Navigating the complexities of tax compliance for contractors in Vietnam can be a daunting task. Our comprehensive tax declaration services provide a hassle-free solution, allowing you to focus on your core business activities. In the current climate of global commercial integration, Vietnamese enterprises are increasingly incurring payments to overseas business partners, particularly for advertising costs through channels such as Google, Facebook, and YouTube. To properly account for these expenses, businesses must fulfill the contractor tax declaration requirements (if the payee does not have a permanent establishment in Vietnam). Recognizing the challenges faced by enterprises regarding contractor taxes, as well as the registration and declaration procedures, Viet An Tax Agent has compiled the following comprehensive guidance on contractor tax declaration services in Vietnam.
Table of contents
Article 1, Circular 103/2014/TT-BTC of the Ministry of Finance stipulates the subjects of contractor tax declaration including:
Enterprises must determine for themselves whether the contract or transaction is subject to declaration and tax payment on behalf of foreign contractors.
At the directly managing tax authority of “organizations and individuals deducting and paying on behalf of foreign contractors and foreign subcontractors submit tax registration dossiers at the directly managing tax authority”.
The tax authority shall process the initial tax registration dossier and return the result as the Tax Registration Certificate and Tax Identification Number Notice to the taxpayer no later than 03 (three) working days from the date the tax authority receives the complete dossier of the taxpayer.
Applicable subjects: Foreign contractors and foreign subcontractors that do not meet one of the conditions stated in Article 8, Section 2, Chapter II of Circular 103/2014/TT-BTC, the Vietnamese Party shall pay tax on behalf of the foreign contractor or foreign subcontractor.
The basis for calculating tax is the revenue subject to value added tax and the percentage rate for calculating VAT on revenue.
| VAT payable | = | VAT taxable revenue | x | VAT rate |
Foreign contractors and foreign subcontractors who are subject to VAT payment under the direct calculation method on VAT are not allowed to deduct VAT on goods and services purchased to perform contractor contracts and subcontractor contracts.
| VAT taxable revenue | = | Revenue excluding VAT |
| 1 – VAT rate |
Percentage to calculate VAT on revenue for business sectors:
| No | Business lines | VAT rate |
| 1 | Services, rental of machinery and equipment, insurance; construction, installation exclusive of raw materials, machinery and equipment | 5 |
| 2 | Production, transportation, services attached to goods; construction, installation inclusive of raw materials, machinery and equipment | 3 |
| 3 | Other business activities | 2 |
Pay corporate income tax
The basis for calculating tax is the taxable revenue and the corporate income tax rate (%) calculated on the taxable revenue.
| CIT payable | = | CIT taxable revenue | x | CIT rate |
If the main contract or subcontract stipulates that revenue received by the foreign contractor or foreign sub-contractor is exclusive of CIT, the revenue subject to CIT shall be calculated as follows:
| CIT taxable revenue | = | Revenue excluding CIT |
| 1 – Corporate income tax rate calculated on taxable revenue |
Corporate income tax rate (%) calculated on taxable revenue for business lines:
| No | Business lines | CIT rate (%) |
| 1 | Trading: distribution, supply of goods, raw materials, supplies machinery, and equipment; distribution of goods, raw materials, supplies, machinery, and equipment attached to services in Vietnam (including those provided in the form of domestic exports, except for goods processed under processing contracts with foreign entities); supply of goods under Incoterms | 1 |
| 2 | Services, lease of machinery and equipment, insurance, rig rental. Except: | 5 |
| – Restaurant, hotel, and casino management services; | 10 | |
| – Derivative financial services | 2 | |
| 3 | Lease of aircraft, aircraft engines, parts of aircrafts and ships | 2 |
| 4 | Construction, installation, whether or not inclusive of raw materials, machinery and equipment | 2 |
| 5 | Other business activities, transport (including sea transport and air transport) | 2 |
| 6 | Transfer of securities, certificates of deposit, ceding reinsurance abroad, reinsurance commission | 0.1 |
| 7 | Loan interest | 5 |
| 8 | Copyright income | 10 |
Declaration form 01/NTNN (Issued with Circular No. 156/2013/TT-BTC)
Businesses in need of contractor tax declaration services in Vietnam, please contact Viet An Tax Agent for quick, timely, and accurate advice and support!
