is essential to justify the necessity of hiring foreign workers, such as requiring proficiency in a specific language, specialized skills, international experience, and more.
Changes in corporate structure
While reports and taxes have specific deadlines, any other changes occurring within a company must be declared without delay. This includes changes such as:
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Business location
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Types of office
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Board of directors
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Shareholder or board member obtaining a new passport
Similarly, when it comes to licenses, if you intend to offer new services or sell new products during the year, it is necessary to apply for the corresponding permit within 30 days. Ensuring prompt declaration and permit applications facilitates business compliance in Vietnam.
Consequences of Non-compliance
Not meeting the tax reporting and payment requirements in Vietnam can have serious consequences for your business. Failure to submit records on time or neglecting tax and insurance fee payments will result in fines. The fine amount will be determined based on the number of days the submission is overdue. During a tax audit, if discrepancies are found, a 20 percent tax will be imposed on the under-declared amount. Additionally, there is a daily interest rate of 0.03 percent for late tax payments.
If a company ignores the fines and reporting obligations, government authorities have the power to revoke its licenses, preventing the company from operating in the future. Moreover, according to the government’s new Penal Code implemented in 2018, businesses that fail to comply with compliance laws can face criminal liability.
Ensuring business compliance in Vietnam requires accuracy and a significant amount of time. MD Law Firm offers comprehensive services to help your company meet all local regulations. Feel free to get in touch with our lawyers using the form below.