As per Circular 103/2014/TT-BTC, contractor tax in Vietnam applies to foreign organizations and individuals (not operating under Vietnamese law) generating income from providing services or goods-related services within Vietnam. This tax encompasses:
- For foreign contractors and subcontractors who are business organizations, compliance with Value Added Tax (VAT) and Corporate Income Tax (CIT) obligations is mandated.
- For foreign contractors and individual subcontractors engaged in business, VAT compliance and Personal Income Tax are applicable as per the guidance in Circular 103/2014/TT-BTC and income tax laws respectively.
- Other applicable taxes, fees, and charges for foreign contractors and subcontractors follow the current legal documents on taxes, fees, and charges.
Entities subject to contractor tax include:
- Foreign business organizations with or without a permanent establishment in Vietnam; foreign individuals residing in Vietnam or not, engaging in business or generating income in Vietnam through contracts, agreements, or commitments.
- Foreign organizations and individuals providing goods in Vietnam through direct import and export generating income based on contracts with Vietnamese enterprises, excluding cases of processing and re-export to foreign entities, or distributing goods within Vietnam under international commercial terms where the seller bears risks to goods upon entering Vietnamese territory.
- Foreign organizations and individuals negotiating and signing contracts on behalf of foreign entities.
- Foreign entities exercising export, import rights, distributing in the Vietnamese market, purchasing goods for export, or selling to Vietnamese traders under commercial law.
Certain cases are exempt from contractor tax, such as:
- Foreign entities operating in Vietnam under the Investment Law, Petroleum Law, or Laws on Credit Institutions.
- Provision of goods without accompanying services performed in Vietnam, including scenarios where goods are delivered at foreign borders (with seller’s responsibility up to foreign customs) or at Vietnamese customs (with buyer’s responsibility thereafter).
- Provision of specific services performed outside of Vietnam, like repair services for transportation vehicles, advertising, investment, and trade promotion, brokerage, training (excluding online), international telecommunication services operated outside Vietnam, and the use of foreign warehouses for international transport support.
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