CHAPTER 1: AN OVERVIEW OF TAXATION

TAX CLASSIFICATION
- Based on ways to levy:
+ Direct tax: corporate income tax, captital gains tax, personal income tax
+ Indirect tax: value added tax, excise duty, export duty, import duty,...
- Based on bases of taxes:
+ Income tax: corporate income tax, personal income tax,...
+ Property tax: land tax, house tax, register tax, inheritance tax,. duty,..
+ Consumption tax: value added tax, turnover tax, excise
- Based on the proportion of tax to income:
+ Progressive tax: personal income tax,....
+ Regressive tax: value added tax, excise duty....
+ Proportional tax: corporate income tax....
- Based on the power to levy:
+ Federal taxes
+ Local taxes: land tax, house tax, natural resource tax,
 Excise duty and VAT
- Similartites:
They are both: indirect tax, consumption tax, regressive tax and base on law and destination
principle
- Differences:
Criteria Excise duty VAT
All most types of business entities
Tax payer Only the producers or importers
and household
The scope Narrow, only 11goods and 6 services Wide
Feature One stage phase consumption tax Multi phased consumption tax
Tax rate Higher, many tax rates Lower; only 0%,5%, 10%
Deduction Only when products are sold All input VAT qualified in term
 CHAPTER 2: VALUE ADDED TAX
2.1: CONCEPTS AND CHARACTERISTICS OF VAT
VAT is a form of sales tax, charged as a percentage of the added value of a commodity as
it changes hands from manufacturer to wholesaler, from wholesaler to retailer and from
retailer to consumer.
We can distinguish VAT from other taxes by the following characteristics:
- VAT is a multi-phased consumption tax. Vat is imposed on all phases of
production, distribution. The supplier must add the vat to the price of commodity & the
buyer pay the total. Added value is the new generated in the process of production and
business activities
- VAT is imposed on all phases of production, distribution, but it is only charged on
added value of each phase. It is a consumption tax because it is borne ultimately by the end
consumption.
- VAT is a neutral tax. VAT is not a cost to a seller. It is only a charge counted and
is paid by the buyer. on the price of commodity and paid by the buyer
- VAT is an indirect tax.
- VAT payers are those who supply products or provide services, but tax born by
consumers, because VAT is shifted onto buyers via the price of goods and services.
- VAT is regressive in relation to income.
- VAT is charged on the selling price of goods and services. VAT has effect on the
rich/high income group than on the poor/low income group.
Compare deductible VAT and credit Excise duty: There must be sufficient evidence and
vouchers of purchase of the goods
deductible VAT credit Excise duty
materials are deductible regardless of
materials are deductible if and only if they are
whether they are purchased directly
purchased directly from the seller.
from the seller or not.
Purchased Materials are only credited when
Materials purchased are fully deductible
they manufacture products consumed. Not yet
at the same period.
sold, not yet deducted. Not sold, not deducted
Only accept payments via banks, not
limited to the minimum amount.
limited to the minimum amount.
If the value of each purchase is less If the value of each purchase is less than 20
than 20 million and paid in cash, input million and they are paid in cash, input excise
value added tax is still deducted. duty is not deducted.
No purchase contract and no copy of Cpn must have purchase contract and copy of
business registration are required. business registration.
2.2: BASIC CONTENTS OF VAT IN VIETNAM
2.2.1: ΤΑΧΡAYERS
- Organizations and individuals who are engaged in producing and/or trading goods and
rendering services subject to VAT in Vietnam
- Other organizations and individuals that import goods purchase services oversea subject
to VAT
2.2.2: ΤΑΧΑABLE GOODS AND SERVICES
- Goods and services used for production, business and consumption in Vietnam (including
imported goods and services), except for these listed as non-taxable items
2.2.3: NON-TAXABLE GOODS AND SERVICES (EXEMPTIONS)
These include the following:
- Necessities such as education and health service
- Goods and services for social and charity object
- Products of preferential fields.
-Imported goods, but not really used for production, distribution and consumption in
Viet Nam.
- Products and dervices considered to be used for non-profit aim.
2.2.4: TAX BASE
VAT base is the base price. The base price for sale of goods or provision of services is the
total revenue (turnover) received or receivable by a supplier from the sale goods or
provision of service exclusive of VAT.
- For imported goods, the base price is the base price for import duty plus import
duty (if any) plus excise duty (if any) and plus environmental protection tax (if any).
- Gifts, presents, goods used for bater or as salary payments, the base price is
determined as equal to the base price of goods or services of the same or equivalent types
at the time such activities are carried out.
- For services of leasing assets, the base price is the rent exclusive of VAT.
- For goods sold on installment or deferred payment, the base price is the sum price
exclusive of VAT (excluding interests on installment or deferred payment), regardless of
the amount of each installment or deferred payment.
