Vietnam Tax Treaties with Other Countries

Vietnam has signed Double Taxation Agreements (DTA) with over 70 countries.
Vietnam’s DTA generally follows the OECD model treaty and provides relief from double taxation on income.
To claim the tax relief, foreign taxpayers need to submit a notification application to the Vietnamese tax authorities 15 days prior to the tax payment deadline.
If tax obligations in DTA do not exist in Vietnam or the DTA rate is higher than the local rate, local laws shall prevail.

India Tax Treaties with China <click me
India Tax Treaties with Taiwan <click me
Other countries on your request

Email: sgn4ww@evershinecpa.com
or
Contact us by WeChat or Skype or Whatsapp in the day-work-time of China  (GMT+8)
The Engaging Manager from Headquarter
Ms. Judy Wang, CPA(Taiwan) Speaks in both English and Chinese.
WeChat: Judy_Evershine
skype: Judy Wang

We set up below judgment criteria on Treaty application:

Scenario :

If you are not a Vietnam legal resident, and if your resident country has DTA with Vietnam, and if you are without PE (Permanent Establishment), please go to Section A.
If you are not a Vietnam legal resident, and if your resident country has DTA with Vietnam, and if you are with PE (Permanent Establishment) please go to section B.
If you are not a Vietnam legal resident, and if your resident country has no DTA with Vietnam, please go to Section C.

Section A:
Scenario:

If you are not a Vietnam legal resident, and if your resident country has DTA with Vietnam, and if you are without PE (Permanent Establishment), it will be redeemed as “non-Vietnam Domestic Sourced Income”.
That means Vietnam will levy zero-tax.
However, you still need to send the zero-tax application to Vietnam Tax Bureau for being approved.
Below, we will let you understand through Q&A

DTA-Q-10:

在越南的哪些外國法律居民公司，可以依DTA申請沒有常設機構(PE)下零稅率?
In Vietnam, which foreign legal resident company can apply for a zero tax rate without PE under DTA?

DTA-A-10:

Vietnam has signed DTAs with the following 80 countries:

* Not yet in force.

DTA-Q-20:
為什麼在DTA下該國外資沒有常設機構 (PE)之外資所得，可以享受零稅率?
Why does the Country’s foreign capital without a permanent establishment (PE) in Vietnam, under the DTA enjoy zero tax rate?

DTA-A-20:

It follows Article 5 and Articles 7 in the DTA Treaty. The article defines if a foreign entity having PE in Vietnam. Article 7 regulates if no PE, non-Vietnam domestic sourced income will not be levied tax in Vietnam.

DTA-Q-30:
哪些情況被視為沒有PE，外資在該國設立子公司會被視為外資的在該國的子公司嗎?
Under what circumstances are deemed to have no PE, and will the establishment of a foreign-funded subsidiary in Vietnam be regarded as a foreign-funded subsidiary in Vietnam?

DTA-A-30:

According to DTA Article 5 item 7, A Wholly Foreign Owned subsidiary in Vietnam will not be treated as PE because it is a separate legal entity.
That means if a Vietnam Subsidiary pay a service fee to a non-Vietnam Parent Company through a service contract signed between subsidiary and non -Vietnam Parent company.
As an investor, a non-Vietnam Parent Company can apply zero tax.
As for if the paid amount is reasonable, it will get involved TP (Transfer Pricing) judgment by Vietnam Tax Bureau.
Please see the Vietnam Transfer Pricing web-page

DTA-Q-40:
外資在越南設立分公司或辦事處，可否適用沒有PE下的零稅率?
If a foreign company establishes a branch or office in Vietnam, can the zero-tax rate without PE be applied?

DTA-A-40:
According to DTA Article 5 item 2, If a foreign company sets up a branch or Office in Vietnam, then will be considered as Vietnam domestic Income.
But According to DTA Article 5 item 4，if an Office is only doing a preparatory or auxiliary activity, will apply a zero-tax rate.

DTA-Q-50:
越南依DTA沒有PE下零稅率申請的程序為何?
What is the procedure for Vietnam to apply for a zero tax rate under DTAA without PE?

DTA-A-50:
According to Circular 28/2011/TT-BTC (Article 18), the Vietnamese party shall submit the following documents to the tax authorities 15 days before the deadline of tax declaration to notify the exemption under DTA.

*Notice of eligibility for tax exemption/ reduction (form No. 01/HTQT)

*Certificate of residence granted by a tax agency of the country of residence.

*Business registration certificate or tax registration certificate granted by the country of residence.

*Contracts signed with Vietnamese organizations which are certified by the taxpayer.

All supporting documents must be in Vietnamese or translated into Vietnamese.

Refer to the below website for further details: –

https://thuvienphapluat.vn/van-ban/Thue-Phi-Le-Phi/Circular-No-28-2011-TT-BTC-guiding-a-number-of-articles-of-the-Law-on-Tax-Admin-125613.aspx

Section B:

Scenario:
If you are not a Vietnam legal resident, and if your resident country has DTA with Vietnam, and if you are with PE (Permanent Establishment), your income will be considered as Vietnam domestic sourced income.
As for levying Tax Rate, please be aware:
if Vietnam Tax rate > DTA Rate, adopt DTA Rate; if Vietnam Tax rate < DTA Rate, adopt Vietnam Rate.

Below, we will let you understand through Q&A

DTA-Q-60:
被視為越南來源所得的判定要素?
What are the factors that are deemed to be the country’s domestic source income?

DTA-A-60:
Definition of source income in Vietnam.
Foreign corporations earn income in Vietnam under contracts, agreements, or commitments with Vietnamese corporations.
Supply of services within Vietnam, or supply of services outside Vietnam but used in Vietnam are Vietnam-sourced income.
Supply of goods associated with services or where the goods delivery points are inside Vietnam is Vietnam-sourced income.

