Tax management for foreign organizations doing business in Vietnam is entering a crucial transitional phase. Based on the guidance in Official Letter No. 33424/HAN-QLDN3 from the Hanoi City Tax Department and relevant legal documents, the following is a summary and detailed explanation for businesses.
Expanding the scope of taxable entities under the Corporate Income Tax Law 2025.
The Corporate Income Tax Law No. 67/2025/QH15, effective from 2025, has specified and expanded the scope of management for foreign entities, especially in the digital economy. The main subjects include:
- Contractors with a permanent establishment: Pay taxes on taxable income arising in Vietnam but not related to the business activities of that permanent establishment.
- Contractors without a permanent establishment: This includes foreign organizations operating in the fields of e-commerce and digital platform businesses (such as online advertising, streaming services, SaaS software, etc.). Taxes will be calculated on income generated within the territory of Vietnam.
New additions: The 2025 law emphasizes clearly defining cross-border business models, requiring Vietnamese businesses, when paying income, to be responsible for withholding and remitting taxes in accordance with regulations.
Methods for determining corporate income tax
During the current transition period, the revenue-based pricing method remains the most common approach to simplify procedures for foreign contractors.
The formula is defined as follows:
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Corporate income tax payable = Taxable revenue x Corporate income tax rate (1/3 tax rate) |
Based on the current rates in Circular 103/2014/TT-BTC: These rates are classified based on the nature and added value of the industry:
- Services, equipment rental, insurance: 5%
- Construction and installation activities with material procurement included: 2%
- Commercial activities (providing goods and services in Vietnam): 1%
- Interest on loan: 5%
- Copyright: 10%
Implementation roadmap for the new regulations and transitional period.
The Hanoi City Tax Department has issued a special note regarding the priority order for applying legal documents as follows:
- Current period: Continue to apply the tax rates and calculation methods as stipulated in Article 13 of Circular 103/2014/TT-BTC.
- Transition period: After Law 67/2025/QH15 comes into effect, the Government will issue detailed guiding decrees. If the new decree stipulates changes to the % ratio on taxable revenue, businesses are required to update and apply the new tax rate framework at the time the decree takes effect.
In complex cases, the use accounting services Professionalism is the optimal solution for assessing documents and protecting data before tax authorities.
Conclude
The issuance of Official Letter No. 33424/HAN-QLDN3 is a timely reminder from the tax authorities in the context of changing regulations. Businesses need to clearly understand that:
- Compliance is a top priority: Applying the correct % ratio on revenue as stipulated in Circular 103/2014/TT-BTC at the present time helps protect businesses from the risks of tax arrears and late payment penalties.
- Transformative thinking: The 2025 Corporate Income Tax Law is not just a change in numbers, but also a tightening of management over the digital economy. Businesses need to proactively review their transactions with foreign partners to be ready to adapt when the new guiding decrees are officially issued.
- Professionalism: Transparency in contractor tax declarations and settlements will enhance the company's reputation in the eyes of international investors and partners, while also laying the foundation for sustainable development in Vietnam's increasingly完善 legal environment.
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Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
MAN Editorial Board – Master Accountant Network
