LICENSE TAX

The Government’s Decree No. 139/2016/ND-CP dated October 04, 2016 on license tax, which comes into force from January 01, 2017, is amended by:

The Government’s Decree No. 22/2020/ND-CP dated February 24, 2020 on license tax on amendments to the Government’s Decree No. 139/2016/ND-CP dated October 04, 2016 on license tax, which comes into force from February 25, 2020.

Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Law on Fees and Charges dated November 25, 2015;

At the request of the Minister of Finance;

The Government hereby promulgates a Circular to provide for license tax. [2]

Article 1. Scope

This Decree provides for license taxpayers; exemption from license tax; license tax rates and license tax payment.

Article 2. License taxpayers

License taxpayers are organizations and individuals producing and trading goods and services, except for the cases mentioned in Article 3 of this Decree, including:

1. Enterprises established in accordance with law.

2. Organizations established in accordance with the Law on Co-operatives.

3. Public service providers established in accordance with law.

4. Business entities belonging to political organizations, socio-political organizations, socio-professional organizations and units of the armed forces.

5. Other organizations carrying out production and business activities.

6. Branches, representative offices and business locations of the organizations specified in Clauses 1, 2, 3, 4 and 5 of this Article (if any).

7. Individuals, groups of individuals and households carrying out production and business activities.

Article 3. Exemption from license tax

Cases in which license tax exemption is granted:

1. Individuals, groups of individuals and households carrying out production and business with an annual turnover of VND 100 million or less.

2. Individuals, groups of individuals and households carrying out production and business on an irregular basis without a fixed location in accordance with guidelines of the Ministry of Finance.

3. Individuals, groups of individuals and households producing salt.

4. Individuals, groups of individuals and households involved in aquaculture, fishing and fisheries logistic services.

5. Commune cultural post offices; and press agencies (printed newspapers, talking, visual and online newspapers).

6. [3] Co-operatives and co-operative unions (including branches, representative offices and business locations) operating in the field of agriculture in accordance with regulations of the law on agricultural co-operatives.

7.[4] People's credit funds; branches, representative offices and business locations of co-operatives/co-operative unions and of sole proprietorships operating in mountainous areas. Mountainous areas are determined in accordance with regulations of the Committee on Ethnic Minority Affairs.

8. [5] Exemption from license tax for the first year from the date of establishment or official commencement of production/business activities (from January 01 to December 3) shall be granted to:

a) New organizations (issued with new TINs/enterprise ID numbers);

b) Households, individuals and groups of individuals engaging in production/business activities for the first time.

c) During the exemption period, if an organization, household, individual or group of individuals establishes a branch, representative office or business location, such branch, representative office or business location shall be also exempted from the license tax for the same exemption period granted to that organization, household, individual or group of individuals.

9. [6] Small- and medium-sized enterprises (SMEs) converted from household businesses (as prescribed in Article 16 of the Law on Assistance for Small- And Medium-Sized Enterprises) shall be exempted from the license tax within 03 years from the date of issuance of the first enterprise registration certificate.

a) During the exemption period, if a SME establishes a branch, representative office or business location, such branch, representative office or business location shall be also exempted from the license tax for the same exemption period granted to that SME.

b) The branch, representative office or business location of a SME (that is eligible to be exempted from the license tax as prescribed in Article 16 of the Law on Assistance for Small- And Medium-Sized Enterprises) established before the effective date of this Decree shall be exempted from the license tax for the period commencing from the effective date of this Decree to the end of the period for which that SME is exempted from the license tax.

c) SMEs converted from household businesses before the effective date of this Decree shall be exempted from the license tax according to Article 16 and Article 35 of the Law on Assistance for Small- And Medium-Sized Enterprises.

10. [7] Public general education schools and public pre-schools”.

Article 4. License tax rates

1. The license tax rates applicable to organizations producing and trading goods and services are as follows:

a) Organizations with charter capital or investment capital above VND 10 billion: VND 3,000,000 per year;

b) Organizations with charter capital or investment capital above VND 10 billion: VND 2,000,000 per year; c) Branches, representative offices, business locations, public service providers and other business entities: VND 1,000,000 per year.

