Vietnam: Foreign Contractor Tax In Vietnam
18 August 2010
Article by Dong Hoang Nam
熊佳琪Vietnam has a specific foreign contractor tax ("FCT"). The rules describe the tax obligations of foreign entities and individuals who do business in or receive income from Vietnam. The current FCT regime clarifies previous ambiguities. One can now say that the tax regime for foreign contractors is complete. For an entity, the FCT is comprid of two parts: Corporate Income Tax ("CIT") and Value Added Tax (手麻吃什么药"VAT"). The Law on Corporate Income Tax ("LCIT") and the Law on Value Added Tax ("LVAT") came into effect on January 1, 2009 and both form an intricate part of the foreign contractor tax regime. The government has also issued veral circulars to implement and explain the laws. For foreign contractors, the most important is Circular 134/2008/TT-BTC on foreign contractor tax, also with effect from January 1, 2009 ("Circular 134"). It was subquently amended by Circular 179/2009/TT-BTC dated October 9, 2009 and Circular 64/2010/TT-BTC dated A
pril 22, 20101.
What is a foreign contractor?
Under Circular 134 a foreign contractor is a foreign entity or an individual who does business or receives income in Vietnam. The rules on calculation of taxes for the two groups are quite different. This article largely discuss the rules that apply to entities.
Normally, a foreign contractor generates income in Vietnam as a result of a contract with a Vietname counter-party. By a Vietname counter-party, we mean any entity whether state, domestic or foreign-owned, that is registered to do business in Vietnam. A foreign sub-contractor is a foreign entity and individual who, in turn, provides rvices to a foreign contractor or carries out part of the work of a foreign contractor. For ea of reference, in this article, a foreign contractor and sub-contractor are each referred to as a "Foreign Contractor".
孟子将朝王For purpos of the FCT, a Foreign Contractor that carries out business or has income in
Vietnam in a form that is not recognized under the Law on Investment, the Law on Petroleum or the Law on Credit Institutions, is subject to the FCT. A Foreign Contractor could; for example, be a firm located abroad that provides construction and design rvices or that is a foreign construction contractor operating in Vietnam. The fact that a Foreign Contractor has a project office in Vietnam does not, by itlf, change its status.
The FCT does not apply in the following circumstances:丰功伟绩
i. A Foreign Contractor that provides goods to a Vietname counter-party at Vietname or foreign border gates, which goods are not associated with rvices provided in Vietnam;
ii. Income of a Foreign Contractor that is derived from rvices provided and consumed outside of Vietnam; or
iii. Services of airplane and ship repair, advertising, marketing, investment and trade promotion, brokerage for the sale of goods, training, international post and telecommunications that are provided abroad.
Applicable taxes
The FCT is a type of withholding tax impod on Foreign Contractors doing business or having income in Vietnam on the basis of a contract with a Vietname counter-party. FCT is comprid of two taxes. VAT and CIT apply to a Foreign Contractor that is an entity. VAT and Personal Income Tax apply to an individual foreign contractor.
Three methods of tax payment那个影响了我的人
A Foreign Contractor can pay tax in one of three ways. It can apply the Vietname Accounting System ("VAS") mechanism, the withholding mechanism, or the "hybrid" mechanism. If a Foreign Contractor meets certain conditions, it can choo between the three mechanisms. Otherwi, it is limited to the withholding mechanism.
泽泻的作用与功效∙ VAS mechanism贷款知识
The method of FCT calculation which us the VAS mechanism and the resulting tax are virtually the same as the method of calculation and tax paid by a Vietname entity regist
ered to do business in Vietnam. The VAT it pays is the same, and the CIT it pays, and which is calculated on net profit, is the same.
春节优秀作文
This mechanism is only available to a Foreign Contractor that maintains a Vietname permanent establishment, that has a contract for a period of more than six months and that registers with the tax authorities to apply VAS. Once VAS has been adopted, the Foreign Contractor is treated as a Vietname entity for Vietname tax calculation filing and payment purpos. And where VAS has been adopted, the Foreign Contractor is entitled to pay VAT under the credit method and to pay CIT on its profits/net income. We discuss the two components.