- For specific documents such as freight tickets, lottery tickets...
The base price = (The payment price)/(1+the tax rate(%) applicable to such G&S)
2.2.5: TAX RATE
The VAT rates are applicable uniformly to each type of goods or service production,
processing or trading stage. There are 3 rates of VAT include 0%, 5%, 10%.
- The 0% rate is applicable to exported goods and service including goods
processed for export, construction and installation of overseas works and export-
processing enterprises' works; international transportation; shops; non-taxable VAT
exported goods and services ds sold to duty-free goods sold to and/or services provided
for enterprises in non-tariff zones.
 - The 0% rate is also applicable to some service directly provided to international
shipping or international airway
Exported goods must meet some conditions to apply 0% including:
+ The payment by the importer must be done through banks;
+ Exported goods must be supported with legitimate economic contract as prescribed
by laws;
+ There is an export declaration from certified by a customs office that customs
procedure has been made for those goods.
There are some exceptions where 0% of VAT is not applicable to an exported item
or an item sold to non-tariff zone. These include
+ Exported credit and derivatives investment services; financial investment and
securities
+ Overseas reinsurance;
+ Royalty and copyright transfer overseas,
+ Sale of coming telecommunication and post service overseas;
+ Exploited mineral resources not yet processed into other products;
+ Goods and services sold to non-business households in non-tariff zones;
+ Vehicles sold to entities or individuals in non-tariff zones;
+ Gasoline sold to entities in non-tariff zones but sold in domestic market.
The rate of 5% is applicable to goods and services basically used for production and
consumption; for example, clean water for production and daily life; curative and preventive
medicines for human and animal use (including vaccines, distilled water for preparation of
injections), teaching and learning aids etc.
The 10% rate applies to goods and services not listed in 5% and 0% rate category.
2.5. EXEMPTION FROM DECLARING AND PAYING VAT
(1) Revenues from compensation, bonus, supports, emission right transfer & other
financial revenues 1qaz
(2) Organizations, individuals producing or trading in VN / purchasing services
from foreign organizations without permanent establishments in VN (tổ chức tại
VN mua dịch vụ của tổ chức nước ngoài k có cơ sở thường trú tại VN)
(3) Non-business organizations, individuals: not being VAT payers when selling
assets, including assets used for loans security at banks and credit institutions
(4) Entities that transfer project of investment in manufacturing or trade of
goods/services subject to VAT to other comps or cooperatives
(5) Contribute assets as capital for establishing enterprises
(6) Asset transfer among dependent cost-accounting member units of the enterprise
(7) Payment claiming from third parties in insurance activities
(8) Amounts collected on other’s behalf not relating to the sale of G&S of business
establishments
(9) Revenues from G&S of agent sale and commissions from agent sale at prices
prescribed by agent-appointing parties for commission & services such as
Post, telecommunication, lotteries
Air/car/train/ship ticket sale
International transport
Agents, agents of aviation, maritime services thereon applied 0% VAT rate
Insurance agents
(10) Revenues from goods, sales & agent commissions received from agent sale of
G&S not subject to VAT
(11) Comp or cooperative that pays VAT using credit invoice method & sells
unprocessed or preprocessed farming, breeding, aquaculture products to another
comp or cooperative for commercial purpose
2.2.6: VAT METHODS
VAT payable by businesses is calculated by either of the two methods: the credit method
and the direct method. If a business liable to pay VAT under the tax credit method also
trades in good, silver or gems, it must separately report these business activities for
calculation of tax under direct method.
2.2.6.1: The credit method
1. Who has to apply this method:
Business establishments which fully observe regulations on accounting invoices and
documents as prescribed by the law on accounting, invoices and documents, include:
- Business establishments who have annual turnover from selling products and
providing service from 1 billion and above, except business household
- Business establishments register volunteer applying the tax credit method except
business households
- Foreign entity and individual that provides goods and services serving petroleum
exploration and extraction pay VAT under credit method and authorizes a Vietnamese party
to deduct tax and pay VAT.
2. Determination of VAT amount payable
The VAT amount payable = The output VAT - The deductible input VAT
Of which:
- The output VAT (output tax) amount is equal to the base price of the taxable goods sold
or service provided multiplied by the rate applicable to these goods or service.
- The deductible input VAT (input tax) amount is equal to the total VAT amount stated on
the value added invoice for purchased goods or services used for production and trading in
goods and services subject to VAT or the VAT amount stated on vouchers on import tax
payment for imported goods or VAT payment made on behalf of foreign parties under the
guidance of the Ministry of Finance applied to foreign organizations and individuals doing
business in Vietnam without establishing legal entities in Vietnam.
