Latest guidance on accounting and tax procedures that need to be carried out after establishing a company in Vietnam
2024/01/29
- Vo Thi Nguyen Linh
Introduction
After establishing a local subsidiary in Vietnam, accounting and tax declarations are required immediately. In particular, there are many cases where companies that have just been established are criticized during audits and tax investigations because they do not have a proper grasp of the points to keep in mind that are unique to Vietnam. This article summarizes the main accounting and tax procedures that occur immediately after a company is established, based on the Revised Tax Administration Law No. 38/2019/QH14, which came into effect on July 1, 2020, and other related regulations. Also, explain the penalties for violating obligations.
I. Accounting procedures
| Procedure | Basis law | Implementation timing | Implementation deadline | Fine |
| 1. First time registration | ||||
| Fixed asset depreciation Registering depreciation |
Circular 45/2013/TT-BTCCircular 200/2014/TT-BTC |
After obtaining Enterprise Registration Certificate (ERC) | Within 10 days | No particular regulations |
| Fiscal year registration (if the fiscal year is not the end of December) | ||||
| Foreign currency registration (when recording in foreign currency) | ||||
| Bookkeeping format registration | ||||
| 2. Submission of audited settlement report | Circular 200/2014/TT-BTC |
Annual | Until the end of the third month after the end of the fiscal year | Fine: 5,000,000 to 50,000,000VND (Article 12 of Decree 41/2018/ND-CP) |
Note
(1) Although fixed asset depreciation methods include the straight-line method, declining-balance method, and unit-of-production method, the tax law stipulates that only the straight-line method can be applied to newly established companies. If the depreciation method of a fixed asset is changed from the second year onward, the change in the use of the fixed asset and the associated expected impact benefit must be explained in writing.
(2) The fiscal year can be selected from March, June, September, and December.
(3) Bookkeeping format For registration, the General Journal bookkeeping format prescribed in Circular 200/2014/TT-BTC will normally be applied.
II. Tax procedures
1.Business registration fee
| Procedure | Basis law | Implementation timing | Implementation deadline | Fine |
| Business registration fee Tax return submission |
Decree 22/2020-lND-CP |
Tax exemption for the first year A tax return must be filed in the second year, from the 3rd year onwards, if there is no change in the annual charter capital, no filing is required. |
January 30th | Fine: 2,000,000～25,000,000VND (Decree125/2020/ND-CP Article 13) |
| Business registration fee payment |
1st year: Tax exemption 2nd year: Annual payment |
January 30th | Number of delay days x required payment amount x 0.03% (Law 38/2019/QH14 Article 59) |
*Based on Circular 302/2016/TT-BTC, pre-registration fees are determined based on the company’s charter capital.
The annual business registration fees are as follows:
・If the capital exceeds 10,000,000,000 VND: 3,000,000 VND (approximately 15,000 yen) per year
・If the capital is 10,000,000,000 VND or less: 2,000,000 VND (approximately 10,000 yen) per year
・For branches, representative offices, etc.: 1,000,000 VND (approximately 5,000 yen) per year
2.Personal Income Tax (PIT)
2.1.Tax registration
| Procedure | Basis law | Implementation timing | Implementation deadline | Fine |
| Personal tax code registration | Circular 105/2020/TT-BTC (Article 7) |
After tax liability arises | Within 10 days | Nothing special |
| Dependent registration | After the need for dependent registration arises(after the child is born) | At least 10 business days before filing the annual personal income tax return
*If dependents are siblings, paternal grandparents, maternal grandparents, etc.: December 31st |
2.2.Monthly/Quarterly Declaration
If you are an individual and have taxable income, you can choose to file monthly or quarterly returns. For companies, the method of filing value added tax (VAT) determines monthly or quarterly filing.
| Procedure | Basis law | Implementation timing | Implementation deadline | Fine |
| *If the VAT declaration is made monthly, the PIT declaration will also be made monthly. | ||||
| Tax return submission | Law 38/2019/QH14 (Article 44) Decree 126/2020/ND-CP (Article 9) |
Annual | Until the 20th of the following month | Fine: 2,000,000～25,000,000VND |
| Tax payment | Number of delay days x required payment amount x 0.03% | |||
| *If you file your VAT return quarterly, you can choose to file your PIT quarterly. | ||||
| Tax return submission | Law 38/2019/QH14 (Article 44) Decree 126/2020/ND-CP (Article 9) |
Quarterly | Until the end of the following month after the end of each quarter | Fine: 2,000,000～25,000,000VND |
| Tax payment | Number of delay days x required payment amount x 0.03% | |||
2.3. Final tax return
| Procedure | Basis law | Implementation timing | Implementation deadline | Fine |
| Submission of company tax return | Law 38/2019/QH14 (Article 44) Decree 126/2020/ND-CP (Article 9) |
Annual | Until the end of the third month after the end of the calendar year | Fine: 2,000,000～25,000,000VND |
| Additional tax payment for the difference¹ (final tax return) | Number of delay days x required payment amount x 0.03% | |||
| Individual tax return submission | Annual | Until the end of April of the following calendar year | Fine: 2,000,000～25,000,000VND | |
| Additional tax payment for the difference¹ (final tax return) | Number of delay days x required payment amount x 0.03% |
¹Pay the difference between the PIT amount you have paid monthly (or quarterly) and the final amount at the time of filing your tax return.
