Overview of Corporate Tax in Vietnam
2025/07/03
- I-GLOCAL CO., LTD.
- USCPA
- 熊谷 克樹
Vietnam’s Corporate Income Tax (CIT) is imposed on corporations doing business in the country. The CIT system differs significantly from the Japanese tax system, and if not properly handled, may result in unnecessary tax burdens. This article explains the basic rules and practical points of corporate taxation.
1.Subject to suspension of departure
Vietnam’s corporate tax rate has been consistently lowered in recent years and is currently at 20%, an attractive level compared to neighboring countries.
Changes in Tax Rates
|
Period |
Tax Rates |
| ～2008 | 28% |
| 2009～ | 25% |
| 2014～ | 22% |
| 2016～ | 20% |
Comparing to other countries
|
Country |
Tax Rates |
| Vietnam | 20% |
| Japan | 30～35% |
| China | 25% |
| Thailand | 20% |
| Malaysia | 24% |
| Indonesia | 22% |
| Philippine | 25% |
2. Tax Audit in Vietnam
2.1. Overview of Tax Investigations
In Vietnam, tax returns are rarely examined at the time of filing, and even in cases where there are violations of tax laws, they are generally discovered mainly during later tax audits. Therefore, in addition to proper tax treatment, it is important to manage taxation with a view to handling tax issues after tax returns are filed
In addition, it is highly likely that a company will be subject to a tax audit at least once every five years, at which time the details of past tax returns will be retrospectively verified. In particular, sufficient evidence is required for transactions with high tax risks and for the application of deductions and tax exemptions.
Furthermore, in the case of Japanese-affiliated companies, the tax audit team in charge of Japanese-affiliated companies will, in principle, handle the tax audit, which is expected to be based on the tendencies of Japanese-affiliated companies. In other words, tax treatment conducted without an appropriate understanding of the gap with Japanese tax practice may lead to unexpected additional penalties. Against this background, preparation for and response to tax audits is an important aspect of business operations.
2.2. High risk of additional tax burden
The additional taxes in a tax audit in Vietnam will be as follows.
| Type of additional tax burden | Amount of money | Prescription |
| Main tax (deficiency) | Correct amount of tax – Amount paid | 10 years |
| Past due fine | 0.03%/day（10.95％/year） ※0.05%/day until June 2016 |
10 years |
| Fines for underpayment of taxes (underpayment, overrefund) | 20% of the shortfall in the main tax | 5 years |
| Fraud fines (tax evasion and fraud) |
100% to 300% of the shortfall in the main tax | 5 years |
| Fines for late filing | 15,000,000 ～ VND 25,000,000/time | 2 years |
| Administrative measures (disposition) | Up to 200 million VND (equivalent to 1.2 million yen) | N/A |
For comparison, the following simplified additional taxes in Japan are shown (as of 2025.) The following is a simplified version of the additional taxation in Japan (as of 2025).
| Type of additional tax burden | Amount of money | Prescription |
| Main tax (deficiency) | Correct amount of tax – Amount paid | 5 years (exception 7 years) |
| Past due fine | ① 2.4% per year (7.3% or the special standard rate plus 1%, whichever is lower) for two months from the day after the payment due date ② After the day after ①, 8.7% per year (14.6% or the special standard rate plus 7.3%, whichever is lower) |
5 years (exception 7 years) |
| Under-claiming and under-taxing | 10%-15% of the shortfall in the main tax | 5 years (exception 7 years) |
| Additional tax for non-payment of taxes | 15% to 30% of the unpaid main tax | 5 years (exception 7 years) |
| Heavy additional tax (in case of malfeasance such as disguise or cover-up) |
35% in lieu of additional tax on underreported income and 40% in lieu of additional tax on undeclared income | 7 years |
Additional Information
・Statute of limitation is 5 years in principle, 7 years in the case of a finding of deception or other wrongful act.
・Delinquent tax rates vary depending on the special standard percentage.
・Delinquent tax is exempted from the day after one year from the statutory due date until the date of the amended return (or the date of correction).
① High additional taxes and late fees
In Vietnam, the burden of additional taxes and late fees resulting from tax audits is significant. In particular, delinquency fees are higher than in Japan at 10.95% per year (0.03% per day), and the statute of limitations period is longer in Vietnam. Furthermore, the exemption period system that exists in Japan does not exist. It is important to minimize risk by ensuring proper tax treatment and on-time tax payment.
② Severe penalties for fraud
Tax evasion and fraud are subject to fines ranging from 100 to 300% of the additional tax due, and have a significant impact on corporate management. In order to avoid unintentional fraud, it is necessary to thoroughly manage taxation, including accurate bookkeeping and proper vouchers.
2.3 Tax audit results (Source: General Administration of Taxation Website)
In 2023, the number of tax audits amounted to 66,241, resulting in approximately VND62 trillion in additional tax collections being pointed out. The breakdown of the amount indicated is as follows.
3. Corporate Tax Calculation Method
The basic corporate tax calculation is shown in the figure below.
In the actual corporate income tax return, the calculation is based on the following flow
4. Tax-deductible expenses
The following four requirements must be met in order to calculate taxable income.
・The expense is related to the company’s business activities
・Have appropriate VAT invoices
・Provide appropriate vouchers (contracts, company regulations, etc.) for the transaction
・Payments of VND20 million or more are settled in a non-cash manner.
