Compliance Obligations in Taxation and Accounting for Foreign-Invested Enterprises Operating in Vietnam

In the course of operating in Vietnam, foreign-invested enterprises (FDIs) are not only required to ensure business efficiency, but must also strictly comply with all legal obligations relating to taxation, accounting, and financial reporting in accordance with the prevailing laws and regulations. Any failure to comply accurately or in a timely manner may give rise to significant legal risks, including tax reassessments, administrative sanctions, restrictions on profit remittance, or even suspension of business operations. The following article provides a comprehensive overview and analysis of the key legal compliance obligations that FDIs must fulfill during their business operations in Vietnam. 

When operating in Vietnam, foreign-invested enterprises (FDIs) are not only required to ensure business efficiency but also to strictly fulfill their legal obligations on taxation, accounting, and financial reporting under the current regulations. Failing to comply accurately and within the timeframe may lead to significant legal risks, including tax reassessment, administrative penalties, restrictions on profit remittance, or even a suspension of business operations.  

The following article provides a comprehensive overview and analysis of the key legal compliance obligations that FDIs need to ensure during their business activities in Vietnam. 

1. Periodic Tax Declaration and Payment: A Key Obligation in the Compliance Risk Management of Foreign-Invested Enterprises

One of the most critical pillars of the financial compliance framework for foreign-invested enterprises (FDIs) in Vietnam is the obligation to declare and pay taxes periodically and on time. This is not merely an administrative duty, but a fundamental factor influencing a company’s ability to obtain tax refunds, remit profits abroad, and avoid being placed under targeted audits by tax authorities. Proper understanding and full implementation of this obligation should be institutionalized as part of the enterprise’s internal control procedures. 

One of the most critical pillars of the financial compliance framework for foreign-invested enterprises (FDIs) in Vietnam is the obligation to declare and pay taxes on time and within the period frame. This obligation is not merely an administrative duty but a fundamental factor influencing the company’s ability to obtain tax refunds, remit profits abroad, and avoid being placed under targeted audits by tax authorities. FDI enterprises should embed a proper understanding and full implementation of this obligation as a regularly monitored internal procedure. 

VAT and Personal Income Tax Declarations, pursuant to Articles 8 and 9 of Decree No. 126/2020/ND-CP, FDIs must determine whether their declarations of Value-Added Tax (VAT) and Personal Income Tax (PIT) are to be made on a monthly or quarterly basis. The key criterion is the total revenue of the preceding fiscal year, with a threshold of VND 50 billion. If the enterprise’s revenue in the prior year reaches or exceeds this threshold, monthly declarations are mandatory; otherwise, the enterprise may opt for quarterly declarations. 

VAT and Personal Income Tax declarations. According to Articles 8 and 9 of Decree No. 126/2020/NĐ-CP, FDI enterprises must determine whether they are required to declare their Value-Added Tax (VAT) and Personal Income Tax (PIT) on a monthly or quarterly basis. The main classification criterion is the total revenue of the preceding year, with a threshold set at VND 50 billion. If the previous year’s revenue is superior to or equal to VND 50 billion, the enterprise is required to declare it monthly. Otherwise, if it’s below this threshold, the enterprise may choose quarterly declarations. 

Incorrect determination of the declaration period may result in late or incorrect filings, leading to administrative penalties and late payment of interest. As such, FDIs should establish a periodic revenue review mechanism, particularly at the beginning of each fiscal year, to ensure accurate classification. 

Incorrectly determining the declaration frequency may lead to consequences such as declaring in the wrong period or missing deadlines, resulting in administrative penalties and late payment of interest. Therefore, FDI enterprises should establish a periodic revenue review process, especially at the beginning of each fiscal year. 

