Dependent Branches and Tax Finalization in Vietnam

Table of contents

• The scenario
• 1. Dependent vs. independent accounting
• 2. CIT: centralized finalization
• 3. VAT: declare where the branch sits
• 4. PIT and other taxes
• 5. Summary table by tax type
• 6. Compliance checklist
• 7. E-invoices and digital signatures
• 8. When to convert to independent accounting
• FAQ
• When to work with a lawyer/tax accountant
• References

The scenario

Company S (headquartered in Ho Chi Minh City) opens a branch in Hanoi as a sales office and warehouse. The chief accountant registers the branch under dependent accounting. At year-end, the branch manager asks: "Must our branch file separate tax finalization? Do we declare tax in Hanoi or Ho Chi Minh City?"

A seemingly simple question — yet the source of countless filing errors: paying to the wrong place, double declaration, or missing local obligations. This article clarifies each tax type.

1. Dependent vs. independent accounting

Under the Law on Enterprises 2020 (as amended by Law 76/2025/QH15), a branch is a dependent unit of the enterprise, tasked with performing all or part of the enterprise's functions, including authorized representation. For accounting, a branch follows one of two forms:

• Independent accounting: the branch has its own accounting apparatus, keeps its own books and prepares separate financial statements like an independent accounting unit; tax finalization is relatively complete where the branch sits;
• Dependent accounting: the branch does not prepare full separate financial statements; accounting figures are consolidated at the parent; the parent handles centralized finalization.

Choosing the accounting form is the enterprise's internal governance decision (stated in the branch establishment decision and registered with the competent authority), but it carries different tax consequences.

Which form to choose? There is no one-size-fits-all answer. Dependent accounting is lean — fitting branches that serve as sales offices or operating representative functions; the downside is that all figures flow to the parent, requiring the chief accountant to run a tight consolidation process. Independent accounting tracks each branch's profit/loss clearly, suiting large, diversified branches; the price is a separate accounting apparatus and fuller filing duties. For FDI enterprises opening their first Vietnamese branch, FLAT typically recommends starting with dependent accounting for simplicity, switching to independent only when the branch is large enough.

2. Corporate income tax (CIT): centralized finalization

This is the scenario's central question. As a rule under tax administration law:

A dependent-accounting branch does NOT file separate CIT finalization. The enterprise (parent company) files consolidated CIT finalization at its head office for all income, including income arising at branches.

The reason: CIT is levied on the enterprise's income — a single juridical person — not on each branch. A dependent-accounting branch is not an independent juridical person and prepares no full separate financial statements, so there is no basis for separate finalization.

Note on allocation: in some cases (an enterprise with production facilities or branches in a different province/city from its head office), tax law provides a mechanism allocating CIT payable to the local budget where the branch/facility sits. This is a budget-allocation technique, not "separate finalization" by the branch — the finalization dossier is still prepared and filed centrally by the parent.

3. Value-added tax (VAT): declare where the branch sits

Unlike CIT, VAT attaches to the place of activity:

• under the framework of Circular 89/2026/TT-BTC (guiding the Law on Tax Administration 108/2025), a dependent-accounting branch conducting business in Hanoi (selling goods, issuing invoices) declares VAT to the tax authority directly managing the branch in Hanoi;
• except where the law provides for consolidated filing at the head office (e.g. certain special activities).

A common real-world error: the parent's accountant declares all revenue (including the Hanoi branch's) on the VAT return in Ho Chi Minh City, while the Hanoi branch declares nothing — creating a missing obligation in Hanoi and a duplicated one in Ho Chi Minh City.

4. Personal income tax (PIT) and other taxes

• PIT withheld from salaries: a branch paying income to employees working at the branch withholds and declares PIT at the tax authority where the branch sits;
• Business license tax: abolished from 01/01/2026 — branches no longer pay this levy;
• Other taxes (contractor tax if the branch contracts foreign contractors, resource tax, fees…) — obligations arise where they arise.

