I.About the ACCOUNTING MODE

Foreign enterprises in Vietnam must organize accounting records according to Vietnam’s accounting regime to monitor and reflect the process of production and business activities of the unit.

* With accounting account system

Clause 1, Article 9 of Circular No. 200/2014/TT-BTC dated December 22, 2014 of the Ministry of Finance stipulating:

a) Enterprises shall base themselves on the accounting account system of the enterprise accounting regime promulgated together with this Circular to apply and detail the system of accounting accounts suitable to the characteristics of production and business. , management requirements of each industry and each unit, but must be consistent with the content, structure and accounting method of the respective general accounts.

 

b) In case an enterprise needs to add a level 1, level 2 account or amend a level 1 or level 2 account in terms of names, symbols, content and accounting methods for specific arising economic operations, it must be written approval of the Ministry of Finance prior to implementation.

 

c) Enterprises can open more level 2 accounts and level 3 accounts for accounts that do not have the regulations on level 2 accounts, level 3 accounts in the list of regulated corporate accounting accounts. in Appendix 1 – This Circular is intended to serve the management requirements of enterprises without having to ask the Ministry of Finance for approval”.

 

Based on the above guidance, the Company must organize accounting records according to Vietnam’s accounting regime to monitor and reflect the process of production and business activities of the unit.

In case the Company wants to use the accounting system of its own country to be consistent with and consistent with the management activities of the Group, the Company must request in writing the Ministry of Finance to approve the application.

II.About CURRENCY USED

Pursuant to the provisions of Circular 200/2014/TT-BTC guiding the Enterprise accounting regime promulgated by the Ministry of Finance in Article 3 on monetary units in accounting:

“The accounting currency is Vietnam Dong (the national symbol is “đ”), which is used to record the accounting books, prepare and present the financial statements of the Enterprise. In case an accounting unit that mainly collects and spends in foreign currencies meets the criteria specified in Article 4 of this Circular, it may choose a foreign currency as the currency unit for recording in accounting books.

III. WORKS THAT A TAX ACCOUNTANT HAS TO DO

For start-up businesses

☑ Initial tax return

☑ Buy tokens (digital signature for online tax declaration)

☑ Open a bank account

☑ Register for electronic tax payment

☑ File a license tax return

☑ Pay license tax

☑ Support to register for electronic invoices.

☑ Invoice release notice

☑ Notify the enterprise’s bank account to the Department of Planning and Investment

☑ Submit the original tax return at the request of the tax authority

Accounting for foreign businesses in Vietnam, the job of an accountant will do:

+ Prepare and submit VAT declarations

+ Prepare and submit a provisional CIT declaration

+ Prepare and submit a provisional PIT declaration

+ Monitor invoice usage

+ Prepare accounting books

+ Prepare payroll, calculate PIT, calculate social insurance

+ Register personal MST for employees and register for deduction of dependents for employees if any

+ Prepare financial statements

+ CIT finalization

+ PIT finalization

+ Pay taxes for businesses

+ Explain to tax authorities when required

+ Declare and work with the social insurance agency, the Department of Labor, War Invalids and Social Affairs

+ Register salary scale and set up annual union fund

The method of declaration and accounting is not different from that of Vietnamese companies. Accountants declare and pay taxes on the website https://thuedientu.gdt.gov.vn/ .

Foreign-invested companies are Vietnamese legal entities and must comply with the laws of Vietnam. Therefore, in terms of tax obligations, the company must comply with the provisions of the Law on Tax Administration. In addition, foreign-invested companies will be required to submit a number of other reports such as: Audit report, Annual report on employment situation.

Is the company required to have a Chief Accountant?

“According to Article 20 of Decree 174/2016/ND-CP, foreign-invested enterprises are required to arrange chief accountants or, if there is no chief accountant, arrange persons in charge of accounting or hire services as chief accountant according to regulations.”

What are the regulations on taxes?

1. Value Added Tax (VAT – VAT)

For businesses investing in Vietnam, doing trade/manufacturing and selling products/services in the country: The VAT amount will be 100% the same as that of businesses in Vietnam. This is detailed in the tax law.

If a foreign investor opens a business in Vietnam with the goal of: Exporting goods to foreign countries (mainly exporting to the investing country), it will need to pay attention to some of the following information:

Check that the investment certificate has the information section stating “The enterprise is eligible to apply the policy for the export processing enterprise if it meets all the conditions prescribed for the export processing enterprise” or not?

• Case 1: The policy is applied to export processing enterprises

Enterprises Not subject to VAT declaration

Goods purchased from the seller will do on-site customs with a VAT rate of 0%.

In this case, due to input tax incentives, there will be no VAT refund

• Case 2: Not subject to application of policies for export processing enterprises

• Export output: 0%
• Input: Refund of input tax
• Tax refund conditions:

The input VAT amount that has not yet been deducted is from 300 million or more to be eligible for tax refund procedures.

Each tax refund period, the tax authority will check before or after the tax refund.

2. CIT

The corporate income tax part of all foreign investment projects will be basically the same as that of enterprises in Vietnam if they are not eligible for incentives.

CIT = (Total revenue – Total valid expenses) x20%

However, there will be businesses that are eligible for tax incentives, based on the location of project registration (export processing).

