Guidelines for Online License Tax Declaration in Vietnam

1. What is License Tax?

While often referred to as "license tax," the correct term in Vietnam is license fee. It's an annual levy imposed on certain organizations and individuals engaged in production and business activities. Here's a breakdown of its key aspects:

Nature of the Fee:

• It's not a true tax but a fee charged for the privilege of conducting business.
• It goes towards supporting state management activities related to production and business.

Basis for Calculation:

• The amount of the license fee is typically determined by the charter capital recorded in the business registration certificate for organizations.
• For individuals and business households, the fee might be based on annual revenue in some cases.

Purpose:

• The license fee serves as a source of revenue for the government to support various administrative functions related to business regulation and oversight.
• It also encourages businesses to register formally and operate within the legal framework.

Key Points to Remember:

• The term "license tax" is often used interchangeably with "license fee" but understanding the distinction is important.
• The fee is not based on profits or income but on a fixed amount or a formula linked to capital or revenue.
• It's a mandatory annual obligation for most businesses and individuals engaged in economic activities.

Additional Considerations:

• The specific rates and exemptions for license fees can vary depending on the type of business activity, location, and other factors.
• It's crucial to consult relevant regulations and seek professional guidance to ensure accurate calculation and timely payment of license fees.

2. Who Needs to Declare License Tax Online?

Determining who needs to declare license tax online in Vietnam can be crucial for businesses and individuals to avoid potential penalties and ensure compliance. Here's a detailed explanation:

Obligated to Declare Online:

• Organizations established under the law: This includes enterprises of all types, cooperatives, public service units, and economic organizations of various entities like political organizations, social organizations, and people's armed units.
• Individuals, groups, and households engaged in production and business activities: This covers a wide range of economic activities, from small businesses and freelancers to larger enterprises.

However, there are some exemptions:

• Individuals/groups/households with annual revenue of 100 million VND or less: This exemption applies to small-scale businesses and individuals with limited income.
• Individuals/groups/households with irregular production and business activities without a fixed location: This category includes activities like occasional sales or services without a permanent establishment.
• Individuals/groups/households involved in specific sectors: This exemption applies to sectors like salt production, farming, fishing, and certain types of social services.
• Public service establishments, press agencies, specific cooperatives, and unions: These entities are generally exempt due to their public service nature or specific regulations.
• People's Credit Funds operating in mountainous areas: This exemption aims to support financial inclusion in remote areas.
• Public general and preschool education establishments: These institutions are exempt due to their social and educational purposes.

Determining Your Obligation:

To determine if you need to declare license tax online, consider the following:

• Nature of your business activity: Is it considered production or business activity under Vietnamese regulations?
• The scale of your operation: Do you fall under the exemption threshold based on annual revenue or other criteria?
• Sector you operate in: Are you involved in a sector with specific exemptions?

Consulting with a tax professional or referring to official regulations from the General Department of Taxation (GDT) is recommended for precise clarification, especially if your situation involves any complexities or uncertainties.

Additional Notes:

• Even if exempt from the declaration, individuals and business households might still be subject to license fees based on notifications from the tax authority.
• The obligation to declare applies not only to the main business entity but also to any dependent accounting units operating under the same organization.

By understanding these details and seeking professional guidance when necessary, businesses and individuals can ensure they fulfill their license tax obligations accurately and avoid potential legal issues.

3. Deadlines for Declaration and Payment

Understanding the deadlines for both declaring and paying license tax in Vietnam is crucial for businesses and individuals to avoid penalties and maintain compliance. Here's a breakdown of the key points:

Declaration Deadline:

• January 30th of every year: This applies to the year following the establishment or commencement of production and business activities.
• Exception for capital changes: If your organization's charter capital changes during the year, a new declaration needs to be submitted by January 30th of the following year.

Payment Deadline:

• January 30th of the year following the declaration: This means the payment must be made by the same date as the next year's declaration deadline.

Example:

• If you establish a business in July 2023, the declaration deadline is January 30, 2024. You would then need to make the payment by January 30, 2025.
• If your company's charter capital increases in October 2024, you need to submit a new declaration by January 30, 2025, and the payment will be due by January 30, 2026.

Consequences of Missing Deadlines:

• Late declaration or payment can result in fines and penalties imposed by the tax authorities.
• Repeated offenses could lead to more severe consequences, including business license suspension or revocation.

Important Reminders:

• It's essential to mark these deadlines in your calendar or set up reminders to ensure timely compliance.
• If you anticipate any challenges in meeting the deadlines, it's advisable to consult with a tax professional for guidance on potential extensions or other options.
• Staying informed about any changes in regulations or deadlines issued by the General Department of Taxation (GDT) is crucial.

Additional Considerations:

• While the deadlines mentioned above are the general rule, there might be specific exceptions or adjustments for certain types of businesses or situations. Consulting with a tax advisor or referring to official GDT pronouncements is recommended for any uncertainties.
• Early declaration and payment are encouraged to avoid any last-minute complications and potential penalties.