3. Principle of deductible input VAT
When determining input tax, businesses have to comply with the following principles:
- Principle 1: Only input VAT of goods and services used for the production of and trading
in goods and services subject to VAT is deductible. Input VAT of goods or services used
for the production of and trading in goods and services not subject to VAT (exempt items)
is not deductible. Businesses have to book separately the input tax amount of the goods or
services used for the production of taxable items and exempt items.
If input tax amount of purchased goods and services cannot be separated from being
used for taxable items, for not to declare and pay VAT items or exempt items, deductible
input tax is determined by allocating the input VAT based on the ratio between turnover of
taxable items plus turnover of transactions exempt from declaring and paying VAT and
total turnover of goods and services.
- Principle 2: The deductible input VAT arising in the period is declared for credit
immediately when the VAT amount payable in that period is determined, regardless of
whether these goods or services have been delivered for use or still remain in stock.
When value added invoices of purchased goods and services are made but not yet declared
in the tax period, they are accepted for deduction in the following period except for the case
where the tax authority or a competent authority has announced their decisions on tax audit
at taxpayers' premises.
In order to be deductible, 3 conditions below must be met at the same time:
+ Condition 1: The establishment must have registered to pay VAT under credit
method.
+ Condition 2: The purchase must be supported with legitimate invoices and/or
vouchers.
+ Condition 3: Non-cash payment must be done to the purchase with total payment
of VND20, 000,000 and more.
Where businesses having customs office's certification for exported goods but lack
of proof of bank payment, they are not required to calculate the output tax but are not
entitled to claim for deduction of input VAT.
For businesses providing export services, if they do not satisfy the condition of bank
payment or the condition for being regarded as bank payment, they are not required to
calculate output tax but are not entitled to claim for deduction of input VAT.
For the cases of transitionally processed goods and on-spot exported goods, if the
businesses lack one of the documents as prescribed, they shall have to calculate and pay
VAT as if these goods were sold in domestic market.
2.2.7: Invoices
- Which type of taxpayers apply value added invoice?
Businesses applying credit method, when selling goods or providing services subject
to VAT have to use VAT invoices (except when they permitted to use special-type invoices
and vouchers writen with total payment prices) văn
- Which type of taxpayers apply normal invoice?
Businesses applying direct method, when selling goods or p Ming services have to
use normal invoices.
- Ways to write the value added invoice?
When making invoices, businesses have to fully and correc invoices. They have to
clearly write the before-VAT base charge collected in addition to the payment price (if any)
payment price
- Ways to use invoices in special cases? .
2.2.8: Tax declaration and payment
- The deadline for VAT declaration and payment?
+ VAT declaration is made on a monthly basis. Tax declaration must be filled by the
20th day of the month following the month in which the tax liabitity arises
+ Declaration of VAT for each time of arising of tax liability must be made by 10th
day from the date the tax liability arises.
- How to declare VAT in case of importation?
Businesses and importers that import goods subject to VAT have to fill in and file
VAT daclarations upon each importation at the time of import tax declaration to custom
offices.
- How to fill the VAT declaration forms?
- VAT declaration in some specific cases:
Taxpayers engaged in extra-provincial mobile construction
For dependent cost-accounting establishments
For agency activities
2.2.9: VAT refund
- How many cases where input VAT can be claimed for refund? Describe each.
Businesses applying credit method have input tax amounts not fully credited for
three or more consecutive months (regardless of the accounting year)
Businesses applying credit method export goods or services in a month and having
the input VAT amount not yet credited up to VND200 million or more considered for tax
refund for the month
For newly-invested businesses which have made business registration and registered
to pay tax under credit method but are still at the executive stage, have neither strarted
operating nor seen any output tax yet, they are entitled to tax refund as follows:
 + if the investment duration has reached one year or more, they still make monthly tax
declaration and may be considered for input tax refund every calender year.
+ If the refundable input tax amount of their invested assets reaches VND200 million or
more, the establishments are considered for tax refund.
For businesses paying tax by the tax credit method, if they have investment projects
to build production establishment which are still at the executive stage, have not yet been
put into operation and have not yet made business and tax payment registration, they are
entitled to tax refund as follows:
+ offset input VAT for use in new projects against input VAT use for other activities.
And the VAT use for the projects reaches 200 mil or more
+ when the projects are complete, projects' investors have to sum up the projects arising
VAT amount and VAT amounts refunded and not yet refunded and deliver them to the
newly-set-up enterprise for making tax declaration and payment as well as VAT refund
requests according to regulation to the managing tax offices.
Businesses finalizing tax (upon their merger, consolidtion, division, splitting,
dissolution, bankruptcy, ownership transformation, or assignment, sale, contracting or
lease) having any overpaid tax amounts or input tax amounts not yet fully credited are
entitled to tax refund.
Businesses enjoy tax refund under decisions of competent bodies defined by law.
VAT amounts paid for goods and services using for ODA-funded project in
considered to tax refund.
