Contractor Tax Declaration Services in Vietnam

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.

Subjects required to declare contractor tax

Article 1, Circular 103/2014/TT-BTC of the Ministry of Finance stipulates the subjects of contractor tax declaration including:

• Foreign business organizations with or without a permanent establishment in Vietnam; foreign business individuals who are residents or not residents in Vietnam (hereinafter referred to as Foreign Contractors, Foreign Subcontractors) doing business in Vietnam or having income arising in Vietnam based on contracts, agreements, or commitments between Foreign Contractors and Vietnamese organizations or individuals or between Foreign Contractors and Foreign Subcontractors to perform a part of the work of the Contractor’s Contract;
• Foreign organizations and individuals supplying goods in Vietnam in the form of on-site import and export and generating income in Vietnam based on contracts signed between foreign organizations and individuals and enterprises in Vietnam (except for processing and returning goods to foreign organizations and individuals) or distributing goods in Vietnam or supplying goods under the delivery terms of international trade terms – Incoterms where the seller bears the risks related to the goods entering the territory of Vietnam;
• Foreign organizations and individuals carry out part or all of the business activities of distributing goods and providing services in Vietnam in which the foreign organizations and individuals remain the owners of the goods delivered to Vietnamese organizations or are responsible for the costs of distribution, advertising, marketing, service quality, quality of goods delivered to Vietnamese organizations or determine the selling price of goods or the price of providing services; including cases of authorizing or hiring a number of Vietnamese organizations to carry out part of the distribution services or other services related to the sale of goods in Vietnam;
• Foreign organizations and individuals, through Vietnamese organizations and individuals, negotiate and sign contracts in the name of foreign organizations and individuals;
• Foreign organizations and individuals exercising export, import and distribution rights in the Vietnamese market, purchasing goods for export, and selling goods to Vietnamese traders following the law on commerce.

Contractor tax declaration procedures in Vietnam

Step 1: Determine the type of contract

Enterprises must determine for themselves whether the contract or transaction is subject to declaration and tax payment on behalf of foreign contractors.

Step 2: Register a tax code to pay taxes on behalf of foreign contractors

• Subjects: Vietnamese parties
• Obligation: Register for the procedure of granting a 10-digit tax code to use for declaring and paying taxes on behalf of foreign contractors.
• Tax registration deadline: paying taxes on behalf of foreign contractors and subcontractors, it is within 10 (ten) working days from the date of arising responsibility for withholding and paying taxes on behalf.

Contractor tax registration dossier

• Tax registration declaration form No. 04.1-DK-TCT issued under Circular 105/2020/TT-BTC dated December 3, 2020 of the Ministry of Finance;
• Copy of contract signed with foreign contractor;
• List form No. 04.1-DK-TCT-BK issued under Circular No. 105/2020/TT-BTC dated December 3, 2020 of the Ministry of Finance;
• Payment state fees documents.

Location for submitting contractor tax declaration documents

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”.

Tax code notification deadline

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.

Step 3: Determine the obligated amount of tax the contractor

Pay VAT, CIT by the rate method calculated on revenue (direct method)

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.

Pay VAT

The basis for calculating tax is the revenue subject to value added tax and the percentage rate for calculating VAT on revenue.

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.

Percentage to calculate VAT on revenue for business sectors:

Pay corporate income tax

The basis for calculating tax is the taxable revenue and the corporate income tax rate (%) calculated on the taxable revenue.

 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:

Corporate income tax rate (%) calculated on taxable revenue for business lines:

Step 4: Prepare and submit contractor tax declaration

Contractor tax declaration form

Declaration form 01/NTNN (Issued with Circular No. 156/2013/TT-BTC)

Contractor tax payment deadline

• Each occurrence: no later than the 10th (tenth) day from the date of payment to the foreign organization;
• Monthly: No later than the 20th of the month following the month in which the tax liability arises.

Contractor tax declaration services in Vietnam of Viet An Tax Agent

• Consulting on issues related to contractor tax and contractor tax declaration;
• Contractor tax consulting services;
• Service of registering for contractor tax identification number;
• Contractor tax declaration service for each occurrence, by month;
• Contractor tax settlement service;
• Contractor tax obligation confirmation service;
• Services to perform other contractor tax procedures.

Businesses in need of contractor tax declaration services in Vietnam, please contact Viet An Tax Agent for quick, timely, and accurate advice and support!