Question

I am considering to open a foreign invested company in Da Nang, Vietnam. I need to consider the tax implications when investing to establish a company in Vietnam ? 

Answer

Differences in tax position of individual investors in Vietnam ?

Law office advise about the main difference in tax position if I choose to set up a single member LLC instead of choosing an LLC with two or more members ?

Differences in tax position of individual investors between a single member LLC and a multi-member LLC in Vietnam

Single member LLC:

The main comparative advantage of this type of enterprise is that profits from capital investment of single-member limited liability companies under the ownership of individuals shall not be included in taxable income (Clause 6 Article 11 Circular No. 92/2015/TT-BTC dated June 15, 2015). Therefore, individual investors shall not have to pay personal income tax (PIT) on incomes earned from the profit after tax of the company. This is the main difference in tax position between the two types of enterprise, and is clearly a notable issue that needs to be taken into account when considering the type of enterprise.

Multi-member LLC:

According to provisions in Clause 3 Article 2 Circular No. 111/2013/TT-BTC dated August 15, 2013, amended in Clause 6 Article 11 Circular No. 92/2015/TT-BTC dated June 15, 2015, profits from capital contributions to limited liability companies is included in incomes from capital investment and subject to personal income tax. Therefore, individual investors shall have to pay PIT on incomes earned from the profit after tax of the company. This means, incomes from distribution of after tax profits of a company to individual investors are taxable incomes for personal income tax of those investors.

Related topics:

Set up LLC with two or more members in Vietnam, with capital contributed by foreign investors

Set up 100% FDI company in Vietnam in the form of a single member LLC

Contact us:

Phone: 0914 165 703 

Email: dmslawfirm@gmail.com

DMS Law firm in Vietnam
Director
(Signed)
Lawyer Do Minh Son

RELATING ITEMS

Fulfillment of tax liability before exiting Vietnam ?

I am the legal representative of a foreign invested company in Da Nang, Vietnam ? Law office in Danang, Vietnam advise about responsibility to settle tax before leaving Vietnam ?

Regulations to enhance tax administration in e-commerce in Vietnam ?

Law office in Vietnam advise about tax administrative measures to address electronic commerce ?

Legal status and tax declaration of a representative office in Vietnam ?

Attorneys in Danang, Vietnam advise about legal status of a representative office ? Tax declaration of a representative office in Vietnam ?

Tax incentives for software producing companies in Vietnam ?

I am a Japanese citizen. I am considering to set up a company specializing in software producing, located in Danang Vietnam, by the form of 100% foreign-owned company in Vietnam ? Lawyer in Danang, Vietnam to give advice on Vietnam’s tax incentives for 100% foreign-owned companies specializing in software producing ?