What is the English term for "Lệ phí môn bài"? Is the licensing fee paid periodically in Vietnam?

What is the English term for "Lệ phí môn bài"?

"Lệ phí môn bài" is a type of tax that business organizations and individuals must pay to the State. It is considered as an official "business license," proving that the enterprise has registered and operates legally, and is responsible for contributing to the state budget.

In English, "Thuế môn bài" is referred to as "License tax." However, according to Vietnamese law, the term “thuế môn bài” has now been replaced by “lệ phí thuế môn bài.” Thus, a more semantically appropriate term is: “Licensing fee.”

The meaning of the licensing fee:

- Legalization of business activity: By paying the licensing fee, the enterprise is recognized as a legal business entity with a clear address and operating in the registered field.

- Market management: Collecting the license tax helps the state manage business activities tightly, preventing underground and illegal businesses.

- Source of state revenue: The licensing fee is one of the crucial sources of state budget revenue, contributing to the construction and development of the country.

What is the English term for "Lệ phí môn bài"? Is the licensing fee paid periodically in Vietnam? (Image from the Internet)

Is the licensing fee paid periodically in Vietnam?

Based on the provisions in Clause 9, Article 18 of Decree 126/2020/ND-CP, the regulations are as follows:

The licensing fee is paid annually. To be specific:

- The deadline for paying the licensing fee is no later than January 30 each year.

- For small and medium enterprises transitioning from household businesses (including dependent units and business locations of the enterprise) when the fee exemption period ends (the fourth year from the year of enterprise establishment), the deadline for paying the licensing fee is as follows:

+ If the exemption period ends in the first 6 months of the year, the deadline is no later than July 30 of the concluding year.

+ If the exemption period ends in the last 6 months of the year, the deadline is no later than January 30 of the subsequent year.

- For household businesses and individual businesses that have ceased production, then resumed, the deadline for paying the licensing fee is as follows:

+ If resuming in the first 6 months of the year: No later than July 30 of the resuming year.

+ If resuming in the last 6 months of the year: No later than January 30 of the subsequent year.

Thus, according to regulations, the licensing fee is paid annually.

Where does an enterprise submit the licensing fee declaration in Vietnam?

Based on Point k, Clause 1, Article 11 of Decree 126/2020/ND-CP, the location for filing the licensing fee declaration (license tax) is regulated as follows:

- Enterprises and household businesses submit their licensing fee declaration at their directly managing tax agency.

- Specifically, for declarations concerning dependent units or business locations in provinces different from the main headquarters: Declarations are submitd at the tax agency of the location of the dependent unit or business location.

Moreover, according to Clause 5, Article 3 of Circular 80/2021/TT-BTC, the following is stipulated:

Definition of terms

In addition to the terms defined in the Tax Management Law and Decree No. 126/2020/ND-CP, some terms in this Circular are understood as follows:

…

5. "Directly managing tax agency" includes:

a) The tax agency that manages the area of the taxpayer's main headquarters, except as provided in point c of this clause;

b) The tax agency managing the area where the taxpayer has a dependent unit in a province different from the main headquarters, but the dependent unit directly submits tax with the tax agency in that area;

c) The Large Enterprise Tax Department under the General Department of Taxation established according to the provisions of Decision No. 15/2021/QD-TTg dated March 30, 2021, by the Prime Minister of Vietnam;

d) For individuals with income from salaries or wages, the directly managing tax agency is the tax agency issuing the tax code and may change according to the tax agency conducting the tax finalization for the individual as regulated;

dd) For individuals receiving inheritance or gifts as securities or capital contributions in economic organizations, business establishments in Vietnam subject to direct tax filing with the tax agency, the directly managing tax agency is the tax agency managing the issuing unit; in cases where multiple agencies manage different issuing units, the directly managing tax agency is where the individual resides.

The directly managing tax agency can be indicated on the taxpayer registration certificate or tax code notification or tax management notification or tax management allocation notice when issuing enterprise codes, cooperative codes, tax codes, or when changing registration information or when re-allocating managing tax agencies according to legal regulations.

Thus, in accordance with the above regulations, the enterprise submits the licensing fee declaration at the directly managing tax agency, i.e., at the location of the business's headquarters.

What is the deadline for new enterprises to pay the licensing fee?

According to Clause 1, Article 10 of Decree 126/2020/ND-CP, the deadline for filing the licensing fee declaration (license tax) is regulated as follows:

- new enterprises (including small and medium enterprises transitioning from household businesses) or having established additional dependent units, business locations, or starting production and business activities must submit the licensing fee declaration no later than January 30 of the year following the year of establishment or start of production and business activities.

In the event of capital changes within the year, enterprises must submit the licensing fee declaration no later than January 30 of the year following the occurrence of the change.

The enterprise is required to submit the licensing fee declaration only once during its entire period of operation and only needs to resubmit if there is a change in capital.

Thus, new enterprises pay the licensing fee no later than January 30 of the year following the year they establish or start their production and business activities.