Tax Consultation for Foreign Capital Company

Tax Legal Consultancy for Foreign Capital Enterprise

Basically, the tax liability of a company with foreign capital investment includes the following taxes:

I. Excise Tax

Excise tax is collected annually for enterprises and households. Besides collection for State budget, excise helps State authorities understand the operations of the business entities in the economy. Excise specifies in Circular No. 43/2003 issued on 7 May 2003.

For enterprises with foreign capital investment, the registered capital is defined as investment capital and according to the amount of capital is recognized in the investment license which will have different levels of excise tax:

Unit: VND

II. Corporate Income Tax (CIT)

CIT is taxes on the income from production and operations and other parts of the business income. Extraordinary income is the income from the transfer of assets and property rights.

Tax Calculation:

CIP payable = [Taxable Income - (Income tax exemption + Loss carried forward from previous years)] × tax rate

(Taxable Income = Revenue – Deducted Expenses + Other incomes)

From 01 January 2016, the tax rate for CIT is 20%.

III. Value Added Tax (VAT)

VAT is a tax on the value added of goods and services during the production, circulation and distribution. However, VAT is not charged to all goods and services. These goods and services are defined in Article 5 of the Law on Value Added Tax is not taxable.

There are two methods of tax calculation:

1. Deduction method:

VAT payable = VA input – VAT deducted output

2. Direct method:

VAT payable = Value added of sold goods and services × VAT rate

VAT rates have three levels: 0%, 5% and 10% depending on the group of goods and services specified in Article 10 of the Law on Value Added Tax.

IV. Special Consumption Tax (SCT)

SCT is indirect taxes on consumers who use products, luxury services, is not necessary for everyday life, or the area in which the State wanted to restrict. Companies with foreign capital have demand to operate products and services under the Article 2 of Law on Special Consumption Tax shall pay this tax.

SCT Calculation:

SCT = taxable price × tax rate

In particular, the taxable price is the selling price and the price of providing services with no SCT, no environmental protection tax and no VAT. SCT rates range from 15% - 65% depending on the type of goods and services.

V. Import and Export Tax:

If foreign capital investment company has operation related to acts of export and import shall pay the import, export taxes.

There are three methods of calculation of export and import tax:

1. Percentage methods:

Determination of tax as a percentage (%) of the taxable value of exported and imported goods.

Calculation: payable tax value × tax rate

(Note about preferential tax, preferential tax and ordinary tax rates)

2. Absolute method:

Certain amount of tax per export/import unit

Calculation:

Number of actual exported/imported goods × absolute tax rate per specified commodity unit at specific time

3. Mixed Method:

Simultaneously apply the above two methods.

Calculation:

Total tax as percentage + total tax as absolute

Dragon Law with Tax Service Consultation to Foreign Capital Investment Company in foreign loans; registration of loans to state-owned banks; capital transfer account opening; account of capital contributions; procedures on transfer of profits abroad; issues related to VAT, CIT, PIT ...

For more detail, kindly contact to Dragon Law at:

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Dragon Law Firm - Hotline: 1900.599.979

Website: www.vanphongluatsu.com.vn - www.dragonlaw.vn

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