EXEMPTION OF BUSINESS LICENSE FEE ON THE FIRST YEAR FOR NEWLY-ESTABLISHED ENTERPRISES
Business license fees are stipulated in Decree No. 139/2016/ND-CP and Decree No. 22/2020/ND-CP on amendments to the Government’s Decree No. 139/2016/ND-CP dated October 04th, 2016 on business license fees. They are guided by Circular No. 302/2016/TT-BTC on guidelines for business license fees and Circular No. 65/2020/TT-BTC on amendments, supplements to several articles of the Ministry of Finance’s Circular No. 302/2016/TT-BTC dated November 15th, 2016 on guidelines for business license fees. Enterprises must comply with the above legislative documents for their business license fees.
1. Business license fee payers
Enterprises; Branches, representative offices and business locations of the enterprises must pay business license fees, except for cases where enterprises, branches, representative offices and business locations of the enterprises are exempted from business license fees in the first year from the date of establishment or official commencement of production/business.
2. The cases of exemption from business license fees
New organizations (issued with new TINs/enterprise ID numbers) are exempted from the business license fee in the first year from the date of establishment or official commencement of production/business (from January 01st to December 31st).
During the exemption period, if the enterprise establishes a new branch, representative office or business location, the new branch, representative office or business location shall be also exempted from the business license fee for the same exemption period granted to the enterprise.
In a case where a new enterprise was established before February 25th, 2020 and its branches, representative offices or business locations were from February 25th, 2020 forward, thus, its branches, representative offices or business locations are not exempted from business license fees and must pay them for tax authority according to current law.
3. Rate of business license fees
- The rate of business license fees for the newly-established enterprise:
If the organizations, branches, representative offices, business locations (that is eligible to be exempted from the business license fee in the first year from the date of establishment or official commencement of production/business) are established, issued with tax registration certificates, tax codes and business codes within the first 06 months of the year, they shall be paid the business license fees of the entire year; If they are established, issued with tax registration certificates, tax codes and business codes within the last 06 months of the year, they shall be paid the business license fees of 50% of the rate of business license fees of the entire year.
- The rate of business license fees for the operating enterprise:
The amounts of annual business license fees for the operating enterprise as follows:
- The enterprise with charter capital and investment capital of greater than VND 10 billion: VND 3,000,000;
- The enterprise with charter capital and investment capital of less than or equal to VND 10 billion: VND 2,000,000;
- Branches, representative offices, business locations and other business entities: VND 1,000,000.
The rate of business license fees for the organizations is based on the charter capital written in the certificate of the business registration or the certificate of enterprise registration. In case of the absence of charter capital, it is based on the investment capital written in the certificate of investment registration or decision on investment policies.
The organization changes its charter capital or investment capital, the ground for determining the amounts of business license fees is their charter capital or investment capital of the preceding year of calculation of business license fees.
If the charter capital or investment capital written in the certificate of the business registration or the certificate of enterprise registration is in currency, it shall be converted into Vietnamese dong. This is a ground for determining the amount of business license fees following the buying rate of commercial banks or credit institutions where business license fee payers open their accounts at the time they make payment to the state budget.
- The rate of business license fees for the enterprise in case of enterprise suspension:
The business license fee payers shall send a written notification of enterprise suspension to supervisory tax authority or business registration authority in the calendar year (from January 1st to December 31st). They shall not pay the amount of business license fee in this year if they provide a written notification of enterprise suspension to tax authority before the prescribed time limit of business license fees payment (January 30th every year) and they have not paid the business license fees in the enterprise suspension year. Where the procedure of enterprise suspension does not meet the above criteria, the business license fee payers must pay business license fees for the entire year.
4. Declaration and payment of business license fees
- Declaration payment of business license fees
The declaration of business license fees is done once when the fee payers newly start their business activities. If the organizations change their charter capital or investment capital, the business license fee payers do not submit the business license fee declaration. Currently, there is a mechanism for exchanging enterprise information between the National Enterprise Registration Information System and the Tax Administration information system.
- Business license fee declaration
The business license fee declaration is the Declaration of license fees.
- Payment of business license fees
The business license fee payers submit the Declaration of business license fees to the supervisory tax authority.
- The case where the business license fee payers have their subordinate units (Branches, representative offices, business locations) which carry on their business in the same provincial-level locality, the business license fee payers shall submit the business license fee declaration of such subordinate units to the tax authority in charge of the business license fee payers;
- The case where the fee payers have their subordinate units (branch, representative office, business location) that carry on their business in the different provincial-level locality where the head office of business license fee payers is located, the subordinate units shall submit the business license fee declaration to the tax authority in charge of the subordinate units.
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