Vietnam Tax System - Overview / Cheatsheet (2026)

Know the system or get bullied by it.

1. Overall positioning

Vietnam’s tax system is relatively standard and not aggressive compared to many jurisdictions.

• Clear structure

• Predictable headline rates

• Incentives exist

• Compliance = paperwork-heavy rather than conceptually complex

2. Core Taxes

Personal Income Tax (PIT)

• Applies to all individuals working in Vietnam (including foreigners)

• Tax treatment depends on tax residency status

• Resident (≥183 days in Vietnam, or have permanent residence / ≥183 days lease)

  • Taxed on worldwide employment income

  • Progressive rates: 0% - 35%

• Non-resident

  • Flat 20% on Vietnam-sourced income

• Taxable income

  • Covers broad categories of income, including:

    • Salaries and wages

    • Business income

    • Capital gains, property, royalties, etc.

  • For employment income:

    • Includes salary, allowances, bonuses, benefits

• Key deductions

  • Personal deduction: VND 15.5 million/month

  • Dependent deduction: VND 6.2 million/month per dependent

• Compliance & filing

  • Employers typically withhold PIT monthly/quarterly

  • Annual finalisation required:

    • By employer or individual depending on situation

  • Deadlines:

    • ~March (employer) / April (individual) after year-end

Practical takeaway: Vietnam PIT is residency-based: residents pay progressive tax (up to 35%) on worldwide income, while non-residents pay a flat 20% on Vietnam-sourced income. The actual tax depends heavily on deductions and proper classification of income/benefits. Employers typically handle withholding, but annual finalisation is still required.

Corporate Income Tax (CIT)

• Scope

  • All enterprises operating in Vietnam (local and foreign)

  • No tax residency concept for CIT

  • Companies established in Vietnam are taxed on worldwide income

• Standard rate: 20%

• Reduced rates for SMEs:

  • 15% (≤ VND 3 billion revenue)

  • 17% (VND 3–50 billion revenue)

• Sector-specific rates

  • Oil & gas: ~25%–50%

  • Mineral / extractive industries: up to ~40%–70%

• Taxable income

  • Business income (goods/services)

  • Capital gains, asset transfers, interest, etc.

• Calculation: Revenue – deductible expenses + other income

• Key deductions & losses

  • Expenses must:

    • Be business-related

    • Be properly documented

  • Loss carryforward:

    • Up to 5 years

    • No carryback allowed

• Tax incentives

  • Preferential rates: 10%, 15%, 17% for qualifying sectors/projects

    • Note: global minimum tax rules may impact this (see below)

  • Incentives typically target:

    • High-tech, R&D, infrastructure, priority sectors

  • May include:

    • Tax holidays (exemption periods)

    • Reduced rates for a period

• Foreign companies / cross-border

  • Foreign companies without entity in Vietnam:

    • Subject to Foreign Contractor Tax (FCT) (see below)

  • With permanent establishment:

    • Taxed on Vietnam + related foreign income

• Compliance & filing

  • Quarterly provisional CIT payments required

  • Annual finalisation:

    • Due ~3 months after year-end

• New development: Global Minimum Tax

  • Vietnam adopts 15% Global Minimum Tax (from 1 Jan 2024) under OECD rules

  • Applies to large MNCs (> €750M global revenue)

  • Mechanism (adopted OECD Pillar Two rules):

    • Either:

      • Vietnam collects (QDMTT - “Qualified Domestic Minimum Top-Up Tax“)

      • OR HQ country collects (IIR - “Income Inclusion Rule“)

Practical takeaway: Vietnam’s CIT is straightforward: most companies pay ~20%, with lower rates or incentives only if specific conditions are met. The real outcome depends on how you structure your presence (local entity vs FCT) and how well expenses are documented. For large MNCs, global minimum tax rules (15%) may limit the benefit of local incentives.

Value-Added Tax (VAT)

• Nature

  • Indirect consumption tax applied on goods & services in Vietnam

  • Applies to most domestic transactions + imports

  • Charged at each stage of production/distribution, ultimately borne by final consumer

• Scope

  • Goods & services used for production, trading, consumption in Vietnam

  • Includes imports + foreign-sourced services

    • Imports → VAT paid at customs together with import duties

• Rates

  • Standard: 10%

  • Reduced:

    • 0% → exports

    • 5% → essential goods/services

  • Current incentive:

    • Temporary 2% reduction → effective 8%, extended to 2026

• Calculation methods

  • Deduction Method (main method)

    • Formula: VAT payable = Output VAT – Input VAT

    • Key points: Used by most companies (esp. FIEs)

    • Requires:

      • Proper accounting records

      • Valid VAT invoices

    • Input VAT credit allowed if compliant

  • Direct Method

    • Used for:

      • Small businesses / individuals

      • Non-compliant accounting cases

    • Rates applied on revenue:

      • Goods trading: 1%

      • Services: 5%

      • Production/transport: 3%

      • Other: 2%

      • E-commerce/platforms: 10%

• Exemptions

  • Examples:

    • Financial services

    • Securities

    • Insurance (certain)

    • Land use rights transfer

    • FX services

• No declaration / no payment

  • Certain agricultural raw products resold

  • Still can deduct input VAT

• Export VAT (0%)

  • Applies if:

    • Goods/services consumed outside Vietnam

    • Proper supporting documents provided

• Filing & Payment

  • Based on turnover:

    • VND 50B → Monthly filing

    • ≤ VND 50B → Monthly or quarterly

  • Deadlines:

    • Monthly → 20th of next month

    • Quarterly → End of next month after quarter

• Refunds

  • Eligible cases:

    • Exporters with ≥VND 300M input VAT credits

    • Investment projects (pre-operation phase)

    • Businesses mainly taxed at 5%

    • ODA (Official Development Assistance) / special cases

  • Key limits:

    • Export refund capped at 10% of export revenue

  • Carry forward:

    • Excess input VAT → carried to next period

• E-Invoicing (mandatory)

  • Required since 1 July 2022

  • Must register with tax authority before use

Practical takeaway: Vietnam’s VAT system is standard, broad-based, and predictable. It works mainly by offsetting input VAT against output VAT. The temporary reduction from 10% to 8% (to 2026 for certain items) is a key commercial point, while VAT refunds can be meaningful for exporters and investors. Compliance depends heavily on proper invoices, documentation, and choosing the correct method.