DTA-Q-70:
DTA第五條及第七條優先於越南來源所得的判定要素?
Do Article 5 and Article 7 in the DTA take precedence over the Vietnam determination factors on Vietnam domestic sourced income?

DTA-A-70:
When DTA is applied, in the event of a different PE definition between Vietnam domestic tax laws and Article 5 in the DTA, the definition under the DTA shall prevail over the domestic regulations.
When DTA is applied, if a foreign company is defined as without PE (Permanent Establishment) in Vietnam, they will be considered non-Vietnam domestic sourced income, in the event business profit is relevant to this issue, the clause in Article 7 in the DTA zero-rate tax can be applied accordingly.
In this scenario, please see section A.

DTA-Q-80:
當非越南稅務居民有越南來源所得，不考慮DTA 情況下，越南稅法扣繳稅率多少?
When non-tax residents of Vietnam having Vietnam domestic sourced income, what is the withholding tax rate according to Vietnam tax regulations excluding DTA?

DTA-A-80:

Non-tax resident corporations without legal entities in Vietnam and/ or having Vietnam-sourced income are subject to Vietnamese Foreign Withholding Contractor Tax (FWCT).
FCWT is a combination of VAT and CIT components, and the rate varies.
The Foreign Contractor Withholding Tax (FCWT) is a taxation scheme that applies to foreign entities earning Vietnam-sourced income.
FCWT is regulated by Circular No. 103/2014/TT-BTC.
FWCT applies to foreign entities providing the goods and services:

• Services provided within Vietnam. Services performed outside but consume inside Vietnam are subject to FCWT whilst services performed and consumed outside Vietnam are not regulated by the circular.
• Supply of goods accompanied by services.
• Supply of goods in which the delivery points is inside Vietnam.
• Construction & installation, interest, royalties, trademarks, transportation income, security transfer.

FCWT consists of Value-added tax (VAT) and corporate income tax (CIT) components.
There are 3 methods to calculate and pay FCWT. They are the Direct Method, Declaration Method, and Hybrid Method.
The direct method is the common type of withholding tax in Vietnam whereby the foreign entities do not have a permanent establishment in Vietnam or contract for 183 days or more in Vietnam.
CIT and VAT are withhold based on the rate specified according to the table below.

For example, when DTA exists with Vietnam, the 5% CIT portion on services provided by a foreign contractor may be eliminated where the foreign contractor does not have profits attributable to a Permanent Establishment in Vietnam.

Briefly summarize, these are general rates under domestic law.

Business Profits – 5% (Note 1)

Dividend – 0% (Note 2)

Interest (loan) – 5% (Note 3)

Royalties fee – 10% (Note 4)

Technical services – 5% (Note 1)

Professional services – 5% (Note 1)

Notes:

1. 2% for services related to the supply of machinery and equipment. The withholding tax rate is not simply applied to the gross amount of the payment but to an amount calculated by reference to a formula based on the taxable income for corporate income tax purposes.
2. 5% applicable to dividends paid to nonresident individuals.
3. 0% for certain loans made by foreign governments or governmental institutions.
4. 5% for copyright royalties.

DTA-Q-90:
If DTA Tax Rate is higher than the Vietnam tax rate, apply which tax rate?

DTA-A-90:
As for levying Tax Rate, please be aware:
if Vietnam Tax rate > DTA Rate, adopt DTA Rate; if Vietnam Tax rate < DTA Rate, adopt Vietnam Rate.

DTA-Q-A0:
當非越南稅務居民有越南來源所得，依DTA優惠稅率申請的程序為何?
When non-tax residents of Vietnam having Vietnam domestic sourced income, what is Vietnam’s application procedure based on the DTA preferential tax rate?

DTA-A-A0:

According to Circular 28/2011/TT-BTC (Article 18), the Vietnamese party shall submit the following documents to the tax authorities 15 days before the deadline of tax declaration to notify the exemption under DTA.

*Notice of eligibility for tax exemption/ reduction (form No. 01/HTQT)

*Certificate of residence granted by a tax agency of the country of residence.

*Business registration certificate or tax registration certificate granted by the country of residence.

*Contracts signed with Vietnamese organizations which are certified by the taxpayer.

All supporting documents must be in Vietnamese or translated into Vietnamese.

Refer to the below website for further details: –

https://thuvienphapluat.vn/van-ban/Thue-Phi-Le-Phi/Circular-No-28-2011-TT-BTC-guiding-a-number-of-articles-of-the-Law-on-Tax-Admin-125613.aspx

Section C:

DTA-Q-B0:
As an investor, if your country has not signed DTA with Vietnam, what kinds of tax rates when you have Vietnam relevant income?

DTA-A-Q0:

If you are not a Vietnam legal resident, and if your resident country has no DTA with Vietnam,
Whatever you are with PE or without PE, all kinds of income will be levied according to Vietnam’s domestic sourced income.
Besides, it will be levied by Vietnam Tax Rates.
Please refer above-mentioned Sections DTA-Q-80 and DTA-A-80.

Please be aware below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Hanoi Evershine BPO Service Limited Corp.
E-mail: sgn4ww@evershinecpa.com
or
Contact us by WeChat or Skype or Whatsapp in the day-work-time of Vietnam  (GMT+8)
The Engaging Manager from Headquarter
Ms. Judy Wang, CPA(Taiwan) Speaks in both English and Chinese.
WeChat: Judy_Evershine
skype: Judy Wang

or
For investment structure relevant to multi-national tax planning and Financial & Legal Due Diligence for M&A (Merge and Acquisition), send an email to HQ4han@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+Vietnam+UK will be accountable for your case.
Email address:dalechen@evershinecpa.com
LinkedIn address:Dale Chen

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