Simply put, it's the annual tax that businesses must pay based on their registered capital as stated on their business license.
Business license tax is a fixed, direct tax levied on the business license of household businesses and enterprises.
The regulations regarding business license tax are quite clear; however, understanding them fully is not easy for businesses, such as the payment deadline, tax brackets, and penalties for business license tax violations.
Tax rates are tiered, based on registered capital or value added from the previous business year, or revenue from the previous business year, and vary depending on the country and locality.
Read more: Business license tax determines the payment deadline and the level of penalties.
1. Clearly define direct and indirect taxes and quotas.
1.1. What are direct taxes?
+ The amount an individual must pay is based on the income earned from: labor; renting property; profits from stocks; interest.
The amount that businesses must pay is based on their profit after deducting expenses. In addition, businesses also represent their employees in paying state insurance contributions.
1.2. What are indirect taxes?
+ Taxes levied on the consumption of goods and services. The most important source of indirect tax revenue is
+ Value Added Tax (VAT).
In reality, indirect taxes are levied on goods sold, unlike consumption tax which is collected at the final point of sale. For consumers, value-added tax is collected at different stages of the production process.
1.3. What is a fixed-rate tax?
It is to impose a fixed amount of tax on all taxable entities.
2. Deadline for paying business license tax in 2019
For businesses, branches, business locations, and representative offices established in 2018 or earlier, the deadline for payment is January 30, 2019. After this date, the late payment interest rate is 0.03% per day.
For businesses, branches, business locations, and representative offices established from 2019 onwards, the deadline for submission is the last day of the fee declaration deadline.
Example 1: If Company A was granted its business license on January 2nd, 2019, then the deadline for declaring and paying the business license fee is January 31st, 2019.
Example 2: Company A was granted a business license on January 2, 2019, but registered its start date of operation as February 1, 2019. Therefore, the deadline for declaring and paying the business license fee is February 28, 2019.
For newly established companies, businesses, and organizations
If you are granted tax registration and a tax identification number, and a business registration number within the first 6 months of the year, you must pay the full annual business license fee.
If established and granted tax registration and tax identification number, and business registration number during the last 6 months of the year (July 1st - December 31st), then in the first year, 50% of the annual business license fee must be paid.
Note:
If you do not declare business license tax, you must pay the full annual fee, regardless of whether it is in the first or last six months of the year.
+ In cases where a business is currently operating and has notified the tax authorities of its temporary suspension of business for the entire calendar year, it is not required to pay the business license fee for the year of suspension.
+ In cases where business operations are temporarily suspended for less than a full calendar year, the full annual business license fee must be paid.
Time of business license fee declaration
If the date of issuance of the business registration certificate differs from the date of commencement of operations, the deadline for submitting the business license fee declaration is within 30 days from the date of commencement of operations, which is usually stated in the application for business establishment registration.
Upon receiving a business registration certificate, the enterprise must prepare and submit the business license fee declaration no later than the last day of the month in which it begins production and business operations. Usually, the date of commencement of production and business operations is the same as the date the business registration certificate is issued.
3. Forms and methods of paying business license tax
– Directly deposit cash into the district's state treasury at Vietinbank.
– Indirect electronic tax payment deducted from the company's bank account requires a digital signature.
Currently, all tax offices require electronic tax filing via digital signatures before processing tax returns. Therefore, opening a company bank account and purchasing a digital signature is mandatory for businesses.
4. Tax brackets and business license tax rates payable in 2019
For businesses established on or before June 30, 2019, the business license tax will be calculated as follows:
– For representative offices, business locations, branches, non-profit organizations, and other economic organizations, the fee is 1.000.000 VND/year.
– For organizations/businesses with investment capital or charter capital of 10 billion VND or less, the fee is 2.000.000 VND/year.
– For organizations/businesses with investment capital or charter capital exceeding 10 billion VND, the fee is 3.000.000 VND per year.
For businesses established between July 1, 2019 and December 31, 2019, the business license tax will be calculated as follows:
– For representative offices, business locations, branches, non-profit organizations, and other economic organizations, the fee is 500.000 VND for the year 2019.
– For organizations/businesses with investment capital or charter capital of 10 billion VND or less, the business license fee is 1.000.000 VND for the year 2019.
– For organizations/businesses with investment capital or charter capital exceeding 10 billion VND, the business license fee is 1.500.000 VND for the year 2019.
The business license tax calculation date is the date of issuance. gpaper Business license, not "OPERATION DAY".
5. Penalties for late payment of taxes and business license tax returns as per regulations.
– Late submission of fee declarations from 01 to 05 days with mitigating circumstances: a warning penalty.
– Late submission of tax return from 01 to 10 days: penalty of VND 400.000 – VND 1.000.000
– Late filing of tax returns from 11 to 20 days: penalty: VND 800.000 – VND 2.000.000
– Late filing of tax returns from 21 to 30 days: penalty: VND 1.200.000 – VND 3.000.000
– Late filing of tax returns from 31 to 40 days: penalty: VND 1.600.000 – VND 4.000.000
– Late filing of tax returns from 41 to 90 days: penalty: VND 2.000.000 – VND 5.000.000
– For late filing of tax returns exceeding 90 days: the penalty is VND 3.500.000 – VND 5.000.000.
If a business pays its business license fee later than the deadline, the late payment penalty will be calculated as follows:
Late payment penalty = business license fee multiplied by 0.03% multiplied by the number of days of late payment.