Corporate Income Tax Declaration. in principle, Corporate Income Tax (CIT) is declared annually. However, advance quarterly payments are still required to prevent significant underpayment and ensure timely budget contributions. According to Point b, Clause 6, Article 8 of Decree No. 126/2020/ND-CP, as amended by Clause 3, Article 1 of Decree No. 91/2022/ND-CP, enterprises must provisionally calculate their quarterly profits and ensure that by the end of the third quarter, at least 80% of the annual CIT liability has been paid. Failure to meet this threshold may result in penalties for late payment on the shortfall. Therefore, FDIs must ensure close coordination between their accounting and financial planning departments to make accurate quarterly tax forecasts and prepare contingency funding plans in a timely manner. 

Corporate Income Tax Declaration. In principle, Corporate Income Tax (CIT) is declared annually. However, quarterly provisional payments remain required to prevent significant underpayment and ensure timely budget contributions. According to Point b, Clause 6, Article 8 of Decree No. 126/2020/NĐ-CP, as amended by Clause 3, Article 1 of Decree No. 91/2022/NĐ-CP, enterprises are responsible for estimating quarterly profits and paying at least 80% of the total annual CIT payable by the end of the third quarter. Failure to meet this threshold may result in late payment penalties for excessive shortfall. Therefore, FDI enterprises need to ensure close coordination between their accounting and financial planning departments to accurately forecast quarterly tax obligations and prepare timely capital reserves. 

2. Deadline for Tax Filing: A Mandatory Timeline Where Even a One-Day Delay May Result in Sanctions

Pursuant to Clauses 1 and 2, Article 44 of the Law on Tax Administration 2019, the deadlines for submitting tax returns are categorized based on the filing period as follows: 

• Monthly filing: No later than the 20th day of the following month; 

• Quarterly filing: No later than the last day of the first month of the subsequent quarter; 

• Annual tax finalization: No later than the last day of the third month following the end of the fiscal year. 

Enterprises should note that the filing date is determined based on the actual submission time via the electronic tax portal, not the date on which the return is signed. In cases where the electronic filing system is overloaded or experiences technical failures, it is advisable for enterprises to take screenshots and retain relevant records as evidence when working with tax authorities to avoid unjust administrative penalties. 

Under Clauses 1 and 2, Article 44 of the Law on Tax Administration 2019, the deadlines for submitting tax returns are categorized based on the filing period as follows: 

• Monthly: No later than the 20th day of the following month; 

• Quarterly: No later than the last day of the first month of the subsequent quarter; 

• Annually: No later than the last day of the third month following the end of the fiscal year. 

Enterprises should note that the filing date is determined based on the actual submission time via the electronic tax portal, not the date on which the return is signed. In cases where the electronic filing system is overloaded or experiences technical failures, enterprises should take screenshots and retain relevant records as evidence when working with tax authorities to avoid unjust administrative penalties. 

3. Time of Tax Payment: Strictly Linked to the Filing Deadline – No Leniency for Delays Despite Timely Declarations

Pursuant to Clause 1, Article 55 of the Law on Tax Administration 2019, the deadline for tax payment coincides with the deadline for filing the relevant tax return. This means that even if a taxpayer submits the tax return on time, any delay in remitting the corresponding tax amount will still result in the imposition of late payment interest, calculated at 0.03% per day on the outstanding tax payable. 

For quarterly provisional Corporate Income Tax (CIT) payments, the deadline is the 30th day of the first month of the subsequent quarter. Foreign-invested enterprises (FDIs), especially those of significant size or with complex cash flows, are advised to develop internal monthly tax management reports to ensure no obligations are overlooked during quarterly calculations. 

In practice, the obligation to declare and pay taxes in Vietnam is not merely a routine administrative requirement; rather, it constitutes the first line of control in ensuring full compliance across a range of interconnected legal domains: taxation, accounting, transfer pricing, and investment reporting. Accordingly, FDIs should establish a proactive compliance system, encompassing internal procedures, early warning mechanisms, clear assignment of responsibilities, and synchronized digital recordkeeping. Failure to timely declare or pay taxes, even for a single period, can trigger a chain reaction to adverse consequences, including tax reassessments, penalties, and reputational risks in the eyes of regulatory authorities. 