Vietnamese organization that use humanitarian and or non-refundable aid money of
foreign organizations or individuals for purchase of goods in Vietnam for use as aid will be
refunded the VAT.
- In what case, input VAT can be refund monthly?
- Explain the rationale of VAT refund? Are they all the like?
- What is the deadline for the settlement of VAT refund?
Where taxpayers are eligible for tax refund prior to auditing, the refund decision has to be
issued within 15 days (3 days for the tax refund for ODA-funded projects) from the date of
receipt of proper dossiers as prescribed.
The deadline for tax refund is 60 days from the date of receipt of proper dossiers as
prescribed applying for the subjects liable to audit prior to tax refund.
 CHAPTER 3: EXCISE DUTY
I. Concept and characteristics
Excise duty is a tax that is impose on certain specail goods and services imported or
produced within a country
Characteristics
Beside the characteristics of a sales tax, excise duty has the following prominent features:
- Firstly, excise duty is one-stage consumption tax. This contrast sharply to other taxes such
as VAT or turnover tax which are muti-stage taxes. Most countries only charege excise duty
on goods and services at one-stage, either at production or importation of goods and supply
of services. Excise duty is only placed on excisable goods and paid by producers or
importers, not by distributors or retailers.
- Secondly, the scope of excise duty is relatively narrow with a small numbers of excisable
goods and services. Excise duty is imposed on only a few selected goods and services which
are normally luxurious goods and services or which are regarded as doing harm to
environment or human's health: air-conditional, liquors, cigarettes, massage and casino
business.... However, categories of excisable goods and services are different from
countries to countries depending on the viewpoint of the Gov in power.
- Thirdly, the rates of excise duty are often higher than those of other sales taxes. The
justification for higher than normal rate of excise duty is that higher rate can best help to
achieve the aims of excise duty. First, large revenue from excise duty can be collected.
Second, high rate and luxury goods and services can both help to bring more revenue to the
bugdet and to get distributional equity. Third, higher rate charged on goods which are
harmful to environment, helps to reduce the production and consumption of these goods
II.Taxpayer
Excise taxpayer include organnizations and individual that produce and/or import goods
and provide services, which are subject to excise duty, or in other words, we call excisable
goods and services.
Thus, in principle, excise taxpayer is the producers and/or importer of excisable goods and
the provider of excisable services.
IV. Excisable goods and services
11 items of goods and 6 items of services
• Goods
- Cigrettes, cigars and processed products made from tobaco
- Liquors
- Beers
- Under 24-seat passenger vehicles, semi passenger automobiles;
- Airplanes
- Yatchs
- Gasoline of various kinds, naphtha, reformade components and other components for
mixing gasoline
- Air conditioners of a capacity of 90000 BTU or less
- Playing cards
- Votive gilt paper, votive objects
- Motor with cylinder capacity of over 125 cm3
* Services
- Dancing halls
- Massage parlors, karaoke bars
- Casinos, electronic games with prizes
- Betting tickets business
- Golf bussiness: sale of golf club membership cards, golf playing tickets
- Lottery business
III. Non-taxable transactions
1. Exported goods or exported goods under an entrustment contract or goods sold to a
trading company who then exports them under a contract sign with a foreign party
2. Importation of goods in the following cases:
- Humanitarian aid or non-refundable aid goods, gifts for State agencies, political
organizations, social organizations, socio-professional organizations, people's armed forced
units; belongings of foreign organizations and/or individuals that enjoy diplomatic
immunities; personal effects within the duty-free luggage quotas
- Goods transshipped, transited or transported through Vietnam's border
- Goods temporarily imported for re-exported, or temporarily exported for re-import during
the import or export duty-free period
- Goods imported for duty-free sale under the prescribed regulations
3. Transactions of specialized passenger vehicles including ambulance cars, criminal
carrying cars, funeral cars, mobile television cars, cars used for radio signals test, armored
cars used to repair public lights, under 24-seat passenger vehicles with standing places to
carry more than 24 persons, and other specialized cars under the guidance of the Ministry
of Finance
4. Air craft and passenger boats sold to those establishments who use them for goods and
passenger carrying, and tourist business.
5. Air conditioners with a capacity of 90000 BTU or less designed by the producers for
parts of transport vehicles such as coaches, buses,...
6. Reformade components, condensate and naptha directly imported by the producers in
order to produce products other than gasoline
7. Importation of goods from foreign countries into non-tariff zones, sales of goods from
domestic market into non- tariff zones for use in non-tariff zones only except for under 24-
seat passenger vehicles, and transportation of goods from one non-tariff zone to anther
→ Most of non-taxable transactions are applicable to goods which are not actually
consumed in Vietnam
IV. BASE PRICE
1. For imported goods sold domestically by the importer and on domestically made goods,
the base price is calculated as follows:
The base price of goods = [Selling price exclusive of VAT - Environmental tax (if any)]
(1 + Excise duty rate of goods)
Example 6.1: A wine production company sells its products in the domestic market. The
price exclusive of VAT of a bottle of wine is VND125,000. Excise duty rate of wine is 25%.
