How long is the duration of exemption from licensing fees for a new enterprise in Vietnam? What are cases of licensing fee exemption in Vietnam?

How long is the duration of exemption from licensing fees for a new enterprise in Vietnam?

Pursuant to Clause 8 Article 3 of Decree 139/2016/ND-CP (amended and supplemented by Clause 1 Article 1 of Decree 22/2020/ND-CP) which regulates cases eligible for licensing fee exemption, specifically:

Exemption from licensing fee

Cases eligible for licensing fee exemption include:

...

8. Exemption from licensing fee in the first year of establishment or commencing production and business activities (from January 01 to December 31) for:

a) Newly established organizations (granted a new tax code, new enterprise identification number).

b) Households, individuals, groups of individuals commencing production and business activities for the first time.

c) During the period of licensing fee exemption, if the organizations, households, individuals, or groups of individuals establish branches, representative offices, or business locations, these branches, representative offices, or business locations are exempt from the licensing fee within the period that the organizations, households, individuals, or groups of individuals are exempt.

...

Thus, according to the regulation, a new enterprise (with a new enterprise identification number and tax code) is exempt from licensing fee only in the first year of establishment (from January 01 to December 31).

From the second year onward, that enterprise will proceed with paying the licensing fee as usual.

How long is the duration of exemption from licensing fees for a new enterprise in Vietnam? (Image from the Internet)

Is an enterprise required to pay licensing fee during business suspension in Vietnam?

Based on Clause 3 Article 4 of Circular 302/2016/TT-BTC amended by Clause 4 Article 1 of Circular 65/2020/TT-BTC which prescribes the licensing fee rates as follows:

licensing fee Rates

...

3. Organizations, branches, representative offices, or business locations (not eligible for licensing fee exemption in the first year of establishment or commencing production and business activities) established and granted taxpayer registration and tax code, enterprise identification number within the first 6 months of the year shall pay the full annual licensing fee rate; if established, and granted taxpayer registration and tax code, enterprise identification number in the last 6 months of the year, they shall pay 50% of the annual licensing fee rate.

Small and medium-sized enterprises transitioning from household businesses (including branches, representative offices, and business locations) when the period of licensing fee exemption ends (the fourth year from the year of enterprise establishment): If it ends within the first 6 months of the year, the full annual licensing fee rate is paid, if it ends in the last 6 months of the year, 50% of the annual licensing fee rate is paid.

Taxpayers engaged in business having a document submitted to the directly managing tax authority or business registration authority regarding temporary suspension of production and business activities within the calendar year (from January 01 to December 31) shall not have to pay licensing fee for the year of business suspension if they meet the condition: the document requesting the temporary suspension of production and business activities is submitted to the tax authority or business registration authority before the deadline for tax payment as prescribed (January 30 annually) and the licensing fee for the year requesting suspension has not been paid. If the business suspension does not meet the above conditions, the full annual licensing fee is payable.

...

Thus, an enterprise temporarily suspending business operations is not required to pay licensing fee for the year of business suspension if the following conditions are met:

- A document requesting the temporary suspension of production and business activities is submitted to the tax authority or business registration authority before the tax payment deadline as prescribed (January 30 annually).

- The licensing fee for the year of the suspension request has not yet been paid.

Note: If the business suspension does not meet the above conditions, the full annual licensing fee is payable.

What are cases of licensing fee exemption in Vietnam?

Pursuant to Article 3 of Decree 139/2016/ND-CP (amended and supplemented by point c Clause 1 Article 1 of Decree 22/2020/ND-CP) which stipulates cases eligible for licensing fee exemption, including:

- Individuals, groups of individuals, households involved in production and business activities with an annual revenue of 100 million VND or less.

- Individuals, groups of individuals, households involved in production and business activities irregularly without a fixed location as per the guidance of the Ministry of Finance.

- Individuals, groups of individuals, households engaged in salt production.

- Organizations, individuals, groups of individuals, households engaged in aquaculture, fishery, and post-harvest fishery services.

- Cultural post offices in communes; press agencies (print, radio, television, and electronic).

- Cooperatives, cooperative alliances (including branches, representative offices, business locations) operating in agriculture per the laws on agriculture cooperatives.

- People's credit funds; branches, representative offices, business locations of cooperatives, cooperative alliances, and private enterprises operating in mountainous areas. Mountainous areas are determined as per the regulations of the Committee for Ethnic Minority Affairs.

- Exemption from licensing fee in the first year of establishment or commencing production and business activities (from January 01 to December 31) for:

+ Newly established organizations (granted a new tax code, new enterprise identification number).

+ Households, individuals, groups of individuals commencing production and business activities for the first time.

+ During the period of licensing fee exemption, if organizations, households, individuals, or groups of individuals establish branches, representative offices, or business locations, these branches, representative offices, or business locations are exempt within the period those organizations, households, individuals, or groups of individuals are exempt.

- Small and medium-sized enterprises transitioning from household businesses (as stipulated in Article 16 of the Law on Supporting Small and Medium Enterprises 2017) are exempt from licensing fee for 3 years from the date of the first enterprise registration certificate.

+ During the licensing fee exemption period, if small and medium-sized enterprises establish branches, representative offices, or business locations, these are exempted within the period the small and medium-sized enterprises are exempt.

+ Branches, representative offices, business locations of small and medium-sized enterprises (eligible for licensing fee exemption per Article 16 of the Law on Supporting Small and Medium Enterprises 2017) established before the effective date of this Decree shall have their licensing fee exemption period calculated from the effective date of this Decree until the exemption period of the small and medium-sized enterprises ends.

+ Small and medium-sized enterprises transitioning from household businesses before the effective date of this Decree shall follow the licensing fee exemption as prescribed in Articles 16 and 35 of the Law on Supporting Small and Medium Enterprises 2017.

- Public primary education institutions and public preschools.