The tax rates applicable to the organizations prescribed in Points a and b of this Clause are based on the charter capital specified in the business registration certificates. If the organizations do not have charter capital, the tax rates are based on investment capital specified in the investment registration certificate.

2. The license tax rates applicable to individuals and households producing and trading goods and services are as follows:

a) Individuals, groups of individuals and households with an turnover above VND 500 million per year: VND 1,000,000 per year;

b) Individuals, groups of individuals and households with an turnover above VND 300 million up to VND 500 million per year: VND 500,000 per year;

c) Individuals, groups of individuals and households with an turnover above VND 100 million up to VND 300 million per year: VND 300,000 per year;

d)[8] The turnover used as the basis for determining the license tax rates applicable to individuals, groups of individuals and households shall be determined according to guidance given by the Ministry of Finance

3. [9] At the end of the period of exemption from the license tax (from the fourth year from the date of establishment), a SME converted from a household business (including its branches, representative offices and/or business locations) shall pay the license tax for the whole year if its exemption period ends in the first 6 months of the year or pay 50% of the license tax payable for the whole year if its exemption period ends in the last 6 months of the year.

A household business, an individual or a group of individuals engaging in production/business that resumes its production/business after a suspension period shall pay the license tax for the whole year if it resumes its production/business in the first 6 months of the year or pay 50% of the license tax payable for the whole year if it resumes its production/business in the last 6 months of the year.

4. If any organization prescribed in Points a and b Clause 1 of this Clause changes its charter capital or investment capital, the basis for determining the amount of the license tax is the charter capital or investment capital of the year immediately preceding the year in which the license tax is charged.

When the charter capital or investment capital specified in the business registration certificate or investment registration certificate is expressed in foreign currency, it shall be converted into Vietnamese dong as the basis for determining the amount of the license tax payable at the buying rate of the commercial bank or credit institution where the taxpayer opened its account at the time the taxpayer pays the license tax to the State budget.

5. [10] An operating license taxpayer that has notified its/his/her supervisory tax authority in writing of its suspension of production/business in a calendar year is not required to pay the license tax for that year of production/business suspension if the taxpayer has sent a written notification of production/business suspension to its/his/her supervisory tax authority before the prescribed deadline for paying the license tax (January 30 annually) and has made no payment of the license tax for the planned year of suspension.

It must pay the license tax for the whole year if it does not meet the abovementioned conditions for production/business suspension.

Article 5. Declaration and payment of license tax

1. [11] A declaration of license tax shall be made on one occasion when the taxpayer commences production and business or is newly established.

a) A taxpayer has just commenced its/his/her production/ business or is newly established; a small or medium-sized enterprise converted from a household business shall make and submit a declaration of license tax to the its supervisory tax authority by January 30 of the year following the year of commencing production/business or following the year of establishment;

b) A household, individual or group of individuals paying fixed tax is not required to make a declaration of license tax. The tax authority shall, according to the tax declaration and the tax database to determine turnover as the basis for determining the license tax amounts payable by a household, individual or group of individuals paying fixed tax.

2. The license tax declaration dossier shall be completed using the form in the Appendix hereof.

3. License taxpayers shall submit their license tax declaration dossier to their supervisory tax authorities.

a) A taxpayer with a subsidiary unit (branch, representative office or business location) operating in the same province shall submit the license tax declaration dossier of such subsidiary unit to its the supervisory tax authority of the taxpayer;

b) A taxpayer with a subsidiary unit (branch, representative office or business location) operating in a province other than that where the taxpayer’s head office is located shall submit the license tax declaration dossier of such subsidiary unit to its the supervisory tax authority of the subsidiary unit.

4. [12] The license tax must be fully paid by January 30 of every year.

a) At the end of the period of exemption from the license tax (from the fourth year from the date of establishment), a SME converted from a household business (including its branches, representative offices and/or business locations) shall pay the license tax as follows:

- If its exemption period ends in the first 6 months of a year, it must pay the license tax by July 30 of the same year.

- If its exemption period ends in the last 6 months of a year, it must pay the license tax by January 30 of the following year.

b) A household business, an individual or a group of individuals engaging in production/business that resumes its production/business after a suspension period shall pay the license tax as follows:

- If it resumes its production/business in the first 6 months of a year, it must pay the license tax by July 30 of the same year.