2. For imported goods at importation:
The base price is the import tax base price plus (+) the import tax.
The import tax base price shall be determined under the law on import duty and export duty.
If imported goods are eligible for import duty exemption or reduction, the taxable price
must not include the exempted or reduced import duty amount.
3. The excise duty base price of goods sold under a deferred payment plan or an installment
plan are selling prices exclusive of VAT, environmental protection tax (if any), and excise
tax of goods sold with one-off payment, exclusive of deferred payment interest or
installment interest.
4. Where an exporter buys goods subject to excise tax from a manufacturer and sells them
domestically instead of exporting, the taxable price in this case is the selling price exclusive
of excise tax, environmental protection tax (if any) and VAT, and shall be determined as
follows: (CT trên)
5. For services: The base price is the before VAT service provision price exclusive of excise
duty. The base price is calculate as follows:
The base price of service =Before VAT price of service/(1 + Excise duty rate of service)
For some special services, the base prices are determined as follows:
- For dancing halls: The base price is the before-VAT price exclusive of excise duty,
including sale of tickets and sale of all goods sold in dancing halls such as beers, alcohol,
cigarettes, fruit juice and other goods.
- For entertainment with bet tickets: The base price is the difference between the sales from
the bet tickets minus (-) the prize paid to the winners of betting.
- For golf business (including operation of golf training courses), the base price is the VAT-
exclusive revenue from selling membership cards and golf tickets, including training
tickets, charges for course maintenance, buggies, caddies, deposits (if any) and other
amounts paid by golf players and members. If the deposit is returned, tax thereon shall be
deducted from tax payable in the subsequent period or refunded under regulations. If a golf
business establishment also sells other goods and services that are not subject to excise tax
such as hotel, food and beverage, goods and games, these goods and services are not subject
to excise tax.
6. For goods or services used for purposes of exchange or internal consumption, gift or or
sales promotion: The base price is the base prices of goods and services of the same or
equivalent type at the time such activities are conducted.
V. TAX DEDUCTION
1. Subject for excise tax deduction
- Taxpayers that produce exisable goods from exisable raw materials.
- Importers when sell exisable imported goods domestically is entitled to deduct of the
excise tax amount paid at importation
2 Conditions for excise tax deduction
- For importation materials subject to excise tax to manufacture goods subject to excise tax,
and for importation goods subject to excise tax, the receipt of excise tax payment at
importation is the basis for excise tax deduction.
- For cases of purchasing raw materials directly from domestic producers:
+ Goods sale and purchase contract, clearly indicating that the goods are produced
directly by the seller, copy of the seller's business registration certificate (containing the
seller's signature and seal);
+ Via-bank payment documents;
+ Documents as a basis for excise tax deduction are value-added invoices issued
upon goods purchase.
3. Determination excise tax deduction amount
For purchasing raw materials directly from domestic producers: The amount of
excise tax paid by the buyer when buying materials = Taxable price x Excise
duty rate, in which:
- Taxable price = [VAT- exclusive buying price Environmental protection tax (if any)]/(1
+ Excise tax rate)
- The deductible excise tax amount equals payable excise tax or paid excise tax on the
quantity of materials used for manufacturing goods sold in the period
4.ED REFUND
 goods temporarily imported for re-export
 goods which are raw materials imported for export production and processing
 tax finalization upon merger, separation, split-up, dissolution, bankruptcy, change of
ownership, assignment, sale, contracting or lease of state enterprises, production and
business establishments that have overpaid ED
 international treaties
 CHAPTER 4: CUSTOMS DUTY
I/ CONCEPTS AND CHARACTERISTICS
1. Concepts
Custom duty as A government tax on imports and exports of commodities in order partly to
raise money for the expenses of government and partly to protect home industries from
foreign competition. This duty is collected by the customs at ports, airports and customs
posts on land frontiers
2. Characteristics
- Customs duty is an indirect tax: customs duty is levied on imported or exported goods. -
Taxpayers are importers or exporters but the burden of customs duty falls on the consumers.
Being an indirect tax, customs duty of course is regressive.
- Customs duty is a consumption tax: the base of this tax normally is the value of
commodities imported or exported
- Customs duty is attached to foreign trade activities: customs duty has a considerable
impact on the turnover of imported or exported goods
- Customs duty is dependent on some international factors
II/ CUSTOMS DUTY IN VIETNAM
1. Taxpayer
- Owners of imports or exports
- Organizations undertaking entrusted exports or imports
- Individuals having imports or exports upon entry or exit; sending or receiving goods
through Vietnamese border gates or border Authorized or allowed to pay tax on behalf of
others or to guarantee tax payment
3. Taxable good
- Goods exported or imported through Vietnamese border gates or border
- Goods brought from the domestic market into non-tariff zones and vice versa.
