Which entities are subject to contractor tax in Vietnam? Which entities are entitled to contractor tax exemption in Vietnam?

Which entities are subject to contractor tax in Vietnam?

Based on Article 1 of Circular 103/2014/TT-BTC, the entities subject to contractor tax are specified as follows:

Applicable Entities

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

1. Foreign organizations doing business with or without a permanent establishment in Vietnam; foreign individuals doing business who reside or do not reside in Vietnam (hereinafter collectively referred to as Foreign Contractors, Foreign Sub-contractors) 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 Sub-contractors to perform part of the contractor's work.

2. Foreign organizations and individuals supplying goods in Vietnam in the form of import-export at the place and having income arising in Vietnam on the basis of a contract signed between foreign organizations, individuals and businesses in Vietnam (except for cases of processing and returning goods to foreign organizations and individuals), or distributing goods in Vietnam, or supplying goods according to delivery conditions of international commercial terms - Incoterms where the seller bears risk related to goods delivered to the territory of Vietnam.

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Thus, the entities subject to contractor tax include:

- Foreign organizations or individuals doing business with or without a permanent establishment in Vietnam.

- Foreign organizations, individuals supplying goods in Vietnam in the form of import-export at the place and having income arising in Vietnam based on a contract or conducting goods distribution in Vietnam or supplying goods according to delivery conditions of international commercial terms - Incoterms.

- Foreign organizations, individuals performing part or whole business activities in distributing goods, providing services in Vietnam.

- Foreign organizations, individuals negotiating, signing contracts in the name of foreign organizations, individuals through Vietnamese organizations, individuals.

- Foreign organizations, individuals exporting rights, importing rights, distribution in the Vietnamese market, purchasing goods for export, selling goods to Vietnamese traders in accordance with trade laws.

Which entities are entitled to contractor tax exemption in Vietnam?

Based on Article 2 of Circular 103/2014/TT-BTC, the following entities are not subject to contractor tax:

- Foreign organizations, individuals doing business in Vietnam under regulations of the Investment Law, Petroleum Law, Law on Credit Institutions.

- Foreign organizations, individuals supplying goods to Vietnamese organizations, individuals without accompanying services performed in Vietnam under the following forms:

+ Delivery at foreign border gate:

- The seller bears all responsibilities, costs, risks associated with exporting the goods and delivering them at the foreign border gate.

- The buyer bears all responsibilities, costs, risks related to receiving goods, transporting goods from the foreign border gate to Vietnam.

+ Delivery at Vietnam border gate:

The seller bears all responsibilities, costs, risks related to the goods up to the delivery point at the Vietnam border gate.

The buyer bears all responsibilities, costs, risks relating to receiving and transporting goods from the Vietnam border gate.

- Foreign organizations, individuals with income from services provided and consumed outside Vietnam.

- Foreign organizations, individuals providing the following foreign-executed services to Vietnamese organizations, individuals:

+ Repairing means of transport, machinery, equipment, with or without accompanying materials, replacement equipment;

+ Advertising, marketing (except advertising, marketing on the internet);

+ Investment and trade promotion;

+ Brokerage: sales of goods, provision of services to foreign countries;

+ Training (except online training);

+ Sharing service charges, telecommunications payments, and international telecommunications between Vietnam and abroad where these services are conducted outside Vietnam, leasing of transmission line bands and foreign satellite according to the Law on Telecommunications;

+ Sharing postal charges, international postal services between Vietnam and abroad in accordance with the Postal Law, international postal agreements to which the Socialist Republic of Vietnam is a signatory where these services are conducted outside Vietnam.

- Foreign organizations, individuals utilizing bonded warehouses, inland container depots (ICDs) as storage facilities to aid international transportation, transit, entrepot, storing goods, or facilitation for another enterprise to process.

What are regulations on the responsibility of tax authorities in receiving tax declaration dossiers for contractor tax in Vietnam?

Based on Article 48 of the Law on Tax administration 2019, the responsibilities of tax authorities in receiving tax declaration dossiers for contractor tax are specified as follows:

- tax authorities receive tax declaration dossiers from taxpayers.

- tax authorities notify the receipt of tax declaration dossiers; if the dossier is not legitimate, incomplete, or does not follow the prescribed form, notify the taxpayer within 3 working days from the date of receipt.