Vietnam: What is the annual license tax of a business with an investment capital of 5 billion? In case the enterprise is late in submitting the license tax return, how will it be sanctioned?
What is the annual license tax that a business with an investment capital of 5 billion must pay in Vietnam?
Pursuant to Clause 1, Article 4 of Decree 139/2016/ND-CP stipulating the license fee of the enterprise branch to be paid as follows:
Article 4. Rate of licensing fees
1. The rate of licensing fees for the organizations having the production and business of goods and services is as follows:
a) The organizations with charter capital and investment capital over 10 billion dong: 3,000,000 dong/year;
b) The organizations with charter capital and investment capital of less than 10 billion dong: 2,000,000 dong/year;
c) The branches, representative offices, business location, public service providers and other business organizations: 1,000,000 dong/year;
The rate of licensing fees for the organizations specified under Point a and b of this Paragraph is based on the charter capital written in the certificate of business registration or on the investment capital written in the certificate of investment registration in case of no charter capital.
According to the above provisions, organizations with charter capital or investment capital of VND 10 billion or less: VND 2,000,000/year.
Vietnam: What is the annual license tax of a business with an investment capital of 5 billion? In case the enterprise is late in submitting the license tax return, how will it be sanctioned?
How long does a start-up have to file a license tax return in Vietnam?
Pursuant to Article 5 of Decree 139/2016/ND-CP (amended by Clauses 3 and 4, Article 1 of Decree 22/2020/ND-CP) stipulating the submission of registration fee declaration as follows:
Article 5. Declaration and payment of licensing fees
1. The declaration of license fee shall be made once when starting production/business or upon establishment.
a) Payers of the license fee that have just started their production/business or established their business facilities and SMEs transformed from household businesses shall make and submit their declarations of license fee to their supervisory tax authorities by January 30 of the year following the year of commencement of production/business or the year of establishment.
b) Household businesses, individuals and groups of individuals paying fixed tax must not submit declarations of license fee. Based on received tax declarations and tax database, tax authorities shall determine revenues which are then used as the basis for determining the license fee amounts payable by household businesses, individuals and groups of individuals paying fixed tax.”
4. The license fee must be fully paid by January 30 of every year.
a) Upon the end of the period of exemption from the license fee (from the fourth year from the date of establishment), a SME transformed from a household business (including its branches, representative offices and/or business locations) shall pay the license fee as follows:
- If its exemption period ends in the first 6 months of a year, it must pay the license fee by July 30 of the same year.
- If its exemption period ends in the last 6 months of a year, it must pay the license fee by January 30 of the following year.
b) A household business, an individual or a group of individuals engaging in production/business that resumes its production/business after a suspension period shall pay the license fee as follows:
- If it resumes its production/business in the first 6 months of a year, it must pay the license fee by July 30 of the same year.
- If it resumes its production/business in the last 6 months of a year, it must pay the license fee by January 30 of the following year.
Accordingly, newly established enterprises declare license fees and submit declarations to tax authorities directly before January 30 of the year after the new year of production, business or newly established.
In case the enterprise is late in submitting the license tax return, how will it be sanctioned in Vietnam?
Pursuant to Article 13 of Decree 125/2020/ND-CP stipulating penalties for violations of the deadline for filing tax returns as follows:
Article 13. Penalties for violations against regulations on time limits for submission of tax returns
1. Penalties imposed in form of cautions shall be imposed for violations arising from filing tax returns from 01 to 05 days after expiration of the prescribed time limits under mitigating circumstances.
2. Fines ranging from VND 2,000,000 to VND 5,000,000 shall be imposed for the act of submitting tax returns from 01 to 30 days after expiration of the prescribed time limits, except the cases specified in clause 1 of this Article.
3. Fines ranging from VND 5,000,000 to VND 8,000,000 shall be imposed for the act of submitting tax returns from 31 to 60 days after expiration of the prescribed time limits.
4. Fines ranging from VND 8,000,000 to VND 15,000,000 shall be imposed for one of the following violations:
a) Filing tax returns from 61 to 90 days after expiration of the prescribed time limits;
b) Filing tax returns at least 91 days after expiration of the prescribed time limits if none of additional taxes is incurred;
c) Failing to submit tax returns if none of additional taxes is incurred;
d) Failing to submit annexes under regulations regarding tax administration by enterprises having related-party transactions, enclosing CIT finalization dossiers.
5. Fines ranging from VND 15,000,000 to VND 25,000,000 shall be imposed for the act of filing tax returns more than 90 days after the prescribed deadline if such act results in additional taxes to be paid, and the taxpayer has fully paid taxes, deferred amounts into the state budget before the time of the tax authority’s announcement of the decision on tax inspection and examination, or before the time of the tax authority’s issuance of the report on the deferred submission of tax returns under the provisions of clause 11 of Article 143 in the Law on Tax Administration.
In case where the fine amount prescribed in this clause is greater than the tax amount additionally incurred in the tax return, the maximum amount of fine for this act shall be equal to the tax amount payable specified in the tax return and shall not be less than the average of fine amounts in the range prescribed in clause 4 of this Article.
6. Remedies:
a) Compelling the full payment of deferred tax amounts into the state budget with respect to the commission of the acts prescribed in clause 1, 2, 3, 4 and 5 of this Article if the taxpayer delays filing their tax return, leading to the late payment of taxes;
b) Compelling the submission of tax returns, enclosing annexes, in case of committing the acts specified in point c and d of clause 4 of this Article.
It's unclear how long your company is slow to file its license tax returns, so it's impossible to answer them clearly. You can rely on the above regulations to base on the status of your company to determine the penalty.
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