- Other traded or exchanged goods that are considered imported or exported.
4. Non-taxable goods
- Goods in transit or being transported across Vietnam's border gates or border; goods
transferred through border gates or borders under the provisions of customs law.
- Humanitarian aid goods, non-refundable aid goods provided by foreign governments,
united nations organizations, inter- government organizations, foreign non- governmental
organizations and foreign economic organizations or individuals to Vietnam and vice versa,
for socio-economic development or other humanitarian purposes according to the
agreement/ by the terms and conditions between the two parties which are approved by
competent authorities; humanitarian aid and emergency relief for overcoming consequences
of wars, natural calamities or epidemics.
- Goods exported abroad from non- tariff zones; goods imported from abroad into non-tariff
zones and only used therein, goods brought from one non-tariff zone to another non- tariff
zone
- Exported petroleum that is a part of the State's severance tax.
5. Tax base

a) Quantity of imports or exports

The quantity of imports or exports used as a tax base is the actual imported or exported
quantity of goods specified in the customs declaration of the importer or exporter.
b) Base price
Base price for exports
The base price is the selling price at the export border-gates (FOB price), exclusive of
international insurance (I) and freight (F).
• Base price for imports
The base price is the actual buying price counting to the first border gate of importation and
determined by applying the hierachical order six methods of determining the base price and
immediately stopped at the method by which the base price finally is determined. These
methods are:
(1) Method 1: Transaction value
The base price of imported goods must be first of all determined on the basis of the
transaction value. Transaction value is the total payment made or to be made by the buyer
to or for the benefit of the seller for the imported goods, and includes all payments made as
a condition of sale of the imported goods by the buyer to the seller or by the buyer to a third
party to satisfy an obligation of the seller
(2) Method 2: Transaction value of identical goods
If the base price of imported goods cannot be determined on the basis of the transaction
value as guided, it shall be determined on the basis of the transaction value of identical
imported goods.
(3) Method 3: Transaction value of similar goods
The transaction value is calculated in the same manner on similar goods if:
- Goods closely resembling the goods being valued in terms of component materials and
characteristics;
- Goods which are capable of performing the same functions and are commercially
interchangeable with the goods being valued;
- Goods which are produced in the same country as and by the producer of the goods being
valued. For this method to be used, the goods must be sold to the same country of
importation as the goods being valued. The goods must be exported at or about the same
time as the goods being valued.
(4) Method 4: Deductive value
If the base price of the imported goods cannot be determined by the three guided methods
sequently, it shall be determined by the method of deductible value on the basis of the unit
price at which imported goods, identical imported goods or similar imported goods are sold
in the domestic market of Vietnam, minus reasonable expenses and profit earned from the
sale of the imported goods.
(5) Method 5: Computed value
If the base price of imported goods cannot be determined using the four methods above, it
shall be determined on the basis of the computed value.
(6) Method 6: Fall-back method
When the customs value/base price cannot be determined under any of the previous
methods, it may be determined using reasonable means consistent with the principles and
general provisions of the Law on import and export duty and on the basis of data available
in the country of importation. To the greatest extent possible, this method should be based
on previously determined values and methods with a reasonable degree of flexibility in their
application.
c) Tax rates
• Export duty rates
Export duty rates are specified for every item in the Export tax Tariffs promulgated by the
Ministry of Finance within the ceiling rates stipulated by the Standing Committee of the
National Assembly of Vietnam.
• Import duty rates
Import duty rates, specified for every item and its origin, include preferential tax rates,
specially preferential tax rates and ordinary tax rates.
6. Tax declaration and payment
6.1. when does a person or an entity has to declare import duties?
The due time for caculating import tax ia the date the taxpayers register their customs
declarations with custom offices
6.2. tax payment dealine
a) for imported supplies or raw materials for direct use in production of goods for export
- The tax payment dealine ia 275 days, counting from the date taxpayers register their
customs declaration:
If they satisfy 4 conditons below
+ The production factory ia located in vietnam
+ By the time of custom declaration, the factory must have conducted import or export
activities for at least 2 years during which no trade fraud and tax evasion has been made, no
overdue date payment of tax and/or of late payment has been incurred
+ Good compliance of law on accunting and law on statistics
+ Must make payment by bank transfer
Or if taxpayers have a guarantee for the tax amount payable by a bank or a credit institution
b) if goods are traded in the manner of temporary export for re-import or temporary import
for re-export, tax payment must be made before customs clearance, if tax payment is
guaranteed, the deadline for payment is 15 dates since the date of expiration of time for time
for temporary export or temporary import
c) other cases of imported or exported goods, other the two special cases above, the tax
payment must be computed before customs clearance except for those it guaranteed by a
bank or a credit institution, the dealine is the guarantee duration but not exceed 30 days
counting from the date taxpayers register their customs declaration
6.3 TAX EXEMPTION
Goods imported or exported in the following cases are exempt from import or export
duty:
(1) Exported or imported goods of foreign entities granted diplomatic immunity and
privileges in Vietnam; tax-free allowance luggage; imports to be sold at duty-free shops.
