Shall household businesses submit licensing fee declarations in Vietnam?

Shall household businesses submit licensing fee declarations in Vietnam?

Pursuant to Point b, Clause 1, Article 10 of Decree 126/2020/ND-CP stipulates as follows:

Deadline for submitting tax declaration dossiers for land-related revenues, licensing fees, registration fees, licensing fees, and other revenues in accordance with the law on the management and use of public assets

Taxpayers are to comply with the deadlines for submitting tax declaration dossiers as prescribed in Article 44 of the Law on Tax Administration. The deadlines for submitting declarations for land-related revenues, licensing fees, registration fees, licensing fees, and other revenues in accordance with the law on the management and use of public assets are as follows:

1. licensing fees

a) Newly established entities, excluding household businesses and individual businesses, including small and medium-sized enterprises transitioning from household businesses, or those establishing additional dependent units, business locations, or commencing production and business activities, must submit licensing fee declarations no later than January 30 of the year following the year of establishment or commencement of production and business activities.

In cases where there is a change in capital during the year, taxpayers must submit a declaration reflecting such changes no later than January 30 of the year following the year the change occurred.

b) Household businesses and individual businesses are not required to submit licensing fee declarations. The tax authority bases on tax declaration dossiers and tax management databases to determine the revenue as the basis for calculating the payable licensing fees and notify the fee payer in accordance with Article 13 of this Decree.

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Thus, household businesses do not have to submit licensing fee declarations, but the tax authority will determine the revenue based on tax declarations and tax management databases to calculate the payable licensing fee amount and notify the fee payer.

What is the rate for licensing fees in Vietnam?

Pursuant to Article 4 of Decree 139/2016/ND-CP (amended and supplemented by Clause 2, Article 1 of Decree 22/2020/ND-CP), the rates for licensing fees in 2024 are prescribed as follows:

[1] The licensing fee rates for organizations engaged in production, business activities of goods and services are as follows:

- Organizations with charter capital or investment capital over 10 billion VND: 3,000,000 VND/year.

- Organizations with charter capital or investment capital of 10 billion VND or less: 2,000,000 VND/year.

- Branches, representative offices, business locations, public service providers, other economic organizations: 1,000,000 VND/year.

The license fee for organizations in items (i) and (ii) is based on the charter capital recorded in the business registration certificate; if there is no charter capital, it is based on the investment capital recorded in the investment registration certificate.

[2] The licensing fee rates for individuals, households engaged in production, business activities of goods, services are as follows:

- Individuals, groups of individuals, households with revenue over 500 million VND/year: 1,000,000 VND/year.

- Individuals, groups of individuals, households with revenue over 300 to 500 million VND/year: 500,000 VND/year.

- Individuals, groups of individuals, households with revenue over 100 to 300 million VND/year: 300,000 VND/year.

- Revenue as a basis for determining licensing fee rates for individuals, groups of individuals, households is guided by the Ministry of Finance.

[3] Small and medium-sized enterprises transitioning from household businesses (including branches, representative offices, business locations) when the exemption period for licensing fees expires (the fourth year from the year the enterprise is established): those ending during the first six months of the year pay the full annual license fee, while those ending during the last six months pay 50% of the annual fee.

Households, individuals, groups of individuals engaged in production, business activities dissolved but returning to production, business activities during the first six months of the year pay the full annual license fee, and during the last six months pay 50% of the annual fee.

[4] Organizations with charter capital or investment capital over 10 billion VND and organizations with charter capital or investment capital of 10 billion VND or less in cases of changes in charter capital or investment capital, the basis for determining the licensing fee is the charter capital or investment capital of the year immediately preceding the fee calculation year.

If the charter capital or investment capital recorded in the business registration certificate or investment registration certificate is in foreign currency, it is converted into VND for determining the licensing fee based on the buying exchange rate of the commercial bank or credit institution where the fee payer holds an account at the time the fee is paid to the state budget.

[5] Fee payers actively operating who submit a written request to the directly managing tax authority for a temporary suspension of production, business activities within the calendar year are not required to pay the licensing fee for the year in which business activities are suspended, provided that the request is submitted before the deadline to pay the fee (January 30 each year) and the licensing fee of the year for which suspension is requested has not been paid.

In the event that the suspension of production, business activities does not meet the above conditions, the full annual licensing fee must be paid.

Who is required to pay the licensing fee in Vietnam?

According to Article 2 of Decree 139/2016/ND-CP, licensing fee payers include organizations and individuals engaged in production and business activities of goods and services, except for those exempted from the licensing fee, including:

- Enterprises established under the law.

- Organizations established under the Cooperatives Law.

- Non-business units established under the law.

- Economic organizations of political organizations, socio-political organizations, social organizations, socio-professional organizations, people's armed units.

- Other organizations engaged in production and business activities.

- Branches, representative offices, and business locations of the organizations stipulated in Clauses 1, 2, 3, 4, and 5 of Article 2 of Decree 139/2016/ND-CP (if any).

- Individuals, groups of individuals, and households engaged in production, business activities.