4. Year-End Tax Finalization

Each foreign-invested enterprise (FDI) operating in Vietnam is obligated to conduct an annual finalization of Corporate Income Tax (CIT) and Personal Income Tax (PIT) at the end of each fiscal year. This finalization serves as a critical compliance juncture where the enterprise reconciles all tax liabilities incurred throughout the year, and it forms the basis for tax refund claims or the resolution of any tax overpayments or underpayments. 

Pursuant to Clause 2, Article 44 of the Law on Tax Administration 2019, the deadline for submitting the finalization dossier is no later than the last day of the third month following the end of the calendar year or fiscal year. All finalization declarations, accompanying schedules, and reports must be submitted electronically through the General Department of Taxation’s online portal in the prescribed electronic format. 

Late submissions, inaccurate declarations, or omissions in the finalization process may not only result in administrative penalties but also increase the risk of specialized tax audits or exclusion from the VAT refund list in the subsequent year. 

Each FDI enterprise operating in Vietnam is obligated to finalize its Corporate Income Tax (CIT) and Personal Income Tax (PIT) at the end of each fiscal year. This step is a critical milestone in the tax compliance process. Enterprises not only reconcile all tax liabilities incurred during the year but also establish the basis for audits, tax refunds, or the handling of overpayments and underpayments. 

Under Clause 2, Article 44 of the 2019 Law on Tax Administration, enterprises must submit the finalization dossier before the deadline set for the last day of the third month after the end of the calendar or fiscal year. This dossier, which includes declarations, accompanying appendices, and finalization reports, must be submitted through the General Department of Taxation’s online portal in the mandatory digital format. 

Late submission, incorrect declarations, or omissions in the finalization process may not only lead to administrative penalties but may also result in the enterprise being subject to targeted tax audits or excluded from the list of VAT refund-eligible entities in the following year. 

5. Annual Financial Statements and Mandatory Audits

Under current regulations, all FDI enterprises, regardless of their size, are required to prepare annual financial statements, which must include: 

• The balance sheet 

• The income statement 

• The cash flow statement 

• The notes to the financial statements 

These financial statements serve as the foundational basis for the finalization of corporate income tax (CIT) and the remittance of profits abroad. Therefore, accuracy, transparency, and timely submission are mandatory legal and practical requirements. FDIs must submit their annual financial statements no later than 90 days from the end of the fiscal year. Furthermore, the financial statements must be audited by an independent auditing firm duly authorized to operate in Vietnam. This audit is a prerequisite for carrying out critical procedures such as dividend distribution, profit remittance abroad, dissolution, or capital transfer. 

6. Related-Party Transaction Reporting, a Mandatory Transfer Pricing Control Instrument

In the context of international economic integration, it is common for foreign-invested enterprises (FDIs) to engage in transactions with their parent companies, subsidiaries, or related parties abroad. However, such activities impose a special legal obligation to prepare and submit Related-Party Transaction (RPT) reports. It serve as a crucial mechanism to monitor and prevent transfer pricing manipulation and tax evasion. The RPT report must be submitted concurrently with the Corporate Income Tax (CIT) finalization dossier, no later than the last day of the third month following the end of the fiscal year. 

In the context of international economic integration, it is common for FDI enterprises to engage in transactions with their parent companies, subsidiaries, or related parties abroad. However, such activities impose a special legal obligation to prepare and submit Related-Party Transaction (RPT) reports. This mechanism is crucial in overseeing enterprises and preventing transfer pricing manipulation and tax evasion. The RPT report must be submitted concurrently with the Corporate Income Tax (CIT) finalization dossier within the same deadline: by the end of the third month after the fiscal year-end. 

7. Investment, Labor Reporting, and Management Information Obligations

Pursuant to Article 102 of Decree No. 31/2021/ND-CP, economic organizations implementing foreign direct investment (FDI) projects must submit periodic reports on their operational status to the Department of Planning and Investment as follows: 

• Quarterly reports: Submitted no later than the 10th day of the first month of the following quarter; 

• Annual reports: Submitted no later than March 31 of the subsequent year. 