(2) Personal belongings, gifts from foreign entities to Vietnamese entities and vice versa
within the tax-free allowance in regulations.
(3) Goods traded across the border of border residents on the List of goods and within the
tax-free allowance in regulations.
(4) Goods exempt from export and import duties under international treaties signed.
(5) Goods whose value or tax payable is below the minimum level. This level applies to
goods with a customs value of under VND500,000 or a payable import or export duty of
under VND50,000 for each importation or exportation.
(6) Imported raw materials, supplies, components serving processing of exports; finished
products imported to be fixed on processed products; outward processing products.
(7) Materials, supplies, components imported for manufacture of exports. products.
(8) Goods manufactured, processed, recycled, assembled in a free trade zone without using
imported raw materials or components when they are imported into the domestic market.
(9) Goods temporarily imported for re-export or goods temporarily exported for re-import
within a certain period of time.
(10) Non-commercial goods: samples, pictures, videos, models instead of samples;
advertisement publications in small quantities.
(11) Imports as fixed assets of an entity eligible for investment incentives as prescribed by
regulations of law on investment.
(12) Plant varieties; animal breeds, fertilizers, pesticides that cannot be domestically
produced as prescribed by competent authority.
(13) Raw materials and components which cannot be domestically manufactured and are
imported serving the manufacturing of investment projects eligible for investment
incentives or in an extremely disadvantaged area prescribed by regulations of law. The
period of exemption is maximum 5 years from the commencement of manufacture.
(14) Raw materials and components which cannot be domestically manufactured of
investment projects for manufacture or assembly of medical equipment given priority shall
be exempt from import duties for 5 years from the commencement of manufacture.
In addition, imported goods serving environmental protection; scientific research
and technological development; education; assurance of social security and recovery from
disasters; national defense and security, manufacture of information technology products,
digital contents, software; petroleum activities, shipbuilding projects... shall have tax
exemption from Custom Duty regulations.
6.4. TAX REDUCTION
Imported or exported goods which are damaged or lost in the course of customs supervision
and certified by a competent authority are considered for tax reduction in proportion to their
actual damage or loss. Local Customs Departments are responsible for considering and
making decisions on tax reduction based on the surveyed quantity of actually lost and
damaged goods.
6.5. TAX REFUND
Cases entitled to tax refund consideration include:
(1) Taxpayers paid export duty or import duty but has no exports or imports, or the quantity
of exports or imports is smaller than the quantity on which duty is paid.
(2) Taxpayers paid export duty but the exports has to be re-imported shall receive a refund
of export duty and does not have to pay import duty.
(3) Taxpayers paid import duty but the imports has to be re-exported shall receive a refund
of import duty and does not have to pay export duty.
(4) Taxpayers paid tax on goods imported to serve manufacture or business operation and
they have been used for manufacture of exports and the products are already exported.
(5) Taxpayerspaid tax on machinery, equipment, tools, vehicles of organizations and
individuals that are permitted to be temporarily imported for re-export, except for those
rented to execute investment projects, construction and installation, manufacture, when they
are re-exported to abroad or exported to a free trade zone.
 CHAPTER 5: CORPORATE INCOME TAX
Corporate income tax is a tax the base for which is incomes of coporations and other
economic entities. The core part of the base is the profit from business activities of a
company. The ohtehrs are the incomes that an enterprise or an economic entity receives
ralated to their business such as incomes from assets liquidation, gifts or donations, etc. The
characteristics:
- CIT is a direct tax. Legally, corporate taxpayers are those who really pay tax. The base is
income of the taxpayers, not the price of goods or services. -Despite being a direct tax,
corporate income tax is less sensitive than personal income
tax. Corporate income tax is rather vague to many people. This is because in many cases,
those who really pay tax are stockholders and most of them do not manage the business.
They seem to neither know nor care about any tax issues. Their mere concern is dividend.
However, their dividend is influenced by income tax, which they are unaware of. They
attribute the rise of fall in their dividend to the management of the corporation. - Corporate
income tax is dependent on the profitability of the taxpayers' business. In fact, the core of
the base of corporate income tax is the profit of the corporation. Therefor, the more profit
the corporation earns, the bigger tax revenue will flow into the state budget. Thus, corporate
income tax is not neutral. It depends on the efficiency of the business.
