Quick answer: A branch of a foreign company in Vietnam is a dependent unit without independent legal personality, but it still bears full tax duties: with independent accounting it declares and pays CIT on its own like an enterprise; with dependent accounting the parent (through its authorized Vietnamese unit or the branch itself) performs centralized filing. Branches must also withhold, declare and pay contractor tax on outbound payments and PIT for employees. Many branches “forget” they still have to finalize CIT annually even with no profit.
Applicable legal bases
The instruments below are in force as of the writing date (20/10/2026) and directly govern this article:
- Corporate Income Tax Law 67/2025/QH15 (effective 01/10/2025, applicable from tax year 2025) — taxpayers, filing methods.
- Tax Administration Law 108/2025/QH15 (effective 01/7/2026, replacing Law 38/2019/QH14) — branches’ declaration, payment and finalization duties.
- Decree 236/2025/ND-CP (effective 15/10/2025) — guidance on CIT filing for dependent units.
- Commercial law on branches of foreign traders — branch establishment licenses, scope of operation, reporting duties.
In-depth analysis
The biggest confusion comes from “dependent unit” status. Many branch directors assume that because the branch is not an independent legal person, “the parent handles tax”. In reality, tax law treats an independently-accounting branch almost like a standalone enterprise for filing purposes: its own tax code, VAT returns, quarterly provisional CIT, annual finalization, and inspections like any normal unit. Dependence shows only in that after-tax profits remitted to the parent are not subject to CIT a second time — not in any filing exemption.
For dependently-accounting branches (all books centralized at the parent or at the main Vietnamese unit), filing is centralized, but the branch must still supply complete figures and documents to the filing unit. This model is common for upgraded representative offices or branches performing only support functions without direct revenue. Note: a branch with no revenue does not mean a branch with no tax duties — the branch’s operating costs, personnel PIT and contractor tax on outbound payments must still be fully declared.
A distinctive issue is cost allocation from the parent. Branches routinely receive allocations of management charges and intra-group service fees from the overseas head office. For these allocations to count as the branch’s deductible expenses, they need a reasonable allocation basis, documentation, and compliance with related-party transaction rules. Inspectors examine “management fees” from parents very closely as a classic profit-shifting channel — baseless allocations are disallowed and may trigger transfer-pricing adjustments.
Four core tax duties of a branch
- CIT filing: quarterly provisional and annual finalization (if independently accounting); complete figures for the centralized filer (if dependently accounting).
- VAT: declare output and input VAT arising at the branch under the prescribed method and filing periods.
- Withholding and filing on behalf: contractor tax on payments to foreign organizations and individuals; PIT on salaries and wages paid at the branch.
- Annual reporting and finalization: file the CIT finalization dossier on time even in years with no tax payable; report operations to the licensing authority.
Common risks and how to prevent them
- Assuming branches need not finalize: an independently-accounting branch must finalize CIT annually like an ordinary enterprise — failure draws penalties and deemed assessments.
- Baseless parent cost allocations: build a written allocation policy with formulas and documents; comply with related-party rules and prepare transfer-pricing files.
- Missing contractor tax on internal payments: every payment to the parent or to foreign third parties (service fees, royalties, interest) must be tested for contractor-tax withholding.
- Delaying tax-code closure on termination: on shutdown the branch must finalize, pay all tax and complete tax-code termination — delays accrue penalties and taint the parent’s record for future projects.
Frequently asked questions
1. Can a branch enjoy CIT incentives?
No. A branch is not an independent investment project and cannot enjoy project-based tax incentives. Incentives (if any) attach to the legal person or enterprise implementing the project, not to the branch as a dependent unit.
2. Is profit remitted to the parent taxed?
A branch’s after-CIT profit remitted to its foreign parent is not subject to further CIT in Vietnam. But the remittance must comply with foreign-exchange regulations.
3. A marketing-only branch with no revenue — how to file?
File everything: VAT (if any), PIT for personnel, contractor tax on outbound payments, and the annual CIT finalization (declaring losses/costs). No revenue does not mean no filing duties.
4. Can a branch switch from dependent to independent accounting?
Yes, but it must register the change with the tax authority and reorganize its accounting books. The switch date must be clear to divide filing duties between periods.
Key takeaway for investors
Treat an independently-accounting branch like a “subsidiary” for tax compliance: its own tax code, its own filings, its own finalization. Legal dependence never means exemption from tax duties.
This article has been quality-reviewed by the FLAW AI Legal Council This content is legal reference only and does not replace counsel for a specific case.