5. Summary table by tax type

6. Compliance checklist for enterprises with branches

1. Identify each branch's accounting form — dependent or independent (review establishment decisions);
2. Build a filing assignment matrix: which tax is filed where, who is responsible, which deadlines;
3. Sync invoicing systems: branch-issued invoices mean revenue recorded and VAT declared at the branch;
4. Year-end: the parent consolidates all branches' figures for centralized CIT finalization; check the local budget allocation mechanism (if applicable);
5. When opening a new out-of-province branch: complete tax registration in the locality from day one — never "operate first, register later".

7. E-invoices and digital signatures of a dependent branch

A dependent branch that sells goods and issues invoices uses e-invoices under the branch's tax code (13 digits: parent tax code + 3-digit suffix). Internal alignment points:

• Who invoices: the branch invoices for transactions arising at the branch; the parent should not invoice "on behalf" and book revenue at head office — that misaligns invoices with local VAT returns;
• Digital signature: the branch should have its own certificate in the branch's name for invoices and local tax filings, rather than depending on the parent's token (slow and hard to control with many branches);
• Archiving: branch invoice data must be stored and reconcilable with the parent's books at centralized finalization.

The most common finding in tax inspections is an invoice-return mismatch: the branch issues invoices but the parent's accountant forgets to declare that revenue on the branch's VAT return (or worse, declares it in both places). The fix: a monthly invoice-to-return reconciliation between branch and consolidation accountants, with sign-off. For multi-branch enterprises, use accounting software that tags data by branch code from data entry.

8. When to convert a branch from dependent to independent accounting

Dependent accounting suits a branch that is merely an "extended arm" (sales, warehouse, liaison office). Consider converting to independent accounting when:

• The branch is large, operating as a complete business unit (own purchasing — sales — inventory — receivables);
• The parent wants to assess each branch via separate financial statements with clear accountability;
• The branch regularly generates large profits/losses needing separate tracking for tax optimization (note: loss offset between units of the same enterprise remains constrained by tax law).

Conversion: parent's decision, amended branch operation registration, accounting-method adjustment, and tax-office notification. Best timed at the start of a fiscal year to avoid a mid-period cutover.

FAQ

Q: Must a dependent-accounting branch file separate CIT finalization?

A: As a rule, no. The enterprise files consolidated CIT finalization at its head office for all operations including branches. The branch still declares and pays other taxes arising where it is located, as prescribed.

Q: Must a dependent-accounting branch declare VAT?

A: Yes, if the branch conducts business generating VAT where it is located. Declaration is made to the tax authority directly managing the branch, except where the law provides for consolidated filing.

Q: What distinguishes dependent from independent accounting?

A: An independently-accounting branch has its own accounting apparatus, prepares separate financial statements and finalizes tax like an independent unit. A dependently-accounting branch does not prepare full separate financial statements; figures are consolidated at the parent for centralized finalization.

Q: A branch in a different province from the head office — where is tax paid?

A: The rule: VAT, withheld PIT and locally-arising taxes are declared and paid to the tax authority where the branch sits; CIT is finalized centrally at the head office (with allocation to the branch's locality as prescribed in some cases).

Q: Must a dependent branch file separate financial statements?

A: No. A dependent branch doesn't prepare separate financial statements; its figures consolidate into the parent's statements. But the branch must keep full vouchers and books for local tax declarations and tax inspections.

Q: Parent in HCMC, branch in Hanoi — where is CIT finalized?

A: CIT finalization is centralized with the tax office directly managing the parent (HCMC in this example), based on the whole enterprise's consolidated results including branches. Where budget-allocation rules apply to the branch's locality, follow the tax administration law's allocation provisions.

When to work with a lawyer/tax accountant

When designing the branch model (dependent vs. independent accounting); when two localities' tax authorities inquire about the same income; or during the first year-end with an out-of-province branch. FLAT Law Firm coordinates with accounting and audit partners — hotline 0988424851.

References

• Law on Enterprises 2020 (No. 59/2020/QH14; as amended by Law 76/2025/QH15, effective 01/7/2025).
• Law on Tax Administration 108/2025/QH15, effective 01/7/2026 (replacing the 2019 Law on Tax Administration).
• Circular 89/2026/TT-BTC guiding the Law on Tax Administration 108/2025, effective 01/7/2026.
• Cross-checked at the time of writing (28/9/2026).

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