When the charter capital changes, should a supplementary or initial licensing fee Declaration be submitted in Vietnam?

When the charter capital changes, should a supplementary or initial licensing fee Declaration be submitted in Vietnam?

Pursuant to Clause 1, Article 10 of Decree 126/2020/ND-CP which regulates the deadlines for submitting licensing fee declarations as follows:

The deadline for filing tax returns regarding land charges, licensing fees, registration fees, right allocation money, and other charges according to the laws governing the management, utilization of public assets

Taxpayers shall comply with the guidelines regarding the deadlines for filing tax returns as prescribed in Article 44 of the Tax Management Law. For the filing deadlines of land charges, licensing fees, registration fees, right allocation money, and other charges according to laws governing the management and utilization of public assets as stipulated in Clause 5, Article 44 of the Tax Management Law, the implementation is as follows:

1. licensing fee

a) Newly established entities subject to licensing fee (excluding household businesses and individual businesses), including small and medium enterprises converted from household businesses, or those establishing additional dependent units, business locations, or commencing production and business activities, shall 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 the event of a capital change during the year, taxpayers liable for the licensing fee must submit the licensing fee declaration no later than January 30 of the year following the year of the change.

b) Household businesses and individual businesses are not required to submit licensing fee declarations. The tax authority bases its assessment on tax returns and tax management databases to determine the revenue serving as the basis for calculating the licensing fee amount payable and notifies the licensing fee payer as regulated in Article 13 of this Decree.

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Thus, when there is a change in the charter capital, the licensing fee payer must fulfill the obligation to submit the initial licensing fee declaration. The firm deadline for submitting the licensing fee declaration is by January 30 of the year following the year the change information arises.

The form for the licensing fee declaration is Form 01/LPMB in Appendix 2 issued with Circular 80/2021/TT-BTC Download here

When the charter capital changes, should a supplementary or initial licensing fee Declaration be submitted in Vietnam? (Image from the Internet)

Which entities are licensing fee payers in Vietnam?

According to Article 2 of Decree 139/2016/ND-CP, entities subject to licensing fees are organizations and individuals engaged in production and trading of goods and services, excluding cases stipulated in Article 3 of Decree 139/2016/ND-CP, including:

(1) Enterprises established according to the law.

(2) Organizations established under the Cooperative Law.

(3) Non-business units established as per legal regulations.

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

(5) Other organizations engaged in production and business activities.

(6) Branches, representative offices, and business locations of entities mentioned in (1), (2), (3), (4), and (5) (if any).

(7) Individuals, groups of individuals, and households engaged in production and business activities.

What are cases of exemption of licensing fee in Vietnam?

Based on Article 3 of Decree 139/2016/ND-CP (amended and supplemented by Clause 1, Article 1 of Decree 22/2020/ND-CP) which sets forth the cases exempt from the licensing fee as follows:

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

- Individuals, groups of individuals, and households engaged in production and business irregularly; without fixed locations as guided by the Ministry of Finance.

- Individuals, groups of individuals, and households producing salt.

- Organizations, individuals, groups of individuals, and households engaged in aquaculture, fishing, and related fishing activities.

- Commune cultural post offices; press agencies (print, radio, television, electronic journals).

- Cooperatives and cooperative unions (including their branches, representative offices, and business locations) operating in agriculture as prescribed under the Law on Agricultural Cooperatives.

- People's credit funds; branches, representative offices, and business locations of cooperatives, cooperative unions, and individual business enterprises in mountainous areas. Mountainous areas are determined in accordance with the regulations of the Committee for Ethnic Minority Affairs.

- Exempt from licensing fee in the first year of establishment or commencement of production and business activities (from January 1 to December 31) for:

+ Newly established organizations (issued new tax code, new enterprise code).

+ Households, individuals, and groups of individuals engaging in production and business for the first time.

+ During the period exempt from licensing fee, if organizations, households, individuals, and groups of individuals establish branches, representative offices, or business locations, these entities are exempt from licensing fee in line with the exemption period granted to the organizations, households, individuals, and groups of individuals.

- Small and medium enterprises transitioning from household businesses (as per Article 16 of the Law on Support for Small and Medium Enterprises) are exempt from the licensing fee for 3 years from the date of issuance of the initial business registration certificate.

+ During the exemption period for the licensing fee, if small and medium enterprises establish branches, representative offices, or business locations, these are exempt from the licensing fee for the exemption period applicable to the small and medium enterprises.

+ Branches, representative offices, and business locations of small and medium enterprises (subject to licensing fee exemption as stated in Article 16 of the Law on Support for Small and Medium Enterprises) established before this Decree came into effect will have their licensing fee exemption period calculated from the effective date of this Decree until the end of the exemption period granted to small and medium enterprises.

+ Small and medium enterprises converted from household businesses before the enactment of this Decree will follow the licensing fee exemption regulations as stipulated in Article 16 and Article 35 of the Law on Support for Small and Medium Enterprises.

- Public general education institutions and public preschool educational institutions.