The following are practical considerations for each of the requirements.
4.1. The cost is related to the company’s business activities
There is no law or regulation that clearly defines expenses related to business activities, and tax audits may be considered unrelated to business activities through expansive interpretation. Major examples of disallowed expenditures include the following
・Fees for golf play, golf membership
・Fees for karaoke, massage
・Fees for visa, residence card, family airfare, children’s school bus
・Fines to authorities
4.2. Have appropriate VAT invoices
While Japan’s invoice system is only related to the deduction of consumption tax on purchases, in Vietnam it is one of the requirements for inclusion in deductible expenses for corporate income tax purposes.
Therefore, it is important to always have a VAT invoice issued, and the following points should be noted
・The company name, tax code, and address must be written correctly in Vietnamese.
・Vietnamese translations of receipts and other documents are required even for expenses incurred outside the country.
4.3. Have appropriate vouchers (contracts, company regulations, etc.) for the transaction
In a tax audit, tax losses may be denied immediately due to inadequate vouchers, without waiting for an explanation of the actual transaction. The required vouchers vary depending on the nature of the transaction, and an understanding of various legal provisions is a key point.
For example, bonuses, various allowances, travel expenses, benefits, and various expenses for expatriates may be disallowed as deductible expenses due to insufficient descriptions in labor contracts or company regulations.
In addition, assets and materials brought into Vietnam by hand-carry, such as expatriates’ computers, may be denied as deductible expenses on the grounds that the customs clearance documents at the time of importation were not kept.
4.4. Payments of more than 20 million VND are settled in non-cash
Payments of VND20 million or more, including value-added tax, must be non-cash payments such as bank remittances or credit cards. Please note that cash payments are not recognized as deductible expenses.
In the case of offsetting the value of goods and services purchased against the value of goods and services sold, if the contract does not specify the method of offsetting settlement, it may be denied as a deductible expense.
To avoid such tax risks, it is important to specify the appropriate settlement method in the contract and maintain vouchers.
5. Schedule of Tax returns and Payments
5.1. Annual Tax returns
Annual tax returns and payments are due at the end of the month within three months of the end of the fiscal year selected.
| Fiscal year (taxable year) | Due date of tax return and tax payment (end of the month within 3 months after the end of the period) |
| Fiscal year ending in March (April-March) | 6/30 |
| Fiscal year ending in June (July-June) | 9/30 |
| Fiscal year ending in September (October-September) | 12/31 |
| Fiscal year ending in December (January-December) | 3/31 |
5.2. Scheduled tax payments (only if profitable)
No interim declaration is required, and the calculation results are entered on the prescribed payment form to pay the tax.
| Duration | Due date for tax payment (within 30 days of the quarter) |
| First Quarter（Q1） | 4/30 |
| Second Quarter（Q2） | 7/30 |
| Third Quarter（Q3） | 10/30 |
| Fourth Quarter（Q4） | 1/30 |
If the total amount of scheduled tax payments for the first through fourth quarters is less than 80% of the amount on the tax return, a late fee will be assessed for the difference up to 80%.
| Annual taxes at the time of filing | Total scheduled tax payments | Late fees |
| 100% | 80% or more | None |
| 100% | Less than 80% | Accrual for difference up to 80% |
In Japan, the tax office notifies taxpayers subject to scheduled tax payments of the amount due based on the previous year’s corporate tax (annual tax amount). In Vietnam, on the other hand, companies are required to calculate their own scheduled tax payments based on their income for the current fiscal year.
| Country | Criteria for calculation |
| Japan | Calculated based on income and taxes for the previous year |
| Vietnam | Calculated by the company based on the current year’s income |
For accounting purposes in Vietnam, either VND or foreign currency can be used, with the choice of the primary transaction currency. On the other hand, only VND is used for tax reporting and payment, and foreign currency transactions must be converted to VND for processing.
| Process | Accepted Currencies |
| Accounting | VND or foreign currency ※Use major trading currencies |
| Tax Returns and Payments | only in VND |
6. Preferential Taxation
Typical tax incentives are as follow:
| Business Category | Preferential treatment |
| Manufacturing Industry | Tax exemption for 2 years + 50% of tax reduction for 4 years thereafter |
| Investment in expansion of manufacturing industry | Tax exemption for 2 years + 50% tax reduction for 4 years thereafter |
| Tax reduction for software development business | 10% preferential tax rate for 15 years, tax free for the first 4 years + 50% tax reduction for the following 9 years |
However, there are unclear provisions in the application of preferential tax treatment, and there have been cases where the authorities have interpreted the provisions in favor of the taxing party and denied the application of the preferential tax treatment. Specifically, the following cases may occur.
・Since the preferential tax rate was applied to taxable income from non-preferential businesses, it is recalculated at the regular tax rate.
・The business is determined not to be software development and the application of preferential tax treatment is denied.
When applying for preferential tax treatment, it is important to carefully check whether your business is applicable and be prepared to clearly prove that you meet the requirements for application.
Conclusion
Vietnam’s corporate tax system differs from Japan’s in many respects. In order to minimize tax risks, it is important to understand the latest tax system revisions and actual operational conditions, and to respond appropriately. In particular, advance preparation for tax audits and appropriate vouchers are required. We hope that the overview of corporate taxation and the practical considerations outlined in this report will be useful in strengthening your company’s tax management system.
*This article was translated by DeepL from the Japanese version.
