Vietnam: Taxation of Artwork Guide

Vietnam: Taxation of Artwork Guide

1. Legal Framework

1.1. How are income and wealth taxed in your country?

Corporate income is taxed under the law on Corporate Income Tax. Personal income is taxed under the law on Personal Income Tax. Vietnam has imposed withholding methods on Corporate Income Tax, Personal Income Tax and Value Added Tax.

There is no general tax on wealth up to now. A land tax is imposed on the non-agricultural use of land.

1.2. What is the range of the applicable tax rates for individuals on income and wealth?

Non-resident individuals being employees are taxed at 20% on their Vietnam-sourced income, regardless of where it is paid. For business income, the rate is 1% to 5%.
Resident individuals are taxed on their world-wide income with a progressive rate of up to 35%.

No tax is imposed on wealth. The tax on land use ranges from 0.03% to 0.15% on the land use price.

1.3. How are profit and net equity taxed in your country?

The profit of corporations is taxed under the system of Corporate Income Tax, the profit of business individuals under the system of Personal Income Tax. No tax on net equity is imposed.

1.4. What is the range of the applicable tax rates for legal entities on profit and capital?

Corporations are taxed at 20% on their profit. In certain cases tax reductions or exemptions can be achieved. No tax is applied on the capital. A license tax of around 150 USD is applied per year for each corporation.

1.5. What kind of valuation is generally accepted in respect of certain assets (such as art) by the tax authorities?

In civil transactions, the assets are generally valued by agreement between the contracting parties or as determined by a third person at the request of the parties following the principle of market prices. Where the law stipulates that the price must conform with the regulations of the authorized State agency, the agreements between the parties on the price of assets must comply with such regulations.

2. Taxation of Art

2.1. Individuals

Is there an obligation of declaring | disclosing private artworks to the tax or other authorities (list of inventories or the like)?

There is no regulation imposing an obligation of disclosing/declaring a privately owned artwork to a state authority. The obvious exception is the case where a relic, antique, or national treasure has been found on the territory of Vietnam i.e. on the mainland, islands, internal waters, territorial sea, exclusive economic zone and continental shelf. That must be reported to the Director of the Culture – Sports and Tourism Department.
Where income is received in the form of royalties from artistic and scientific works, the declaration on Personal Income Tax will have to refer to the related artworks.

2.1.1. Income taxes

Is income generated from the sale of artworks taxed in your country? If yes, please indicate how (i.e. capital gains tax | income from self-employment).

The tax rate for income from capital investments is 5%, the income from transferring artwork will be taxed at 5% as a copyright transfer, the tax rate for business income is 1% to 5%.

2.1.2. Wealth taxes

Does your country envisage any specific categories of classification of artworks (e.g. tax-exempt personal belongings/household)?

No. There are no categories of classification of artworks as personal belongings/household.

Is there an obligation to declare works of art in the tax return? Please indicate how this is done or if there is any other obligation of declaration.

No. Artworks are not considered as a special category for tax purposes.

How are works of art valued for tax purposes in your country? Are there any common and accepted valuation methods, i.e. at cost, insured value, market price?

Artworks may either valued as the object of business income or as income from copyrights.
Works of art may be valued at either (i) market prices of these assets or (ii) like assets of the same kind (if any).

2.1.3. Inheritance | gift taxes

In case of an inheritance or gift will there be any tax levied?

Income from an inheritance or gift is taxed at 10%. The amount exceeding 10 million VND (around 450 USD) per case is taxable.
If the artwork is real estate and passes by inheritance/is given as a gift to husband/wife, parent/child including parents- and children-in-law, grandparents and grandchildren or siblings, no tax is imposed.

3. Taxation of legal entities (as owner of the artworks)

3.1. Corporate income taxes

How are profits deriving from the sale of artworks taxed?

The profit of the company is taxed in the same way whether the traded goods are artworks or not. The general tax rate is 20% on the profit.
If the company is not licensed to perform the business done, the related costs cannot be claimed as deductible expense.

Are there any general advantages of a legal entity as owner of artworks instead of a private ownership?

A private person being a foreigner will not easily obtain a license for trading artwork (or any other product) in Vietnam. For a compliant handling of all activities, setting up a legal entity is recommended. If the intentionis limited to buying in Vietnam and exporting, no legal
entity in Vietnam is required..

4. VAT | Customs

When selling or dealing with works of art within your country what VAT implications have to be considered?

When selling, the seller usually will have to add VAT onto the invoiced amount. The following are not subject to VAT according to Art 5 No. 15 Law on VAT: “Publication, importation and distribution of newspapers, magazines, specialized newsletters, political books,
textbooks, teaching materials, law books, technical and scientific books, books printed in languages of ethnic minorities, propaganda pictures, photos and posters, including in the form of disks, tapes and electronic databases; and printing of money.”
Tax rates are: general rate 10%, reduced rate 5% for “Cultural activities; exhibitions; …artistic performances; film, books” and 0% for exportation.

When works of art cross the border of your country, what needs to be considered regarding VAT | customs?

For exportation, the VAT rate zero applies. For importation, usually the VAT rate of 10% applies
Applicable customs tariffs depend on the type of goods and the origin.
Temporary import for re-exportation is possible and in that case no VAT and no customs duty will be applied, but the handling must be done very carefully.

5. Voluntarily disclosure program

What is the procedure in a voluntary disclosure of previously not properly declared art works and what are the expected consequences?

No special regulations regarding artworks exist.
Taxpayers having committed tax offenses (“violators”), whether deliberately or unintentionally, incur administrative penalties.

Does your country have a non-punishable voluntary disclosure programme?

No. Vietnam does not follow the concept of a non-punishable voluntary disclosure.

6. Special provisions re taxation of arts

Vietnam law allows the foundation of various types of not-for-profit organizations. Regulations are complex, the structure of these organizations can only partially be compared to a Trust or Foundation in other countries. However, these not-for-profit organizations will
enjoy tax reductions or exemptions. For certain projects of collecting and trading artworks, it might be considered using such organizational form and benefit from reduced taxation or achieve tax exemption.

For the full guide on Taxation of Artwork around the world, please see: Private Clients – Taxation of Artwork Guide