The content of these reports shall include but not be limited to, realized investment capital, revenue, import-export activities, taxes paid to the State Budget, labor force, land use, and technology employed. 

Regarding investment monitoring and evaluation reports, pursuant to Point a, Clause 11, Article 100 of Decree No. 29/2021/ND-CP, the requirements are as follows: 

• Semi-annual reports: Submitted no later than July 10; 

• Annual reports: Submitted no later than February 10 of the following year. 

• Reporting templates shall conform to Circular No. 05/2023/TT-BKHDT (Form No. 17) and must be submitted electronically via the online reporting system of the investment registration authority. 

8. Repatriation of Profits: Stringent Conditions and Clear Timing Requirements

In order to safeguard investors’ legitimate interests, Vietnamese law allows foreign-invested enterprises (FDIs) to remit profits abroad upon the full discharge of their financial obligations. Nevertheless, this activity is subject to strict regulatory oversight to prevent tax evasion and transfer pricing practices. According to Article 2 of Circular No. 186/2010/TT-BTC, profit remittance is permitted under the following conditions: 

• The enterprise has fully complied with its tax obligations under Vietnamese law; 

• The audited financial statements for the relevant fiscal year have been duly submitted; 

• The final settlement of corporate income tax (CIT) for the fiscal year has been completed. 

The timing of profit remittance is typically on an annual basis, after the completion of tax finalization and submission of all required documentation. The remittance may be made at the investor’s discretion, or profits may be retained in Vietnam for reinvestment purposes. Alternatively, profits may be remitted upon the termination of the investment project, provided that all financial obligations have been fulfilled after the liquidation process has been completed. Profits may be transferred in the form of cash or in-kind assets, in accordance with regulations on foreign exchange control and import-export management. 

To protect the rights of investors, Vietnamese law allows FDI enterprises to remit profits abroad after fulfilling all financial obligations. However, this activity is strictly regulated to prevent tax fraud or transfer pricing practices. According to Article 2 of Circular No. 186/2010/TT-BTC, profit remittance is allowed under the following conditions: 

• The enterprise has fully complied with its tax obligations under Vietnamese law. 

• The audited financial statements for the relevant fiscal year have been duly submitted to the authorities; 

• The company has completed the final settlement of corporate income tax (CIT) for the fiscal year. 

FDI enterprises typically remit profits on an annual basis, after completing tax finalization and submitting all required documentation. The decision to repatriate profits or retain them in Vietnam for reinvestment is up to the investor’s discretion. 

Alternatively, FDI enterprises may remit their profits when the investment project terminates, provided that all financial obligations have been fulfilled and the liquidation process has been completed. It is possible to transfer the profits in the form of cash or in-kind assets, in accordance with regulations on foreign exchange control and import-export management. 

Overall, Vietnam has emerged as a strategic destination for global FDI inflows, thanks to its increasingly stable and integrated business environment. 
However, alongside its growth potential lies a multilayered system of legal obligations, particularly in the areas of taxation, accounting, finance, and profit remittance. Indeed, enterprises must not only understand the applicable regulations but also establish a robust, proactive, and transparent compliance framework. 

From periodic tax declarations, annual tax finalization, and preparation of audited financial statements to transfer pricing documentation and the remittance of profits abroad, each stage carries potential risks if performed incorrectly or delayed. Non-compliance may result not only in administrative penalties and late payment interest but also in reputational damage, loss of access to investment incentives, and diminished capacity to maintain long-term operations in the Vietnamese market. 

Foreign investors are strongly advised not to regard compliance as a mere “mandatory expense” but rather as a strategic investment in mitigating legal risks. 
Adopting this proactive approach allows enterprises to build a sound internal control system, engage experienced legal and tax advisors, and regularly assess the consistency between actual business operations and the requirements of local laws. In a business environment that is becoming increasingly regulated and transparent, compliance is no longer just a formality—it is a core element of long-term competitiveness and operational resilience for any foreign-invested enterprise in Vietnam. 

Time of writing: 28/05/2025

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