After registering a company in Vietnam, foreign investors must ensure that it complies with local laws and reporting requirements. This article was written to give details about business compliance in Vietnam and to assist foreigners in planning their tax reporting in Vietnam ahead of time.
1. Requirements for business compliance in Vietnam
Registering for tax
To follow business compliance in Vietnam, foreign owners have to complete tax registration at a local tax department after acquiring their Business Registration Certificate. Each business will be assigned a company registration code that also serves as a tax identification number.
Issuing VAT invoices
Another requirement for business compliance in Vietnam is VAT invoices. Electronic, pre-printed, self-printed, and ordered invoices are all options for businesses in Vietnam. The District Taxation Department sells pre-printed invoices to businesses that use the direct deduction technique.
Obtaining a business license tax certificate
Company owners must declare yearly license fees within 30 days upon registration. After that, the yearly license fee must be paid before the 31st of January each year.
After receiving the Business Registration Certificate, the founders have 90 days to make their capital contributions.
You must re-register the business license and modify the amount of capital contribution if the capital contribution is less or higher than what was originally registered.
2. Business compliance calendar for Vietnam
- Statement of income
- Statement of financial position (profit and loss)
- Statement of changes in equity (if any)
- Balance sheets
Within 30 days of formation, you must additionally register all employees on your payroll in Vietnam. A labor use report is also requested twice a year by the District Department of Labor.
The report should include information such as the number of employees, their jobs, credentials, and the type of labor contract, such as fixed-term or indefinite-term labor contracts, among other things.
3. Registration for domestic and international employees
Social insurance registration
You must enroll all local workers in obligatory insurance (includes social, health, and unemployment insurance) in order to follow business compliance in Vietnam. These insurances are covered by both the company and the employees.
Work permits for foreign employees
To follow business compliance in Vietnam, foreign employees must be registered immediately if a business employs them.
Also, you must first explain why a foreign workforce is required, such as if the role demands fluency in a given language, specialized talents, international experience, and so on.
Changes in corporate structure
Although reports and taxes have a set time, all other changes in a business must be reported immediately to follow business compliance in Vietnam. For example, the company changes its address, the board of directors changes, or a shareholder or board member obtains a new passport.
If you want to start offering a new service or selling a new product during the year, you must first apply for the appropriate permission 30 days in advance.
4. Non-compliance Penalties
Non-compliance with tax reporting and payment obligations in Vietnam can have serious implications for your company.
Fines will be imposed if records are submitted late or not at all, or if taxes or insurance payments are not paid. The fee will be calculated depending on the number of days that you have been late.
If the company fails to pay the fines and comply with the reporting requirements, the Government will revoke its licenses and prevent it from functioning in the future.
Following an audit, if the tax authorities discover discrepancies in the financial records, a 20% tax will be applied to the under-declared amount. Late tax payments are also subject to a 0.03 percent daily interest charge.
Keeping up with business compliance in Vietnam requires precision and takes a lot of effort. You can always contact Bizspective for more detailed advice about business compliance in Vietnam. We also suggest you get in touch with a good lawyer and a good tax expert to ensure that your company follows all local requirements.