IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 01 Oct 2014 | Removal date: open ended
Still in force

FDI: Treatment and operations, nes

 On 6 August 2014, the Ministry of Finance of Vietnam issued Circular 103/2014/TT-BTC stating guidelines for applicability of the Foreign Contractor Withholding Tax. This tax is levied on foreign businesses that earn income or conduct business in Vietnam under contract with local organization/individuals and are considered foreign contractors. The new Circular replaces an earlier 60/2012/TT-BTC and makes the following amendments -
 

  • The applicability of the tax has been extended to several activities of foreign entities 
  • Some business arrangments where such tax will not be applicable have been specified
  • Supply of goods with associated services provided free of charge and/or whether or not the value of services is included in the contract value, will be subject to such tax
  • VAT for "other business activities decreased from 3% to 2%
  • VAT on petroleum drilling services removed
  • The Circular provides guidance on on taxable income calculation for treasury bills 
  • VAT rate on oil and gas services raised to 10%
  • Foreign contractors who receive compensation from Vietnamese customers/partners for breach of contract are given the choice to two different tax calculation methods
  • Income from transfer of assets, transfer of contract, transfer of project in Vietnam and software royalties will be subject to this tax.

 
The Circular takes effect from 1 October 2014

AFFECTED COUNTRIES

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