4. Instructions for Online Declaration

Declaring your license tax online in Vietnam can be a smooth process if you follow the correct steps and have the necessary information prepared. Here's a comprehensive guide to navigating the online declaration process:

Before You Begin:

• Ensure you have a digital signature: This is essential for electronically signing and authenticating your declaration documents. You can obtain a digital signature from authorized providers.
• Register for an electronic tax payment account: This allows you to pay your license tax online after submitting the declaration. You can register through the e-Tax website or your local tax authority.

Steps for Online Declaration:

1. Access the e-Tax website: Visit thuedientu.gdt.gov.vn/.

2. Login: Enter your company's login credentials, including the tax code and confirmation code provided by the tax authorities.

3. Register the declaration (if not already done):

• Select "Tax declaration" from the main menu.
• Choose "Register declaration" followed by "Register additional declaration."
• Locate the "License Tax" section and select "01/LPMB - License Tax Fee Declaration (TT80/2021)."
• Confirm your selection to proceed with registering the declaration.

4. Select and update declaration information:

• Go to "Tax declaration" and choose "Online tax declaration."
• Select "01/LPMB - License Tax Fee Declaration (TT80/2021)" from the list of available declarations.
• The declaration form will appear. Fill in the required information accurately, including:
  • Declaring official or additional license fees: Choose the appropriate option.
  • Tax agent information (if applicable): Provide details if you're using a tax agent for filing.
  • Company's charter capital: Enter the amount recorded in your business registration certificate.
  • Information of dependent accounting units (if any): Include details of any branches or subsidiaries under your organization.
• Carefully review the information you've entered before submitting the declaration.

5. Complete declaration:

• Once you've reviewed and confirmed the accuracy of the information, click "Complete declaration" to submit your online license tax declaration.

Additional Notes:

• Business households and individuals exempt from declaration will receive separate notifications from the tax authority regarding payment.
• The license tax rate is determined by the charter capital or investment capital of the organization, as specified in relevant regulations.

Tips for a Smooth Declaration Process:

• Gather all necessary documents beforehand: This includes your business registration certificate, any relevant financial statements, and information about dependent accounting units (if applicable).
• Familiarize yourself with the declaration form: Understand the different sections and what information needs to be provided in each field.
• Seek professional guidance if needed: If you encounter any difficulties or have complex situations, consulting with a tax advisor can ensure accurate and compliant declaration.

5. Important Notes

While the previous sections explained the key steps and deadlines for online license tax declaration, there are some crucial details to remember for complete understanding and compliance:

1. Exemptions and Notifications:

• Business households and individuals: While generally exempt from online declaration, they are still subject to license fees. They will receive notifications from the tax authority for payment based on their annual revenue or other relevant criteria.

2. License Tax Rate:

• The license tax rate is not a fixed amount but is determined by the charter capital or investment capital of the organization as recorded in the business registration certificate.
• Refer to relevant regulations or consult with a tax professional for specific rates applicable to your organization's capital level and industry.

3. Additional Resources:

• Decree 139/2016/ND-CP: This decree outlines the regulations on license fees, including rates, exemptions, and payment procedures.
• Circular 80/2021/TT-BTC: This circular provides further details on the elaboration of license fee declaration processes and requirements.

4. Seeking Professional Guidance:

• Consulting with a qualified tax advisor or accountant is highly recommended if you encounter any complexities in the declaration process, have uncertainties about your specific situation, or require assistance with navigating regulations.

5. Staying Informed:

• Tax regulations and deadlines can occasionally change. It's essential to stay updated on any official pronouncements or amendments issued by the General Department of Taxation (GDT) to ensure ongoing compliance.

Additional Points to Consider:

• Accuracy and completeness: Ensure all information provided in the declaration is accurate and complete to avoid potential discrepancies or delays in processing.
• Recordkeeping: Maintain proper records of your declaration submissions, payment confirmations, and other relevant documents for future reference and potential audits.
• Timely payment: Even after submitting the declaration, remember to make the license tax payment by the designated deadline to avoid penalties and late fees.

6. Conclusion

Fulfilling license tax obligations in Vietnam can be streamlined through the convenient online declaration process. This guide has comprehensively explained the process, eligibility, deadlines, and essential information for businesses and individuals to navigate online license tax declaration effectively. Understanding key aspects like exemptions, tax rates, and the importance of seeking professional guidance when needed empowers individuals and businesses to ensure compliance and avoid potential issues. By following the outlined steps, adhering to deadlines, and staying informed about any regulatory updates, you can confidently manage your license tax obligations in Vietnam's digital landscape.

Remember, seeking professional advice and maintaining accurate records is crucial for a smooth and compliant experience. With this knowledge and proactive approach, you can successfully fulfill your responsibilities and contribute to the Vietnamese economy. If you need further explanation on this subject, please don't hesitate to contact us through email at lienhe@luatminhkhue.vn or phone at: +84986 386 648. Lawyer To Thi Phuong Dzung