According to current regulations, individuals and organizations have the right to establish their own company. Setting up a company has become a popular activity nowadays. However, to open a company, you have to carry out certain administrative procedures and prepare to pay the required taxes. But not everyone knows fully about the taxes required for company establishment. So, in this article, LSX legal firm will answer the question: “What taxes do you have to pay when opening company in Vietnam?”
Legal grounds
- Law on Enterprise 2020
- Decree 47/2021/ND-CP
Kinds of taxes you have to pay when opening a company
Firstly, license tax when establishing a company
You must pay this tax once a year according to the charter capital; The tax rate according to the tax schedule is prescribed at the following rates:
- Level 1 registered capital 10 billion or less: license tax payable: 2 million/year.
- Level 2 of registered capital over 10 billion in license tax payable: 3 million/year.
- The level of the license tax for dependent accounting units: 1 million.
Secondly, value added tax (VAT) paid 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 and the number of goods and services revenue of the company’s purchased red invoice.
Therefore, when doing business, you will have to balance input and output costs reasonably to reduce the amount of VAT.
Thirdly, corporate income tax (CIT)
Pay at the end of the fiscal year in which the business has profits:
Your business needs to declare this tax and pay it 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 less than zero and the business suffer a loss, then it will not have to pay corporate income tax.
Fourthly, environmental tax
This fee used for the purpose of environmental improvement and waste treatment where the business operates. If the business does not do business that affects the environment, it does not need to pay the environmental tax.
Fifthly, import and export tax
Payable only when your business relates to the field of import and export.
Lastly, land use tax
Payable only when the enterprise has leased land from the state. Every year your company has to pay land use taxes to the state.
Should you start a company?
Establishing a company is a mandatory activity for entities who want to conduct their business activities. Establishing a company means both rights and certain obligations attached. So, should you start a company? Setting up a company brings many benefits to you:
- You can master with titles: General Director, Chairman of the Board of Directors, Director, …
- You have the right to manage the company’s operations.
- Having the support of the State in capital, organization, and management, …
- Bring a lot of profit.
In conclusion, setting up a company gives you a lot of benefits. Therefore, if you meet the actual and statutory requirements, you should set up a company.
Procedures to establish a company
Step 1: Prepare documents to register the business
At this step, for each type of company, the requirements for the profile that you need to prepare differs. However, in general, no matter what type of company, you need to prepare the following basic documents for the procedures to establish a company:
- Firstly, the application form submits to the business registration office requesting the certificate to establish a company.
- Secondly, draft of company charter.
- Thirdly, list of founders.
- Fourthly, authenticated legal papers of members.
- Also, valid identification papers of the authorized representative and the legal representative.
- Legal capital confirmation document.
- Equally important, certificate of business registration (for organizations).
- Lastly, Investment registration certificate for foreign investors.
Reference to the registering application for types of companies
Firstly, Application for registration of a joint-stock company
1. The enterprise registration application form.
2. The company’s charter.
3. The list of founding shareholders; the list of shareholders that are foreign investors.
4. Copies of:
a) Legal documents of founding shareholders and shareholders that are foreign investors who are individuals and legal representatives;
b) Legal documents of shareholders that are organizations, documents about the designation of authorized representatives; legal documents of authorized representatives of founding shareholders, and shareholders that are foreign organizations.
Legalized copies of legal documents of the members that are foreign organizations.
c) The Certificate of Investment Registration of foreign investors as prescribed by the Law on Investment.
Secondly, Application for registration of a limited liability company
1. The enterprise registration application form.
2. The company’s charter.
3. The list of members.
4. Copies of:
a) Legal documents of members who are individuals and legal representatives;
b) Legal documents of members that are organizations, documents about the designation of authorized representatives, and their legal documents.
Legalized copies of legal documents of the members that are foreign organizations.
c) The Certificate of Investment Registration of foreign investors as prescribed by the Law on Investment.
Thirdly, Application for registration of a partnership
1. The enterprise registration application form.
2. The company’s charter.
3. The list of partners.
4. Copies of legal documents of the partners.
5. Copies of the Certificate of Investment Registration of foreign investors as prescribed by the Law on Investment.
Also, Application for registration of a sole proprietorship
1. The enterprise registration application form.
2. Copies of legal documents of the sole proprietorship’s owner.
Step 2: Submit dossiers
Submit the application at the Business Registration Office of the Department of Planning and Investment at the province level where you plan to locate the head office of your Company.
Currently, there are two forms to submit an application:
- Register directly: apply at the “one-stop” department of the Business Registration Office. However, in Hanoi, this method is no longer applied.
- Online business registration: submit your application on the National Business Registration Portal (Address: https://dangkykinhdoanh.gov.vn). After the online application is valid, you will have to go directly to the “one-stop” department to return the scanned copy (hard copy) when submitting it online. However, this method is relatively complicated, requiring you to have skills and knowledge about registering a business account.
Once you have submitted your application, you will receive a receipt for your application. The usual processing time for applications will be 3 working days.
Step 3: Receive result
According to the schedule on the appointment, you return to the “one-stop” department of the Business Registration Office to receive the results. There are two possible scenarios:
- Dossiers valid: You will receive a Certificate of Business Registration as a result and a notification to the tax authorities.
- In contrast, dossiers invalid: The Business Registration Office will have a document instructing you to amend the dossiers in accordance with the provisions of the law. After the amendments and supplements to your application according to this guide, then resubmit your application as in Step 2.
Step 4: Post-establishment procedures.
Receiving a Business Registration Certificate is just the first step in putting your company into operation. After that, you have to do the following series of procedures:
- Notice the use of the company’s seal sample.
- Bank account notice (if your company registers a bank account).
- Tax procedures such as license declaration and payment of license fees, Tax on corporate headquarters inspection,…
- Trademark protection (if you need it).
- …
After carrying out these procedures, your Company can go into operation.
Legal service of LSX Legal Firm
LSX legal firm provides legal services to clients in various legal areas. To make your case convenient, LSX will perform:
- Legal advice related to new regulations;
- Representing in drafting and editing documents;
- We commit the papers to be valid, and legal for use in all cases;
- Represent to submit documents, receive results, and hand them over to customers.
With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.
Furthermore, 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.
Contact LSX
Finally, hope this article is useful for you to answer the question about “What taxes do you have to pay when opening company in Vietnam?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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Related questions
License tax (license fee)
Value Added Tax (VAT)
Corporate Income Tax (CIT)
Personal Income Tax (PIT)
License tax/fee
Value added tax
Personal income tax
Commissions from sales agents and brokers will be considered as salary and wages income that employees receive from employers. Therefore, the sales agent’s commissions and brokerage commissions will be taxable income, and the recipients of this money must pay personal income tax if they are subject to tax.
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