📌 Summary:
- Exemption from business license fees first year established for the prescribed subjects. Exemption policy in the first year of application by calendar year, not calculated for 12 odd months from the date of registration.
- Deadline for submitting the business license fee declaration is no later than 30/01 (including exempted years), avoiding the risk of late payment penalties.
- The level of business license fee is determined based on charter capital/investment capital.
- When changing capital causes a change in the fee level, it is necessary to update the profile on time to apply the appropriate fee level from the following year.
Exemption of business license fees for newly established enterprises is an important incentive policy to encourage entrepreneurship and facilitate business activities. However, this regulation is not applied universally but comes with specific conditions on the scope and duration of exemption. Therefore, mastering the relevant regulations will help enterprises limit risks and avoid unnecessary mistakes. The following article will analyze in detail the fee exemption period as well as the necessary procedures for enterprises to effectively take advantage of this policy.
I. What is a business license fee?
Currently, there is no legal document that provides an official definition of the concept. "license fee" (formerly known as business tax).
However, based on the regulations on business license fees, business license fees can be understood as follows:
-
Is a kind of direct tax, which is collected directly from payers based on their production and business activities;
- There mandatory financial obligation that organizations, households and individuals must carry out to be allowed to legally operate in the production and business sector (except for exempted cases);
II. How long are newly established businesses exempt from business license fees?
According to the Clause 8 Article 3 Decree 139/2016/ND-CP (amended and supplemented by Decree 22/2020/ND-CP):
- Newly established enterprises (granted new tax codes/business codes) are exempted from business license fees for first year established or when starting production and business activities (calculated according to the calendar year from January 01 to December 01).
- During the same exemption period, if the business opens branch/representative office/business locationThese dependent units are also exempted from business license fees corresponding to the exemption period of the parent enterprise.
Note:
📜 “Small and medium enterprises transformed from business households (as prescribed in Article 16 of the Law on Support for Small and Medium Enterprises) are exempted from business license fees for a period of time. 03 years from the date of first issuance of the business registration certificate."
– Clause 9, Article 3, Decree 139/2016/ND-CP
III. During the year of exemption, does the enterprise have to submit a declaration of business license fee?
According to the Point a Clause 1 Article 10 Decree 126/2020/ND-CP (guiding the Law on Tax Administration):
- Although exempted in the first year, businesses (except for business households/individuals) still have to submit the application for business license fee latest on January 30 of the following year after the year of establishment or year of commencement of operations.
- If in the year there is change capital To change the fee level, the fee payer must resubmit the declaration at the latest. January 30 of the year following the year in which the change occurred.
IV. How to calculate and pay the business license fee after the exemption period expires?
At the end of the exemption period, enterprises must declare and pay annual business license fees according to regulations. The collection level is determined. based on charter capital recorded in the Business Registration Certificate (or investment capital in the Investment Registration Certificate if there is no charter capital).
According to the Article 4 Decree 139/2016/ND-CP, current collection rates are as follows:
| Subject of application | Collection rates (VND/year) |
|
Organization with charter capital/investment capital over 10 billion VND |
3,000,000 |
|
Organization with charter capital/investment capital from 10 billion VND or less |
2,000,000 |
|
Branches, representative offices, business locations, public service units and other economic organizations |
1,000,000 |
V. Who is subject to paying the current business license fee?
According to the Article 2 Decree 139/2016/ND-CP (amended by Clause 1, Article 1 of Circular 65/2020/TT-BTC), the person paying the business license fee is organizations, individuals, groups of individuals, households engaged in production and business of goods and services (except in cases of exemption).
Here are some tips:
- Enterprises established under the provisions of Vietnamese law;
- Organization established under the Law on Cooperatives;
- Public service units are established in accordance with the provisions of law;
- Economic organizations of political organizations, socio-political organizations, social organizations, socio-professional organizations, and people's armed forces units;
- Other organizations with production and business activities;
- Affiliated units (branches, representative offices, business locations) of the above organizations.
- Individuals/groups of individuals/households with production and business activities.
The exemption from business registration fees is an advantage that helps young businesses get off to a good start, but any negligence can quickly turn this advantage into a burden. Businesses need to strictly comply with the declaration regulations and carefully monitor the preferential period. When businesses Understand correctly, do correctly, all activities will go into a safe and stable orbit from the very first day, building a foundation and long-term sustainable development!