Part 1: VAT - Understanding It to Price Correctly
What is VAT?
Value-added tax (VAT) is not money the government takes extra from sellers, but a mechanism to encourage or discourage certain product groups. Each country applies different rates: priority items may be reduced or exempted, while items to be restricted face higher taxes.
Simple Example with a Water Bottle
Suppose you sell a bottle of water for 10,000 VND and VAT for this item is 10%.
- Customer pays: 11,000 VND.
- You only keep 10,000 VND – actual sales revenue.
- The remaining 1,000 VND is collected on behalf of the state, must be remitted on time.
Don't Forget Corporate Income Tax
Besides VAT, businesses must also pay corporate income tax (CIT) calculated on profit. For very small businesses, tax rates are often preferential to encourage startups.
Part 2: Tax Filing Schedule - No More Missing Deadlines
Why Track Your Tax Calendar?
When I first opened my company, I wished someone had given me a simple sheet listing what to file each quarter. Information was everywhere, but overwhelming—easy to miss deadlines. Below is a tidy version for small businesses.
For Companies with VAT
- Quarterly: 1 VAT return + 1 personal income tax (PIT) return.
- Year-end: PIT finalization, CIT finalization, and full financial statements.
For Companies Without VAT
- Quarterly: only PIT return.
- Year-end: PIT finalization and CIT finalization.
Practical Tips
- Set reminders 1-2 weeks before deadline
- Maintain simple books to track revenue and expenses
- Consult an accountant if revenue grows quickly
- Store supporting documents fully for reconciliation when needed
Understanding taxes well not only helps you comply with the law but also price products accurately, predict cash flow, and plan business more sustainably.