3. Value added tax (VAT)
| Procedure | Basis law | Implementation timing | Implementation deadline | Fine |
| *If the business activity start date is less than 12 months or the total revenue from business activities in the previous year is 50 billion yen VND (approximately 300 million yen) or less | ||||
| Submit VAT return | Law 38/2019/QH14 (Article 44) Decree 126/2020/ND-CP (Article 9) |
Quarterly | Until the end of the following month after the end of each quarter | Fine: 2,000,000～25,000,000VND |
| VAT payment | Number of delay days x required payment amount x 0.03% | |||
| *If 12 months have passed since the first day of business activity, or if the next year’s sales exceed 50 billion VND | ||||
| Submit VAT return | Law 38/2019/QH14 (Article 44) Decree 126/2020/ND-CP (Article 9) |
Annual | Until the 20th of the following month | Fine: 2,000,000～25,000,000VND |
| VAT payment | Number of delay days x required payment amount x 0.03% | |||
4. Foreign Contractor Tax (FCT)
Foreign contractor tax is a tax imposed on foreign contractors (whether or not resident in Vietnam) or foreign legal entities (with or without a permanent establishment in Vietnam) operating in Vietnam, This is a Vietnam-specific tax that targets remuneration generated from services provided to other parties.
| Procedure | Basis law | Implementation timing | Implementation deadline | Fine |
| Registration of FCT tax code | Circular 105/2020/TT-BTC (Article 7) |
First contract After the conclusion date |
Within 10 days from the date of signing the first contract (No registration required after the second contract) |
Nothing special |
| FCT declaration | Law 38/2019/QH14 (Article 44) |
After overseas remittance or with a foreign corporation After offsetting receivables and debts |
Within 10 days | Fine: 2,000,000～25,000,000VND |
| FCT payment | Number of delay days x required payment amount x 0.03% | |||
| FCT final tax return | After the contract ends | Within 45 days | Fine: 2,000,000～25,000,000VND | |
| Additional FCT payment (in case of occurrence) |
Number of delay days x required payment amount x 0.03% |
5.Corporate Tax (CIT)
| Procedure | Basis law | Implementation timing | Implementation deadline | Fine |
| Quarterly CIT tax payment | Law 38/2019/QH14 (Article 44) |
Only if taxable income is generated | Within 30 days after the end of each quarter | No particular regulations |
| Final tax return submission | Annual | Until the end of the third month after the end of the fiscal year | Fine: 2,000,000～25,000,000VND | |
| Tax payment | If the additional unpaid tax generated at the time of final tax return exceeds 20% of the total tax amount paid from the first quarter to the fourth quarter – Number of days of delay x amount exceeding 20% of the total tax amount x 0.03%
Delay days = From the day after the last day of the provisional payment deadline for the fourth quarter until immediately before the date of payment of additional unpaid taxes |
|||
| Between related parties Transaction details |
Decree 132/2020/ND-CP | Annual | Submit your final tax return | Fine: 2,000,000～25,000,000VND (Same as final tax return) |
6.Electronic voice
| Procedure | Basis law | Implementation timing | Implementation deadline | Fine |
| Electronic invoice Start of use notification |
Decree 132/2020/ND-CP | After sales occur | At least one day before using e-invoice | Fine 6,000,000～18,000,000VND (Decree 125/2020/ND-CP) |
Ⅲ. Other procedures
| Procedure | Basis law | Implementation timing | Implementation deadline | Fine |
| 1. Submission of report to the General Directorate of Statistics | Decision 77/2010/QD-TTg |
Quarterly | Next quarter period 12th day of the second month |
Fine: 1,000,000～20,000,000VND (Decree 79/2013/ND-CP) |
| Year round and calendar year | June 12th and November 12th | |||
| Annual | March 31st of the following year | |||
| 2. Registration procedures and report submission to the central bank | ||||
| Long term loan registration | Circular 12/2022/TT-NHNN |
After loan contract occurs | Within 30 days after signing a long-term loan contract and before remittance | Fine: 20,000,000～30,000,000VND (Decree88/2019/ND-CP Article 23) |
| Register to change long-term loan information | After loan contract occurs | Within 30 days after signing a long-term loan contract and before remittance | ||
| Submission of reports on foreign short-term and long-term loans and foreign debts | Annual | Until the 5th of the following month | Fine: 5,000,000～ 10,000,000VND (Decree 88/2019/ND-CP Article 47) |
|
In conclusion
Based on the latest regulations, we have explained the accounting and tax procedures required after company establishment, as well as the penalties for non-compliance. Many of the procedures, filing deadlines, fine amounts, etc. that existed before June 2020 have changed. Therefore, we hope that by properly understanding the main procedures through this article, you will be able to reduce the risk of late payment interest and fines, and enable sound company management. The content described in this article may be interpreted differently depending on the region or may change at any time, so we recommend checking with authorities and updating the information from time to time.
Reference
・Accounting Law 88/2015/QH13
・Decree 41/2018/ND-CP
・Circular 45/2013/TT-BTC
・Circular 200/2014/TT-BTC
・Decision 77/2010/QD-TTg
・Decree 79/2013/ND-CP
・Circular 302/2016/TT-BTC
・Decree 88/2019/ND-CP
・Law 38/2019/QH14
・Decree125/2020/ND-CP
・Decree 126/2020/ND-CP
・Decree 132/2020/ND-CP
・Decree 123/2020/ND-CP
・Circular 105/2020/TT-BTC
・Decree 22/2022/ND-CP
・Circular 12/2022/TT-NHNN
M000112-178
(Created on January 29, 2024)
