What is the tax rate for service provision of Vietnamese non-residents?

Do Vietnamese non-residents pay personal income tax?

Based on Article 2 of the Law on Personal Income Tax 2007, specific regulations on tax payers are as follows:

Tax Payers

1. Individuals subject to personal income tax are Vietnamese residents receiving taxable income as specified in Article 3 of this Law, arising both within and outside the territory of Vietnam, and Vietnamese non-residents receiving taxable income as specified in Article 3 of this Law, arising within the territory of Vietnam.

2. A Vietnamese resident is a person who meets one of the following conditions:

a) Being present in Vietnam for 183 days or more within a calendar year or for 12 consecutive months from the first date of presence in Vietnam;

b) Having a regular place of residence in Vietnam, including a registered permanent residence or a rented house to stay in Vietnam under a lease contract with a term.

3. A Vietnamese non-resident is someone who does not meet the conditions specified in Clause 2 of this Article.

Thus, based on the above regulation, Vietnamese non-residents are subject to personal income tax.

What is the tax rate for service provision of Vietnamese non-residents? (Image from the Internet)

What is the tax rate for service provision of Vietnamese non-residents?

Based on Article 25 of the Law on Personal Income Tax 2007, specific provisions are as follows:

Tax on Income from Business

1. Tax on income from business of Vietnamese non-residents is determined by the revenue from production and business activities specified in Clause 2, Article 25 multiplied by the tax rate specified in Clause 3, Article 25.

2. Revenue is the total money arising from the provision of goods and services, including costs paid by the purchaser of goods and services on behalf of the Vietnamese non-resident without reimbursement.

In case the contract agreement does not include personal income tax, the taxable revenue must be converted to the total money received by the Vietnamese non-resident in any form from the supply of goods and services in Vietnam, regardless of the location of business activities.

3. The tax rate on income from business is specified for each field, industry, and business activity as follows:

a) 1% for goods trading activities;

b) 5% for service provision;

c) 2% for production, construction, transportation, and other business activities.

Thus, based on the above regulation, the tax rate for service provision of Vietnamese non-residents is 5%.

When is the timing for determining taxable income from service provision of Vietnamese non-residents?

Based on Article 32 of the Law on Personal Income Tax 2007, specific provisions are as follows:

Timing for Determining Taxable Income

1. The timing for determining taxable income for the income specified in Article 25 of the Law on Personal Income Tax is the time the Vietnamese non-resident receives the income or the time the sales invoice for goods or services provision is issued.

2. The timing for determining taxable income for the income specified in Articles 26, 27, 30, and 31 of the Law on Personal Income Tax is the time the organization or individual in Vietnam pays income to the Vietnamese non-resident or the time the Vietnamese non-resident receives income from the abroad organization or individual.

3. The timing for determining taxable income for income specified in Articles 28 and 29 of the Law on Personal Income Tax is the effective date of the transfer contract.

Thus, based on the above regulation, the taxable timing of income from service provision for Vietnamese non-residents is the time they receive the income or the time the sales invoice for goods or services provision is issued.

How to calculate the tax period for Vietnamese non-residents?

Based on Article 7 of the Law on Personal Income Tax 2007 amended by Clause 3, Article 1 of the Amended Law on Personal Income Tax 2012, specific provisions are as follows:

Tax Period

1. The tax period for Vietnamese residents is regulated as follows:

a) The annual tax period applies to income from business; income from wages and salaries;

b) The tax period for each time of income occurrence applies to income from capital investment; income from capital transfer, excluding income from securities transfer; income from real estate transfer; income from winnings; income from copyright; income from franchise; income from inheritance; income from gifts;

c) The tax period either for each time of transfer or annually applies to income from securities transfer.

2. The tax period for Vietnamese non-residents is calculated based on each occurrence of income for all taxable income.

Thus, based on the above regulation, the tax period for Vietnamese non-residents is calculated based on each occurrence of income for all taxable income.