3. Special / Industry Taxes

Special Consumption Tax (SCT) - “Sin / Luxury Tax”

Targets:

• Harmful products (alcohol, tobacco, sugary drinks)

• Luxury goods (cars, yachts)

• Services (casino, karaoke, golf)

From 2026 onwards — tightening significantly:

Key changes:

• Dual structure:

  1. % of price

  2. + fixed tax per unit (new)

Expansion:

• Broader coverage across goods (11 categories) & services (6 categories) - key ones:

  • Tobacco (cigarettes, cigars)

  • Alcohol (spirits, wine, beer)

  • Cars (<24 seats)

  • Motorbikes (>125cc)

  • Petrol

  • Air-conditioners

  • Luxury items (yachts, airplanes)

  • Playing cards / votive paper

  • Nightclubs / discos

  • Karaoke / massage

  • Casinos / gaming

  • Betting

  • Golf

  • Lotteries

  • NEW trend: sugary drinks (from 2027)

Trend:

• Rates increasing over time (not one-off)

  • Alcohol/beer → up to ~90%

  • Tobacco → rising + per-pack tax

  • Cars → higher rates for bigger engines

Who pays

• Producers

• Importers

• Service providers

Wide range: ~7% → 150%+ depending on item

• Typical anchor points:

  • Cigarettes: 75%

  • Alcohol: 35% – 65%+ (increasing over time)

  • Beer: ~65%+

  • Cars: 10% – 150% (engine size driven)

  • Petrol: 7% – 10%

  • AC: 10%

Offset against double tax:

• Raw materials already taxed; and/or

• Impact → sell locally

Practical takeaway: 1) SCT rates are high + increasing as general trend; 2) Policy-driven → expect ongoing changes

Foreign Contractor Tax (FCT)

Applies when foreign companies earn Vietnam-related income without a local entity.

Structure:

• Combination of:

  • VAT + income tax (CIT/PIT)

• Typical effective rate: ~5–10%

• Filing timeline: ~10 days

Very broad scope (no physical presence needed):

• Services in Vietnam (consulting, marketing, SaaS, training, etc.)

• Services partly performance / linked to Vietnam (installation, maintenance)

• Online services (ads, SaaS, training, platforms etc)

• Bundled goods + services

• Royalties, interest, commissions, licensing

Not applicable:

• Pure goods import (no services)

• Services fully performed & consumed outside Vietnam

Mechanism:

• Vietnamese party withholds tax before payment (within 10 days of payment)

• Pays to government on behalf of foreign contractor

Practical takeaway: FCT broadly applies to most cross-border payments from Vietnam (even without a local entity), so always factor ~5–10% tax into pricing upfront. The Vietnamese party must withhold and pay within ~10 days, and poor contract structuring can lead to higher tax exposure.

Import / Export Duties (Customs Tax)

• Import tax: varies by product - multiple tax layers (not just tariff)

  • Import duty

  • VAT (typically 10%)

  • SCT (if applicable - e.g. alcohol, cars)

  • Anti-dumping / safeguard duties (if applicable)

• Export tax: limited, many exemptions

  • Mostly 0% duty

  • Applies mainly to natural resources (minerals, etc.)

• What drives the tax rate

  • 3 key factors:

    • HS code (classification) → determines base rate

    • Origin of goods → MFN (standard) vs Preferential (WTO) vs FTA (ASEAN) rates

    • Type of goods → consumer (higher) vs machinery (lower)

  • MFN rates (Most Favoured Nation)

    • Default import tax rate

    • Applies if:

      • No special trade agreement applies, or

      • You can’t prove origin

    • Usually higher than FTA rates

  • FTA rates (Free Trade Agreement)

    • Preferential (lower, sometimes 0%) tax rate

    • Applies if:

      • Goods come from an FTA partner country (e.g. China, Korea, EU, ASEAN, CPTPP countries), and

      • You meet rules of origin + have proper documents (e.g. Certificate of Origin – CO)

• Timing

  • Import: before clearance

  • Export: within ~30 days

Practical takeaway: Import duties in Vietnam are mainly driven by HS code classification and origin (FTA vs non-FTA), so getting these right upfront is the biggest cost lever. Duties (plus VAT/SCT if applicable) must be paid before clearance, meaning mistakes directly impact cash flow and shipment delays.

4. Other Relevant Taxes

• Natural resources tax

• Environmental tax

• Land use tax (manufacturing, energy, real estate)

5. Business License Tax (BLT)

• Nature: annual registration fee ranging from VND 1 million to 3 million based on charter capital or revenue, typically paid at the start of each year

• Eliminated from 1 Jan 2026

6. Key Takeaways

• System is standard → complexity is in paperwork, not rules

• PIT = residency-driven → global vs VN-only tax changes everything

• CIT ≈ 20% baseline → incentives exist but not automatic

• VAT = input vs output → 8% (temp) is key commercial lever

• FCT hits most cross-border flows → assume ~5–10% tax leakage

• Customs = HS code + origin → biggest driver of cost (FTA can → 0%)

• SCT = high & rising → policy-driven (sin/luxury sectors)

• Execution matters most → structure, docs, classification = real outcome