What is the full text of Circular 103 on contractor tax in Vietnam? What are the 05 entities which are exempt from contractor tax in Vietnam under Circular 103?

What is the full text of Circular 103 on contractor tax in Vietnam?

Circular 103 on contractor tax is precisely Circular 103/2014/TT-BTC

According to Article 1 of Circular 103/2014/TT-BTC regarding contractor tax, the applicable entities are stipulated as follows:

The guidelines in this Circular apply to the following entities (except for the cases stated in Article 2, Chapter I):

- Foreign organizations conducting business with a permanent establishment in Vietnam or without a permanent establishment in Vietnam; foreign individuals conducting business who are residents in Vietnam or non-residents (collectively referred to as foreign contractors, foreign subcontractors) conducting business in Vietnam or deriving income in Vietnam based on a contract, agreement, or commitment between the foreign contractor with Vietnamese organizations or individuals, or between the foreign contractor and the foreign subcontractor to carry out part of the contractor's work.

- Foreign organizations or individuals providing goods in Vietnam in the form of domestic import-export and deriving income in Vietnam based on a contract signed between the foreign organization, individual with enterprises in Vietnam (except for cases of processing and exporting goods to foreign organizations or individuals) or distributing goods in Vietnam or supplying goods under delivery conditions of international commercial terms - Incoterms, where the seller bears the risk related to the goods until they reach Vietnamese territory.

Example 1:

- Case 1: Foreign enterprise X signs a contract to purchase fabric from Vietnamese enterprise A, concurrently designates enterprise A to deliver the fabric to Vietnamese enterprise B (in the form of domestic import-export as per legal regulations). Enterprise X derives income in Vietnam based on the contract signed between enterprise X and enterprise B (enterprise X sells fabric to enterprise B).

...

View full text of Circular 103 on contractor tax.

What is the full text of Circular 103 on contractor tax in Vietnam? What are the 05 entities which are exempt from contractor tax in Vietnam under Circular 103? (Image from the Internet)

What are the 05 entities which are exempt from contractor tax in Vietnam under Circular 103?

Based on Article 2 of Circular 103/2014/TT-BTC, the five entities which are exempt from contractor tax under Circular 103 include:

The guidelines in this Circular do not apply to:

[1] Foreign organizations and individuals conducting business in Vietnam under the provisions of the Law on Investment, Law on Petroleum, Law on Credit Institutions.

[2] Foreign organizations and individuals providing goods to Vietnamese organizations and individuals without accompanying services performed in Vietnam in the following forms:

- Delivering goods at the foreign port of departure: the seller is responsible for all responsibilities, costs, and risks related to the export and delivery of goods at the foreign port of departure; the buyer bears all responsibilities, costs, and risks related to receiving goods, transporting goods from the foreign port of departure to Vietnam (including the case where goods are delivered at the foreign port of departure with accompanying warranty terms as the responsibility and obligation of the seller).

- Delivering goods at the Vietnamese port of entry: the seller assumes all responsibilities, costs, and risks related to the goods until the point of delivery at the Vietnamese port of entry; the buyer absorbs all responsibilities, costs, and risks associated with receiving goods and transporting goods from the Vietnamese port of entry (including cases where goods are delivered at the Vietnamese port of entry with accompanying warranty terms as the responsibility and obligation of the seller).

[3] Foreign organizations and individuals earning income from services that are provided and consumed outside Vietnam.

[4] Foreign organizations and individuals providing the following services to Vietnamese organizations and individuals where the services are performed abroad:

- Repairing means of transport (aircraft, aircraft engines, aircraft parts, seagoing ships), machinery, and equipment (including submarine cables, transmission devices), whether or not they include replacement materials and equipment;

- Advertising and marketing (except advertising and marketing on the internet);

[5] Foreign organizations and individuals using bonded warehouses and inland container depots (ICD) as stores of goods to support international transportation, transit, transshipment, storage, or for other enterprises to process.

Which entity is the taxpayer for contractor tax in Vietnam?

According to Article 4 of Circular 103/2014/TT-BTC, the taxpayers for contractor tax are stipulated as follows:

- Foreign contractors and foreign subcontractors who meet the conditions stipulated in Article 8 of Section 2, Chapter II or Article 14 of Section 4, Chapter II, conducting business in Vietnam or deriving income in Vietnam. The business is conducted based on a contractor contract with Vietnamese organizations or individuals or with other foreign organizations or individuals conducting business in Vietnam based on a subcontractor contract.

Determining whether a foreign contractor or foreign subcontractor has a permanent establishment in Vietnam or is a resident is governed by the Corporate Income Tax Law, the Personal Income Tax Law, and related guiding documents.

In cases where a Double Tax Avoidance Agreement signed by the Socialist Republic of Vietnam provides different provisions on permanent establishments or residences, such agreements shall prevail.

- Organizations established and operating under Vietnamese law, registered under Vietnamese law, other organizations, and individuals conducting business: purchasing services or goods attached to services, or paying income arising in Vietnam based on a contractor or subcontractor contract; purchasing goods under domestic import-export or international commercial terms (Incoterms); distributing goods, providing services on behalf of foreign organizations and individuals in Vietnam (hereinafter referred to as the Vietnamese Party), including:

+ Business organizations established under the Enterprise Law, Investment Law, and Cooperative Law;

+ Economic organizations of political organizations, political - social organizations, social organizations, social - professional organizations, armed units, operational organizations, and other organizations;

+ Petroleum contractors operating under the Petroleum Law;

+ Branches of foreign companies permitted to operate in Vietnam;

+ Foreign organizations or foreign representatives allowed to operate in Vietnam;

+ Ticket offices, agencies in Vietnam of foreign airlines with the right to transport to and from Vietnam, direct transportation, or jointly venture;

+ Organizations or individuals conducting maritime transport services of foreign carriers; agents in Vietnam of foreign logistics firms, express delivery firms;

+ Securities companies, security issuers, fund management companies, commercial banks where foreign investment funds or organizations open their securities investment accounts;

+ Other organizations in Vietnam;

+ Individual producers conducting business in Vietnam.

Taxpayers as guided in clause 2, Article 4, Chapter I are responsible for deducting the value added tax and corporate income tax as guided in Section 3, Chapter II before payment to foreign contractors, foreign subcontractors.