Vietnam Tax Treaties with China

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skype: Judy Wang

 

CN-Q-10:

中國母公司在越南 是否可以依DTA申請沒有常設機構(PE)下零稅率?

China Parent Company, can apply for zero tax rate without PE under DTA in Vietnam?

CN-A-10:

Yes.
China has DTA with Vietnam, and if China Legal Resident company is without PE (Permanent Establishment), it will be redeemed as “non-Vietnam Domestic Sourced Income”.
That means Vietnam will levy zero-tax.
However, China Legal Resident company still needs to send the zero-tax application to Vietnam Tax Bureau for being approval.

That means if a Vietnam Subsidiary pay service fee to a non-Vietnam Parent Company through a service contract signed between a 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.

 

CN-Q-20:

中國母公司在越南設立了越南子公司， 中國母公司替子公司服務收入能否申請零稅率?

When China Parent Company as an Investor, set up a Vietnam subsidiary, and provide services from China to Vietnam Subsidiary, can apply for zero tax rate without PE under DTA in Vietnam?

CN-A-20:

According to DTA Article 5 item 7, A Vietnam subsidiary will not be treated as PE of China Parent company as an investor because it is a separate legal entity.

That means if a Vietnam Subsidiary pay service fee to China Parent Company through service contract signed between subsidiary and China Parent company
as an investor, China 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.

 

CN-Q-30:  

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?

CN-A-30:

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

CN-Q-40:  

中國母公司有越南來源所得的各項所得扣繳稅率為何?
When China Resident company having Vietnam domestic sourced income, what are the withholding tax rates for various incomes in Vietnam?

CN-A-40:

China has DTA with Vietnam, and if you are with PE (Permanent Establishment) in Vietnam, 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.

If DTA is applied, the DTA rates between China and Vietnam are as below:

No.	Type of Payments	DTA rates	Vietnam Rates	Applicable Rates
1	Business profits (without PE)	0%	0%	0%
2	Dividends	10%	0%	0%
3	Interest (General)	10%	5%	5%
4	Royalties fee	10%	10%	10%
5	Technical services	0%	0%	0%
6	Professional services (Individual)	0%	0%	0%

 

*Business profits (without PE) will be considered as non-Vietnam sourced income with zero tax, please refer to Section A.

*The withholding tax rate under domestic law may apply rather than the treaty rate where the domestic law rate is lower than the treaty rate.

*No tax is imposed on dividends paid to nonresident corporations under Vietnamese domestic law.

 

CN-Q-50

當中國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 China Tax Resident having Vietnam domestic sourced income, what is Vietnam’s application procedure based on the DTA preferential tax rate?

CN-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

 

Summary of TAX TREATY between Vietnam and CHINA

The Government of the People’s Republic of China and The Government of the Socialist Republic of Vietnam concluded and signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Double Taxation Agreements, DTA), on 17 May 1995 and takes effects from 18 October 1996.

Permanent Establishment

Article 5 states the term permanent establishment (PE) means a fixed place of business which generally includes the followings:

*A place of management

*A branch

*An office

*A factory

*A workshop

*The furnishing of consultancy services through employees or other personnel (other than agents of an independent status) for periods aggregating more than 6 months.

Withholding Tax

No.	Type of Payments	DTA rates	Article in DTA	Vietnam Rates	Applicable Rates
1	Business profits (without PE)	0%	Article 7	0%	0%
2	Dividends	10%	Article 10	0%	0%
3	Interest (General)	10%	Article 11	5%	5%
4	Royalties fee	10%	Article 12	10%	10%
5	Technical services	0%	Article 7	0%	0%
6	Professional services (Individual)	0%	Article 14	0%	0%

 

*Article 7 of DTA between Vietnam and China explained, Vietnam may not tax payments on business profits rendered by China corporations unless it is attributable to the permanent establishment situated in the relevant territory.

 

*In Article 10, dividends paid by a Vietnamese Resident enterprise to China Resident enterprise, the tax charged shall not exceed 10% of the gross dividends.
However, domestic law may apply rather than the treaty rate where the domestic law rate is lower than the treaty rate. No tax is imposed on dividends paid to non-resident corporations under Vietnamese domestic law.

 

*Article 11 states that where the beneficial owner of the interest (exclude exempted interest) is a non-resident, shall be taxed in the territory in which it arises at the rate not exceeding 10% of the gross interest.
The rate of withholding tax under domestic law may apply rather than the treaty rate where the domestic law rate is lower than the treaty rate.

 

*Article 12 explained royalties means payment for the use of, right to use, copyright of literary, artistic, or scientific work or equipment, information concerning industrial, commercial, or scientific experience.

 

*Technical services rendered are covered by the business profits article. Vietnamese corporations may not tax payments for technical services rendered by a China enterprise unless it is attributable to PE.
Technical services rendered in an independent capacity should be covered in Article 14 (see professional services) instead.

 

* Professional services or other activities provided by individuals of an independent character as explained in Article 14.
Vietnamese corporations may not tax payments for professional service rendered by a China resident unless the China resident has a fixed place or stay in Vietnam for 183 days or more.
An independent profession includes physicians, lawyers, engineers, architects, dentists, and accountants.

 

Elimination of Double Taxation

Article 23 of the DTA states that double taxation shall be eliminated by allowing tax credit to be made available to the home resident territory.
It shall be credited against the tax levied in the first-mentioned territory on that resident. However, the amount of credit shall not exceed the amount of the tax in the first-mentioned territory.

Exchange of Information

Article 26 states that the competent authorities of the territories shall exchange such information (including documents or certified copies of the documents) relevant to the provision of this Agreement.

Please be aware of 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 Vietnamese.
WeChat: Judy_Evershine
skype: Judy Wang

or
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