Tax obligation on income from capital investment in Vietnam ?

What are tax obligations on income from foreign capital investment in Vietnam ?

DMS Law office in Danang, Vietnam compare tax obligations on income form capital investment in Vietnam in two cases: (1) foreign investors set up 100% FDI company in Vietnam, and (2) foreign investors and Vietnamese enterprises or Vietnamese people contribute capital to set up foreign invested company in Vietnam ?

Tax obligation on income from capital investment in Vietnam:

In case foreign investors set up a wholly foreign owned enterprise, in the form of one member LLC (there is no Vietnamese member contributed capital in the company):  

Foreign investors no longer subject to 5% tax on income from capital investment mentioned in Clause 2 Article 10 Circular No. 111/2013/TT-BTC dated August 15, 2013 thanks to amendment, supplement mentioned in Clause 6 Article 11 Circular No. 92/2015/TT-BTC dated June 15, 2015: “Profits from capital investment of single-member limited liability companies under the ownership of individuals shall not be included in taxable income”. This is the biggest difference in tax obligation between the two forms of LLC : one member LLC vs. LLC with two or more members.

Further, 100% foreign direct investment enterprises (100$ FDI companies) are increasingly developing their good reputation in Vietnam market, and the management control of a single member LLC owned by a person is more flexible.  

In case foreign investors set up a company, in the form of an LLC with two or more members, jointly owned by such foreign investors and Vietnamese enterprises or individuals.

Foreign investors being individuals shall subject to the 5% tax on income from capital investment, according to Clause 2 Article 10 Circular No. 111/2013/TT-BTC dated August 15, 2013 and Clause 6 Article 11 Circular No. 92/2015/TT-BTC dated June 15, 2015./.

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