Required tax for business establishment in Vietnam

Since the start-up trend started, setting up a company is becoming popular. According to the current law, individuals and organizations have the right to establish their own companies. However, paying taxes when opening a company still confuses people. In this article, LSX legal firm would like to provide information regarding “Required tax for business establishment”.

Legal grounds

• Law on Enterprise 2020
• Decree 47/2021/ND-CP

Required tax for business establishment

What Are Taxes? Taxes are mandatory contributions levied on individuals or corporations by a government entity—whether local, regional, or national. Tax revenues finance government activities, including public works and services such as roads and schools, or programs such as Social Security and Medicare.

So, what are the required tax for business to be set up?

License tax

This tax must be paid once a year based on the charter capital; The tax rate is prescribed according to the tax schedule:

• The registered capital of 10 billion or less: 2 million VND/year.
• the registered capital of over 10 billion: 3 million VND/year.
• The license tax for dependent accounting units is 1 million VND.

Value added tax (VAT) when the business generates revenue on red invoices

This tax is paid based on the revenue of goods and services sold from the red invoice; revenues from goods and services of the company’s purchased red invoice.
Therefore, when doing business, businesses will have to balance output and input costs reasonably to reduce the amount of VAT.

Corporate income tax (CIT)

Pay at the end of the fiscal year in which the enterprise has made a profit:
Enterprises need to declare and pay this kind of tax quarterly; At the end of the year, the annual corporate income tax finalization will be paid at the rate of 20%.
If the net revenue is less than 0, which means the business has a loss. Then they do not have to pay corporate income tax.

Environment tax

This is a fee to use for environmental improvement and waste treatment where the business operates. (If the business does not do business that affects the environment, they do not have to pay).

Import/Export tax

Only payable when your business relates to the import and export activities.

Land use tax

Every year your company has to pay land use taxes to the state. However, only payable when the enterprise has leased land from the state.

Should I open a company?

Establishing a company is a decisive activity for people who want to conduct their own business operations.

Establishing a company gives you both rights and obligations. Should you set up a company? The answer is yes. It brings you many benefits:

• Firstly, you can be the owner with positions: President, Chairman of Directors, Director, …
• Secondly, you have the right to manage the company’s operations
• Thirdly, you are supported by the State in terms of capital, organization, management,…
• Fourthly, you gain profits

Overall, setting up a company brings you a lot of benefits. Therefore, if you meet the actual and statutory requirements, you should establish a company of a certain type.

Why setting up a company?

In addition to some of the mentioned benefits; There are many reasons for you to set up a company:

• When opening a company, you have the right to decide, and manage your business.
• Opening a company will bring a big turning point in the process of your career. Establishing a business promotes your brand and products, thereby bringing more profits.
• Opening a company means expanding the business. Instead of opening 1 or 2 more small retail branches, you can set up a whole company specializing in trading certain products and services.
• Registering a company means that you work under the regulations as well as the protection of the law, your business process becomes more and more serious by days.
• Moreover, other businesses do not have the right to use your trademark to conduct business after the registration of your company.
• Starting a company will create jobs for many other people.
• A Vietnamese company with valid legal status will enjoy benefits under Vietnamese legislation.
• In addition, establishing a company helps you satisfy your passion for business; Become a boss, a genuine director.

LSX legal firm’s service on business establishment

When establishing a company, people must carry out the procedure following the law at the competent business registration authority (under the Law on Enterprise 2020). The process of establishing a business includes many different steps and phases. If you are not familiar with the law, this process may take a lot of time.
With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.
Using our service, you do not need to do the paperwork yourself. We guarantee to help you prepare documents effectively and legally.
Also, you will not have to waste time preparing the application; submitting application, or receiving results. At those stages, we will help you do it smoothly.
After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.

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Procedures to register for the latest personal tax code in Vietnam

Related questions

Contact LSX

Finally, hope this article is useful for you to answer the question about “Required tax for business establishment in Vietnam”. If you need any further information, please contact  LSX Law firm: +84846175333 or Email: [email protected]

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