Vietnamese regulations on foreign contractor tax are primarily governed by the Tax Law and related implementing guidelines. Here are some important points regarding foreign contractor tax in Vietnam.
Foreign contractor tax is imposed on individuals or foreign organizations when they earn income from providing services or supplying goods in Vietnam. Foreign contractors are classified as follows:
- For foreign organizations, according to Article 5, Clause 1 of Circular 103/2014/TT-BTC, foreign contractors, foreign subcontractors are business entities that are subject to value-added tax (VAT) and corporate income tax (CIT) as guided by Circular 103.
- For individuals, according to Article 5, Clause 2 of Circular 103, foreign contractors, foreign subcontractors are foreign individuals conducting business subject to VAT as guided by this Circular and personal income tax (PIT) as per the regulations on PIT.
The amount of tax to be paid depends on specific circumstances:
- If the foreign contractor is a foreign organization, the tax includes value-added tax and corporate income tax.
- If the foreign contractor is an individual (resident or non-resident), the tax includes value-added tax and personal income tax.
According to Circular 103/2014/TT-BTC, individuals or organizations are required to pay foreign contractor tax when they engage in the following activities:
- Conducting business or generating income in Vietnam under a contract or commitment.
- Importing goods into Vietnam.
- Producing goods in Vietnam and generating income.
- Participating in negotiations or signing contracts through Vietnam, with the contract being under the name of a foreign contractor.
It is important to note that regulations on foreign contractor tax may change over time and must comply with specific regulations and guidelines from Vietnamese tax authorities. For specific and detailed cases, foreign contractors should refer to current legal provisions and seek advice from tax experts or tax authorities to ensure full compliance and accuracy.