- If it resumes its production/business in the last 6 months of a year, it must pay the license tax by January 30 of the following year.

5. The license tax collected must be 100% paid to the State budget in accordance with law.

1. This Decree comes into force from January 01, 2017.

2. A license taxpayer currently doing business which declared and paid such tax before January 01, 2017 is not required to submit a license tax declaration fee for the following years if the factors serving as the basis for determining the amount of such tax are not changed.

Based on capital or turnover and tax rates, the tax authority shall review and prepare a file on license tax, notify the tax payable to the organization, individual, group of individuals or household and manage collection thereof in accordance with this Decree.

3. From the effective date of this Circular, the Government's Decree No. 75/2002/ND-CP dated August 30, 2002 and Article 18 of the Government's Decree No. 83/2013/ND-CP dated July 22, 2013 shall cease to have effect.

Article 7. Responsibility for implementation

1. The Ministry of Finance shall provide guidelines for Articles 2, 3, 4 and 5 of this Decree.

2. Ministers, heads of ministerial bodies, heads of Governmental agencies, Presidents of People’s Committees of provinces and central-affiliated cities, and regulated entities of this Decree are responsible for the implementation of this Decree./.

[1] This is the consolidated document of:

- The Government’s Decree No. 139/2016/ND-CP dated October 04, 2016 on license tax, which comes into force from January 01, 2017.

- The Government’s Decree No. 22/2020/ND-CP dated February 24, 2020 on license tax on amendments to the Government’s Decree No. 139/2016/ND-CP dated October 04, 2016 on license tax, which comes into force from February 25, 2020 (hereinafter referred to as “the Decree No. 22/2020/ND-CP”).

This documents does not replace the 02 abovementioned Decrees.

[2] The Decree No. 20/2020/ND-CP is promulgated pursuant to:

 “The Law on Government Organization dated June 19, 2015;

Pursuant to the Law on Fees and Charges dated November 25, 2015;

The Law on Assistance for Small- And Medium-Sized Enterprises dated June 12, 2017;

At the request of the Minister of Finance;

The Government hereby promulgates a Decree on amendments to the Government’s Decree No. 139/2016/ND-CP dated October 04, 2016 on license tax.”

[3] This Clause is amended by Point a Clause 1 Article 1 of the Decree No. 22/2020/ND-CP, which comes into force from February 25, 2020.

[4] This Clause is amended by Point b Clause 1 Article 1 of the Decree No. 22/2020/ND-CP, which comes into force from February 25, 2020.

[5] This Clause is added by Point c Clause 1 Article 1 of the Decree No. 22/2020/ND-CP, which comes into force from February 25, 2020.

[6] This Clause is added by Point c Clause 1 Article 1 of the Decree No. 22/2020/ND-CP, which comes into force from February 25, 2020.

[7] This Clause is added by Point c Clause 1 Article 1 of the Decree No. 22/2020/ND-CP, which comes into force from February 25, 2020.

[8] This Point is amended by Point a Clause 2 Article 1 of the Decree No. 22/2020/ND-CP, which comes into force from February 25, 2020.

[9] This Clause is amended by Point b Clause 2 Article 1 of the Decree No. 22/2020/ND-CP, which comes into force from February 25, 2020.

[10] This Clause is amended by Point c Clause 2 Article 1 of the Decree No. 22/2020/ND-CP, which comes into force from February 25, 2020.

[11] This Clause is amended by Clause 3 Article 1 of the Decree No. 22/2020/ND-CP, which comes into force from February 25, 2020.

[12] This Clause is amended by Clause 4 Article 1 of the Decree No. 22/2020/ND-CP, which comes into force from February 25, 2020.

[13] Article 2 of the Decree No. 22/2020/ND-CP stipulates that:

 “Article 2. Implementation and effect

1. This Decree comes into force from February 25, 2020.

2. Ministers, heads of ministerial bodies, heads of Governmental agencies, Presidents of People’s Committees of provinces and central-affiliated cities, and organizations, individuals, groups of individuals and households concerned are responsible for the implementation of this Decree./.”

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