Regulation on tax and revenue for joint ventures

Question: (A Germany-based transporter): We want to set up a joint-venture enterprise with a Vietnamese partner operating in trade and export. We have some questions as followed:

1. How much corporate revenue tax (CRT) is imposed on joint venture or wholly foreign-owned enterprises?

2. Beside CRT, does the joint venture have to pay any other tax?

3. Whether the foreign side could transfer abroad the whole or part of its profits? 

Answer: (Lawyer NHQuang’s Office, B23 Trung Hòa–Nhân Chính Villa Complex, Thanh Xuân District, Hà Nội)

1. Regulations on corporate revenue tax for joint-ventures

Việt Nam imposes the same rates of CRT on both Vietnamese and foreign enterprises.

Under Decree 124/2008/NĐ-CP dated on December 11, 2008 of the Vietnamese Government, provides detailed regulations and guidelines for the enforcement of some articles of the Law on Corporate Revenue Tax, the CRT rate is 25% (Article 10)

The rate applicable to activities of exploring and extracting oil and gas and other precious and rare natural resources is between 32% and 50% (Article 10).

Tax incentives are applied to enterprises doing investment in the localities with extreme socio-economic difficulties, economic zones, hi-tech parks, and in the domains which need social involvement. 

2. Apart from CRT, the join venture has to pay the following taxes

• Business rates
• Value added tax
• Personal income tax (if any)
• Special consumption tax (if any)
• Import duties (if any)
• Land lease (if any)

3. Outwards transfer of profit

Under Circular 124/2004/TT-BTC dated on December 23, 2004 of the Ministry of Finance, foreign investors shall be permitted to do annual one-off transfer of their whole amount distributed or earned at the end of the fiscal year and after filing a tax finalization report to the tax office (Point 1.1, Section 2)./.