- In certain case, income tax is regarded as a withholding of personal income tax.
Formula
CIT amount payable = (Base income income tranferred to scientific research and
techonology fund) * CIT rate
Base income = Accessable income - exempt income - losses carried forward
Accessable income = Base tunover - deductible expenses + other taxable incomes
 CIT calculation
 Turnover
 Less: deductible expenses
 Add: other taxable income

 Assessable income
 Less: exempt income
 Less: loss carry forward

 Base income
 Less: science &technology fund allocation
 Net assessable income
 CIT payable
1. Conditions for deductible expenses
a) Actual expenses used for the production and business of the enterprise
In practice, expenses that are necessary for business operations are accepted as 'actual
expenses'. Expenses for capital construction investment; financial supports for localities,
mass organizations and social organizations outside business establishments; expenses for
charity purposes except for some donations mentioned below are regarded as "Not used for
the production and business of the enterprise".
b) Legitimate invoices and vouchers
In principle, there are two types of legitimate invoices. They are: (i) invoices published by
the tax offices; and (ii) invoices made and issued by business establishments which are
registered with the tax offices in charge. The use of the invoices must be compliant with the
Act of accounting and other regulations on invoices stipulated by the Ministry of Finance.
Vouchers are legitimate if they are in compliance with the regulations stipulated by the
Ministry of Finance.
c) Non-cash payment
Non-cash payment is required to expenses supported with invoices for purchases of goods
or services with total payment of VND20 million or more. Non-cash payment is bank
payment (such as cheque, credit card, debit card, visa card, bank transfer etc.) and other
non-cash payment under the regulations stipulated by the State Bank of Vietnam such as
offsetting payment, clearing payment etc.

 Principles for a tax deduction

(1)The scope of expense refers to “outgoings and expenses” (expenses refer to
disbursement & involve some sort of violation; outgoing encompasses business
losses due to theft, defalcation of employees, bad debts)
(2)The expenses have to be “wholly and exclusively”
(3)Incurred
(4)In the production of gross income from that business source

2. NON-DEDUCTIBLE EXPENSE
a. Expenses that do not match with base turnover under matching principle
b. Capped expenses
- Amortization and depreciation: Applicable to certain type of fixed asset
(under-ten-seat cars, passenger boats) in certain fields; certain depreciation methods;
accelerated depreciation;
- Money paid for employees to buy uniforms;
- Interest expenses paid to lenders who are not credit institutions or economic organizations;
- Welfare benefit which is directly spent on employees;
- Life insurance and voluntary retirement insurance;
- Expenses for hiring management in the fields of prize-winning electronic game business,
casino business.
c. Expenses which are not in compliance with specific regulations stipulated by
competent state agencies

- 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
- 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
- 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.
- 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,…
+ 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
- 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.
- 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.
- 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
- 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.
- 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

3. OTHER INCOMES
- Interests
+ Received interest > payable interest: other income
+ Received interest < payable interest: Set off against taxable income
- Fines for breach of economic contracts
+ Received compensation > payable fines: other income
+ Compensation < payable fines: Set off against other income then taxable income
- Property liquidation
Income from liquidation = Liquidation turnover - Liquidation expenses - Book value at the
time of liquidation
- Bonuses, gifts, presents
- Capital transfer
- Revenue from domestic joint venture
- Patents, copyrights…

4. EXEMPT INCOMES
- Income from farming, animal husbandry and aquaculture products of cooperatives and
entities, which are established under the Act of Cooperatives;
- Income from farming, animal husbandry and aquaculture products of enterprises earned
in geographical localities with exceptionally difficult socio-economic conditions;
- Income from the provision of technical service directly related to agriculture production;
- Income from contracts on scientific research and/or technological development for
maximum period of time of 3 year counting from the commencement of production under
the scientific research and/or technological development contract;
- Income from the sale of products during the period of trial production in accordance with
the legislation on production process;
- Income from the sale of products made by new technologies applied for the first time in
Vietnam, but for no more than 5 year since the application of these new technologies to the
production;
- Income from goods production and trading or service provision activities carried out by
disabled people, HIV acquired people and recovered drug addicted people (the percentage
of disabled people and/or HIV acquired people and/or recovered drug addicted people must
be at least 30% of the total number of employees);
- Income from job training exclusively for ethnic minority people, disabled people, children
in exceptionally difficult circumstances, and social evil victims;
- Income received from a joint venture (which is established in Vietnam) which has paid
the corporate income tax;
- Donations received for education, scientific research, cultural and art activities, charities
and other social activities in Vietnam.

5. OTHER INCENTIVES
- Tax holidays
+ Newly founded in difficult socio-economic conditions areas
+ Newly founded in high tech…
+ Newly founded in important infrastructure
- Other exempts
+ Female employees in production, transportation and construction Company
+ Minority employees