What is the rate of level-2 licensing fee in Vietnam?

What is the rate of level-2 licensing fee in Vietnam?

For enterprises and organizations:

Based on Clause 1 Article 4 of Decree 139/2016/ND-CP and Clause 1 Article 4 of Circular 302/2016/TT-BTC guiding the business license fee, the fee rate for organizations engaged in the production and business of goods and services with charter capital or investment capital of up to 10 billion VND is set at the level-2 rate: 2 million VND/year.

Where:

- The fee level is based on the charter capital recorded in the business registration certificate or in the enterprise registration certificate or in the cooperative charter.

In cases without charter capital, it is based on the investment capital recorded in the investment registration certificate or the investment policy decision document.

- Organizations in tiers 1 and 2 that change their charter capital or investment capital must use the previous year's capital as the basis for determining the business license fee for the current year.

If the charter capital or investment capital is recorded in foreign currency in the business registration certificate or investment registration certificate, it must be converted to Vietnamese Dong to determine the business license fee based on the exchange rate of the commercial bank or credit institution where the fee payer has an account at the time of payment to the state budget.

For individuals and household businesses:

According to Clause 2 Article 4 of Decree 139/2016/ND-CP and Clause 2 Article 4 of Circular 302/2016/TT-BTC (amended by Clause 3 Article 1 of Circular 65/2020/TT-BTC), the level-2 fee applies to individuals and household businesses engaged in the production and business of goods and services with annual revenue between 300 to 500 million VND.

Revenue criteria for determining the fee for individuals, groups of individuals, households, or new business locations of household businesses are as follows:

- The revenue base for determining the fee level for individuals, groups of individuals, and households (excluding individuals leasing out properties) is the total revenue declared for personal income tax of the previous year from production and business activities (except for property leasing activities) at business locations as per Circular 92/2015/TT-BTC.

- For individuals, groups of individuals, and households that have ceased business and then resumed, if the previous year's revenue cannot be determined, the revenue for the tax year is used for businesses of similar scale, locality, and industry as stipulated in Circular 92/2015/TT-BTC.

- For individuals with property leasing activities, the revenue base is the taxable personal income revenue from leasing contracts for the tax year.

If an individual has multiple leasing contracts at one location, the revenue for determining the fee for that location is the total revenue from all leasing contracts for the tax year.

If an individual has leasing activities at multiple locations, the revenue for each location is the sum of all leasing contracts at that location for the tax year, including cases where multiple contracts occur at a single location.

If a leasing contract spans multiple years, the business license fee is paid annually corresponding to the years for which the individual, group of individuals, or household is subject to value-added tax and personal income tax. If these taxes are declared and paid in one installment for a multi-year property leasing contract, the business license fee is paid for only one year.

- For individuals, groups of individuals, households, or business locations (not exempt in the first year of establishment or operations) starting production or business within the first 6 months of the year, the annual fee is due; if starting in the last 6 months, 50% of the annual fee is required.

Note:

- Organizations, branches, representative offices, business locations (not exempt from the business license fee in their first year of establishment or operations) established, registered for taxpayer registration, and issued a tax code or business code during the first 6 months of the year must pay the full annual fee; if established in the last 6 months, they pay 50% of the annual fee.

- Small and medium enterprises transitioning from household businesses (including branches, representative offices, business locations) after the exemption period (starting the fourth year after company establishment) must pay the full fee if the exemption ends in the first 6 months, or 50% if it ends in the last 6 months.

- Business license fee payers actively submitting written notifications about temporarily suspending production/business to tax authorities or business registration agencies within the calendar year (from January 1 to December 31) are exempt from the fee for the suspension year, provided they submit the suspension request before the due date (January 30 annually) and have not paid the business license fee for the suspension year.

If the suspension does not meet these conditions, the full annual business license fee is due.

What is the rate of level-2 licensing fee in Vietnam? (Image from the Internet)

Is the licensing fee exempt for new enterprises in Vietnam?

According to Article 3 of Decree 139/2016/ND-CP as supplemented by Point c Clause 1 Article 1 of Decree 22/2020/ND-CP, the regulation on business license fee exemption is as follows:

Exemption from business license fee

Cases of exemption from business license fee include:

...

8. Exemption from business license fee in the first year of establishment or starting production/business (from January 1 to December 31) for:

a) Newly established organizations with newly issued tax codes or business codes.

b) Households, individuals, groups of individuals entering production/business for the first time.

c) During the fee exemption period, branches, representative offices, business locations established by organizations, households, individuals, or groups of individuals are also exempt as long as the main body remains exempt.

9. Small and medium enterprises transitioning from household businesses (as per Article 16 of the Law on Support for Small and Medium Enterprises) are exempt for 3 years from the first issue date of the business registration certificate.

a) Branches, representative offices, and business locations established during the exemption period by small and medium enterprises also benefit from the exemption.

Simultaneously, Clause 9 Article 18 of Decree 126/2020/ND-CP stipulates the deadline for filing the business license fee declaration as follows:

Tax deadlines for state budget revenues from land, exploitation rights of water resources, mineral resources, sea area usage, registration fees, business license fees

...

9. Business license fee:

a) The deadline for paying the business license fee is no later than January 30 annually.

b) For small and medium enterprises transitioned from household businesses (including subsidiaries, business locations) at the end of the free period (fourth year from company establishment), the deadlines are:

b.1) If the exemption ends in the first 6 months, pay no later than July 30 of the end year.

b.2) If the exemption ends in the last 6 months, pay by January 30 of the following year.

c) Detached household businesses or individuals resuming operations must meet fee deadlines as follows:

c.1) Resuming within the first 6 months: by July 30 of the operational year.

c.2) Resuming in the last 6 months: by January 30 of the following year.

Hence, new enterprises are exempt from the business license fee in the first year from the start of business activities (from January 1 to December 31).

After the exemption period, the business license fee must be paid by January 30 annually.

Which entities are licensing fee payers in Vietnam?

According to Article 2 of Decree 139/2016/ND-CP, licensing feepayers are organizations and individuals engaged in the production and business of goods and services (except exempt cases), including:

- Enterprises established per the law.

- Organizations established under the Law on Cooperatives.

- Public units established per the law.

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

- Other organizations engaged in production and business.

- Branches, representative offices, and business locations of organizations mentioned in Items 1, 2, 3, 4, and 5 of Article 2 of Decree 139/2016/ND-CP (if applicable).

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