Chapter.2 License fee

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 Law on fees and charges No.97/2015/QH13

issued by National Assembly dated 25 November

2015

 Decree 139/2016/ND-CP dated 04 October 2016

on regulations for license fees

 Circular 302/2016/TT-BTC dated 15 November

2016 on guidelines for license fees

Chapter 2 : License Fee (Lệ phí

môn bài)

Outline

1 Definition and scope of application

2 Tax rates

3 Calculation of license fee

4 Regulations on license fee exemption

5 Business license fee payment

6 Fines

7 Accounting for business license fee

THE VIETNAMESE TAX SYSTEM

Objective 1:

Definition and Scope of application

Definition

License Fee (BLT) is an direct tax imposed on entities that conduct business activities in Vietnam and are paid by the enterprises themselves on an annual basis

Scope of Application

All companies, organizations or individuals (including branches, shops and factories) and foreign investors that operate businesses in Vietnam are subject to BLT charges, and the BLT rates are different for economic entities and for households/individuals

Scope of Application

The amount of BLT that a business is obligated to pay is based on the amount of their registered capital (as listed on their business registration certificates) in

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Scope of Application

For state-owned enterprises, limited liability companies (LLCs) and joint stock companies (JSCs), the registered capital amount is equal to the charter capital amount If the registered capital on the business registration certificate or investment certificate is in a foreign currency, then the registered capital amount will be converted into Vietnamese

Dong in accordance with the average interbank exchange rate published by the Vietnam state bank at the time of tax calculation

THE VIETNAMESE TAX SYSTEM

Objective 2:

Tax Rate

Tax rates

New businesses established after June 30 of

calendar year, will only need to pay half of the BLT amount listed in the table above, otherwise will pay

in full

BLT’s

grades

Manufacture or trading or service organization

with Registered capital

License tax for the whole

year

Grade 1 Over 10 billion 3,000,000

Grade 2 Equal or less than 10 billion 2,000,000

Branches, representative offices , non-profit business and other economic organizations are subject to a license fee

of 1 million/year

Tax rates

The BLT rates applicable for households and individuals

conducting business in Vietnam are based on yearly income

THE VIETNAMESE TAX SYSTEM

Objective 3:

Calculation of Business License fee

Calculation of BLT for Corp - Example

Thanh Cong Corporation was established in July 01, 2016, having the head office in 10 Nguyen Trai, Dist 1, HCMC, its charter capital VND 6 billion, its tax code: 0312251145 In August 15, 2016, the company opened two dependent branches:

- Thanh Cong Corporation – Binh Duong Branch, located

at 105 Tran Hung Dao, Thu Dau Mot, Binh Duong

- Thanh Cong Corporation – Cho Lon Branch, located at

15 Hai Thuong Lan Ong, Dist.5, HCMC

In September 2016, the company’s charter capital was increased to VND 12 billion

Required: Calculate the license fees Thanh Cong has to pay

for 2016 and 2017

Solution

 :

Charter capital Rate License Fees

Head office (established in 01 July

2016) 6 billion 2,000,000 1,000,000 Branch in HCMC 1,000,000 500,000 Branch in Binh Duong 1,000,000 500,000

Total license fees payable in 2016 2,000,000

Head office (capital increased) 12 billion 3,000,000 3,000,000 Branch in HCMC 1,000,000 1,000,000 Branch in Binh Duong 1,000,000 1,000,000

Total license fees payable in 2017 5,000,000

Calculation of BLT for Household - Example

Shop A: annual income of VND 400 million Shop B: annual income of VND 80 million

Shop C: annual income of VND 3 million

Required:

How much BLT will each shop have to pay?

Determine BLT

For a newly started-up enterprise, the amount

of license tax shall be determined base on the registered capital (or charter captial) inscribed

in the business registration certificate of the year of establishment

THE VIETNAMESE TAX SYSTEM

Objective 4:

Regulations on Business License fee exemption

BLT Exemption

(Decree 139/2016/ND-CP)

a Individuals, groups of individuals, or households engaged in production and business activities with an annual income is

equal or less than VND 100 million

b Individuals, groups of individuals, or

households engaged in irregular production & business activities; There is no permanent

location as instructed by the Ministry of

Finance

e Commune cultural post office; newspaper agencies (print, broadcast, electronic newspaper)

BLT Exemption

g Branches, representative offices and business locations of co-cooperatives-society which provide direct technical services in agricultural production

h People's Credit Fund; Co-cooperatives- society specializing in business services for agricultural production; Branches, Representative offices, business locations of Co-cooperatives-society and private enterprises operating in mountainous areas Mountainous areas are determined according to the regulations of the Committee for Ethnic Minorities

THE VIETNAMESE TAX SYSTEM

Objective 5:

Business License fee payment

BLT Payment

 BLT shall be paid by January 30 of the year in which

tax is incurred

 If the taxpayer has been inaugurated and granted tax

registration certificate and tax codes in the first 6

months of the year, he shall declare and pay BLT for the whole year

 If the taxpayer has been inaugurated and granted tax

registration certificate and tax code in the last 6 months

of the year (from 1 st of July), he shall declare and pay 50% of the BLT for the whole year

 If the taxpayer fails to register for a business tax

registration certificate and tax code while doing

business, he must pay the full amount of BLT for the

whole year no matter when his fault is discovered

Location for Payment of BLT

 The business establishments shall pay license

fee at the tax offices where they have made

tax payment registration

 In cases where a business establishment has

many attached shops and stores located in

different places within the same locality, the

business establishment shall pay license fee for itself and its attached shops and stores located in the same locality

 Branches, shops and stores located in other

localities shall pay license fee at the tax

offices of the localities where they are

located

 The business establishments which have no

fixed location, such as those conducting in distance trade, mobile business, construction, transportation or other self-employed trades,

long-shall pay license fee at the tax offices of the

localities where they reside or where they are

granted business registration certificates

Location for Payment of BLT

THE VIETNAMESE TAX SYSTEM

Objective 6:

Fines

Fines

 The business establishments shall have to pay

license fee fully and timely according to tax offices notices

 Each day of delay in license fee payment shall be

subject to a fine of 0.05% of the payable amounts

 If the business establishments evade (avoid) the

license fee payment, when being inspected, apart from having to pay the prescribed license fee

amounts, they shall, depending on the nature and seriousness of their violations, be subject to a fine from one to five times the evaded tax amounts

THE VIETNAMESE TAX SYSTEM

Objective 7:

Accounting for Business License fee

Accounting for Business License Tax

Theo Quyết định 48/2006 QD-BTC và Thông tư 133:

Nợ TK 6422 - Chi phí quản lý Doanh nghiệp

END OF CHAPTER

Business License fee