• Specify the location of the project in which industrial park to determine CIT incentives for enterprises in the industrial park.
• Tax exemption for 2 years, 50% reduction for the next 4 years for enterprises located in industrial parks, not in geographical areas with favorable conditions Pursuant to Clause 3, Article 16, Decree 218
  :

Tax exemption for 2 years and 50% reduction of payable tax for the next 4 years for incomes from the implementation of new investment projects specified in Clause 3, Article 15 of this Decree and incomes of enterprises from project implementation new investment in industrial parks (except for industrial parks located in areas with favorable socio-economic conditions).

Areas with favorable socio-economic conditions specified in this Clause are urban districts of special-class cities, grade-I cities directly under the central government, and grade-I cities directly under provinces; in case an industrial park is located in both favorable and unfavorable areas, the determination of tax incentives for industrial parks shall be based on the area with a larger area of ​​the industrial park. The determination of special-class and grade-I cities specified in this Clause shall comply with the Government’s regulations on urban classification.)

For commercial enterprises:

• Areas eligible for investment incentives:

• Industrial parks (except for industrial parks located in areas with favorable economic conditions): Tax exemption for 2 years, 50% reduction of payable tax for the next 4 years
• Economically difficult areas: Tax exemption for 4 years, 50% reduction of payable tax for the next 9 years, tax rate of 17% for 10 years.
• Especially difficult economic areas: Tax exemption for 4 years, 50% reduction of payable tax for the next 9 years, 10% tax rate for 15 years.

In case not eligible for incentives => CIT rate: 20%

• CIT = (Total revenue – Total valid expenses) x20%
• Total revenue: Total revenue based on invoices and commercial invoices when exporting

Eligible expenses: are expenses with full invoices and vouchers as prescribed by tax law, serving business and production activities of enterprises.

3. Personal income tax (PIT)

• PIT on income from wages of foreigners

• In Vietnam under 183 days => Non-resident individuals => PIT rate: 20%
• In Vietnam from full 183 days => Personal residence => PIT rate: 10%
• Share the profit:

• Divide only when the business is profitable
• PIT from capital investment (distributed profit): 5%

SOME NOTE:

When can foreign investors’ profits be transferred abroad?

Enterprises can choose to remit profits abroad annually or at the end of their direct investment activities in Vietnam. Regardless of the time, enterprises must fulfill their financial obligations to the State of Vietnam in accordance with the law, have submitted audited financial statements and corporate income tax finalization declarations. fiscal year to the tax authority for direct management and at the same time fulfill all obligations under the provisions of the Law on Tax Administration.

Do foreign experts working in Vietnam have to pay tax?

Foreign experts residing or non-resident working in Vietnam, having wages at the Company in Vietnam, must declare and pay personal income tax like Vietnamese employees.

Foreign experts who reside or do not reside in Vietnam, come to Vietnam to work but do not generate income in Vietnam, if they are not eligible to carry out the procedures for PIT exemption, they must declare and finalize taxes themselves with the tax authorities. for not being eligible to authorize an income-paying agency. Finalization dossiers made according to the form of tax authorities together with documents proving overseas income and tax declaration and payment dossiers abroad.

In case the resident individual earns income in a foreign country and has calculated and paid personal income tax according to foreign regulations, the tax amount already paid abroad may be deducted. The deductible tax amount does not exceed the payable tax amount calculated according to Vietnam’s tax table and distributed to the income generated abroad. The distribution ratio is determined by the ratio between the amount of income generated abroad and the total taxable income.

The dossier includes: Salary sheet, time sheet of overseas income, letter confirming overseas income, proof of PIT payment abroad.

+ In case the foreign expert satisfies the condition that he or she is an individual residing in the tax year, the taxable income is the income generated inside and outside the Vietnamese territory, regardless of the place of income payment. Individuals shall declare PIT according to the partially progressive tax schedule guided in Clause 7 Article 26 of Circular No. 111/2013/TT-BTC and Clause 7, Article 16 of Circular 156/2013/TT-BTC of the Ministry of  Finance  . .

+ In case the foreign expert satisfies the condition that he is a non-resident individual in the tax year, the taxable income is income generated in Vietnam (regardless of the place of income payment and receipt). Individuals shall declare tax at the tax rate of 20% guided in Clause 8 Article 26 of Circular No. 111/2013/TT-BTC and Clause 8 Article 16 of Circular 156/2013/TT-BTC of the Ministry of Finance.

– If the foreigner is a non-resident individual during the year (up to the date of departure), there is no need to carry out tax finalization procedures, the individual only has to declare tax monthly and quarterly as prescribed.

– If the foreigner is a resident by the date of exit, he/she must make a tax finalization on income from wages and salaries. The deadline for submitting a tax return is the 45th day from the date the individual leaves the country.

Is the rental invoice for foreign experts deductible for value added tax?

In case the enterprise has foreign experts who come to Vietnam to work, hold managerial positions in Vietnam, receive salary in Vietnam according to the labor contract signed with the business establishment in Vietnam, the business establishment VAT of the rent for these foreign professionals is not deducted.

Above are the sharing of Accountant – Auditor MVA about the process of accounting and auditing activities of foreign-invested enterprises in Vietnam, if you have any questions, readers can contact the accountant. MVA for answers and more information.