General Taxes in Vietnam
Find out about the different taxes that a person may be liable for when living in Vietnam…
While Vietnam is still officially a socialist country, its taxation system has gradually moved more in line with those of many Western nations. The Vietnamese taxation system is overseen by the General Department of Taxation, which falls under the supervision of the Ministry of Finance.
Anyone living and working in Vietnam for more than 183 days a year, or in twelve consecutive months, is subject to Personal Income Tax. A wide range of other taxes apply to general consumption of goods and engaging in business and trade.
Value Added Tax (VAT)
There are three bands of VAT that apply to different goods and services: 0 percent, 5 percent and 10 percent.
- 0 percent applies mainly to goods and services that are produced for export or which are used for international trade, such as foreign currency and gold bullion.
- 5 percent is applied to goods that are considered essential to the proper functioning of society and the economy, such as fertilizers, clean water, medicine, teaching aids and agricultural products.
- The 10 percent rate applies to most consumed goods that do not fall under the categories mentioned above.
Land and Property Tax
Although private ownership of land is not permitted in Vietnam (the land officially belongs to the Vietnamese people and the State acts as administrator of the ownership rights), the right to use the land for a specific time period can be obtained.
The right to rent the land through the allocation of a Land Use Right (LUR) contract is the only form of land ownership available to foreigners. Holders of a Land Use Right contract are required to pay a 0.03 percent tax rate, based on the value of the land (not including buildings or businesses), as determined by the provincial People’s Committee.
Following the 2012 Land Tax law, owners of residential property are also required to pay land tax at a progressive rate of between 0.03 percent and 0.15 percent, which is calculated according to the square metre size of the liveable area.
Taxes on cars and other vehicles in Vietnam are numerous and make up a large proportion of the vehicle’s overall cost. There have been frequent changes in policy regarding taxation in this area and, with the Vietnamese Ministry of Industry and Trade considering cutting special consumption tax and registration fees in order to boost the domestic car manufacturing industry, this is likely to remain the case.
Some of the Vietnamese vehicle taxes and fees include:
- Automobiles under a 24-seat capacity and motorcycles with an engine capacity greater than 125cc fall under the Special Sales Tax (SST) category. Automobiles are subject to a 60 percent rate while motorcycles are subject to 20 percent
- Automobiles are also subject to a 20 percent registration fee in Hanoi and a 15 percent registration fee in Ho Chi Minh City
- While many automobiles are produced in Vietnam, consumers seeking to purchase a new imported vehicle are required to pay an additional 70 percent tax
- Second hand imported cars less than 1,000cc are subject to a $5,000 tax, while those between 1,000cc-1,500cc are subject to a $10,000 tax
- Imported components for locally produced cars are also subject to the 20 percent import tax
Alcohol, Tobacco and Petrol Taxes
Taxes on alcohol and tobacco are paid for by consumers, and are included in the price shown. These taxes fall under the category of Special Sales Tax (SST).
The Vietnamese government has maintained an intermittent policy of subsidisation for fuel, intervening when it deems international prices to be too high, as happened in 2011.
As exports are encouraged by the Vietnamese government, very few are subject to export tax. Those that are include natural resources and minerals, and the rate can range from 0 percent to 45 percent.
Import tax is a different story, as virtually every import to Vietnam is subject to some form of taxation. Rates can vary according to the goods’ value and the country of origin and its relevant trade agreements with Vietnam. Most normal goods are subject to a 20 percent import tax. The Vietnamese government recently implemented an exemption for goods with a value of less than 1 million VND. Some other exemptions apply to specific goods deemed essential or valuable to the development of the country.
The Special Sales Tax is applied to many luxury items and services such as automobiles with a capacity of less than 24 seats, cigars, gambling-related goods and operating entertainment businesses. This tax can range from 10 to 70 percent. VAT is also applied to these items.
There are numerous other taxes that apply in Vietnam, including business licences and registration fees.
- Business licence tax is 1,000,000 VND, plus approximately 1,500,000 VND more for associated seals and certificate checks
- Registration fees are applicable to certain goods and are paid by the purchaser. They are as follows:
- Land and Housing – 0.5 percent
- Ships and Boats – 1.0 percent
- Motorcycles – 1-5 percent
- Automobiles – 2-20 percent