Foreign contractor tax declaration and payment services in Vietnam

In the rapidly evolving landscape of global business, foreign contractors operating in Vietnam are increasingly seeking clarity on their tax obligations. Navigating the complexities of foreign contractor tax declaration and payment can be daunting, especially for those unfamiliar with Vietnam’s regulatory framework. By understanding these key elements, foreign contractors can ensure their operations remain efficient and legally compliant while minimizing the risk of penalties and disputes. In this article, Viet An tax agent will give a better answer about the service of declaring and paying foreign contractor tax in Vietnam to clients.

For whom is the foreign contractor tax declaration and payment service suitable

According to the provisions of Circular 103/2014/TT-BTC, there are 5 cases in which contractor tax must be paid, specifically as follows:

• Foreign organizations doing business with permanent establishments in Vietnam or without permanent establishments in Vietnam; foreign individuals doing business being residents of Vietnam or not residing in Vietnam (hereinafter collectively referred to as foreign contractors and foreign subcontractors) doing business in Vietnam or earning incomes arising in Vietnam on the basis of contracts, agreements or commitments between foreign contractors and Vietnamese organizations and individuals or between foreign contractors and foreign subcontractors to perform part of the work of the contractor contract.
• Foreign organizations and individuals providing goods in Vietnam in the form of on-the-spot import and export and generating incomes in Vietnam on the basis of contracts signed between foreign organizations and individuals and enterprises in Vietnam (except for cases of processing and returning goods to organizations, foreign individuals) or distribute goods in Vietnam or provide goods according to the delivery conditions of international trade terms – Incoterms that the seller assumes risks related to goods entering the territory of Vietnam.
• Foreign organizations and individuals that carry out part or all of the business activities of distributing goods or providing services in Vietnam in which foreign organizations and individuals are still the owners of goods delivered to Vietnamese organizations or are responsible for distribution costs, advertising, marketing, service quality, quality of goods delivered to Vietnamese organizations or fixing prices for sale of goods or prices for provision of services; including the case of authorizing or hiring a number of Vietnamese organizations to perform part of distribution services and other services related to the sale of goods in Vietnam.
• Foreign organizations and individuals through Vietnamese organizations and individuals to negotiate and sign contracts in the name of foreign organizations and individuals.
• Foreign organizations and individuals exercising the right to export, import and distribute in the Vietnamese market, purchase goods for export or sell goods to Vietnamese traders in accordance with the law on trade.

Steps to declare foreign contractor tax

• Step 1: Clearly determine the object of tax declaration and payment, whether the enterprise or individual is subject to paying tax to the foreign contractor or not?
• Step 2: Register a tax identification number to pay tax on behalf of a foreign contractor if you use the foreign contractor tax declaration and payment service. The tax identification number used to declare contractor tax consists of 10 digits.
• Step 3: Determine the taxes that the contractor must pay. Individuals or enterprises subject to foreign contractor tax payment need to fulfill the following 2 tax obligations:
  • Pay VAT.
  • Pay CIT.
• Step 4: Prepare and submit the foreign contractor’s tax return on time.

How to determine the amount of tax payable by foreign contractors

When using the foreign contractor tax declaration and payment service provided by Viet An tax agent, our unit will be responsible for determining the correct contractor tax amount applied to two types of tax, namely VAT and CIT, and at the same time is obliged to make and submit the declaration on time for your business. The specific formula for determining contractor tax is as follows:

VAT

VAT payable = VAT calculation turnover * VAT calculation % rate on turnover.

In which:

VAT-calculated turnover = Turnover exclusive of VAT/(1-% of VAT calculation on turnover).

Percentage of VAT calculation on turnover

CIT

Payable CIT = CIT calculation revenue * Payable CIT rate on turnover

In which

CIT calculation turnover = Turnover excluding CIT / (1- payable CIT rate on turnover)

Percentage (%) of CIT calculated on taxable turnover for business lines:

Foreign contractor tax declaration and payment service of Viet An Tax Agent in Vietnam

• Advising on related issues when enterprises are required to declare and pay contractor tax.
• Contractor tax identification number registration service.
• Contractor tax declaration service on a per-incurrence basis or by monthly declaration period.
• Contractor’s tax finalization service when there is an official letter from the tax authority.
• Does the service of confirming whether the enterprise needs to fulfill the contractor’s tax obligation or not?

If customers want to use the service of declaring and paying taxes for foreign contractor, please pick up the phone and call Viet An Tax Agent‘s hotline number for free advice!