Which entity is subject to contractor tax in Vietnam?

Which entity is subject to contractor tax in Vietnam?

The subjects subject to contractor tax according to Article 1 of Circular 103/2014/TT-BTC are as follows:

- Foreign organizations doing business with or without a permanent establishment in Vietnam; foreign individuals doing business who are residents or non-residents of Vietnam (foreign contractors, foreign sub-contractors) conducting business in Vietnam

Or earning income arising in Vietnam on the basis of a contract, agreement, or commitment between a foreign contractor and a Vietnamese organization or individual, or between a foreign contractor and a foreign sub-contractor to perform part of the contractor's work.

- Foreign organizations or individuals supplying goods to Vietnam in the form of on-spot export-import and earning income in Vietnam based on a contract signed between a foreign organization or individual and enterprises in Vietnam (except for cases of processing and exporting goods back 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 risks related to the goods until they arrive in Vietnamese territory.

- Foreign organizations or individuals conducting part or all of the business operations of distributing goods or providing services in Vietnam, in which the foreign organization or individual retains ownership of the goods delivered to a Vietnamese organization

Or takes responsibility for the costs of distribution, advertising, marketing, the quality of services, and the quality of goods delivered to the Vietnamese organization or setting the sale price of goods or the price of services provided;

Including cases where they authorize or hire some Vietnamese organizations to perform part of the distribution services, or other services related to the sale of goods in Vietnam.

- Foreign organizations or individuals using Vietnamese organizations or individuals to perform negotiation, and sign contracts in the name of the foreign organization or individual.

- Foreign organizations or individuals exercising export rights, import rights, distribution in the Vietnamese market, purchasing goods for export, and selling goods to Vietnamese traders in accordance with the law on commerce.

Which entity is subject to contractor tax in Vietnam? (Image from the Internet)

Who is not subject to contractor tax in Vietnam?

According to Article 2 of Circular 103/2014/TT-BTC, the subjects not subject to contractor tax are as follows:

- Foreign organizations or individuals doing business in Vietnam as regulated.

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

+ Delivery at the foreign country's border checkpoint: the seller bears all responsibilities, costs, and risks related to the export of goods and the delivery of goods at the foreign country's border checkpoint;

The buyer bears all responsibilities, costs, and risks related to receiving, transporting goods from the foreign country's border checkpoint to Vietnam (including cases where delivery at the foreign country's border checkpoint includes warranties as the seller's responsibility and obligation).

+ Delivery at the Vietnamese border checkpoint: the seller bears all responsibilities, costs, and risks related to the goods up to the point of delivery at the Vietnamese border checkpoint;

The buyer bears all responsibilities, costs, and risks related to receiving, transporting goods from the Vietnamese border checkpoint (including cases where delivery at the Vietnamese border checkpoint includes warranties as the seller's responsibility and obligation).

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

- Foreign organizations or individuals providing the following services to Vietnamese organizations or individuals with services performed abroad:

+ Repair of transportation means (aircraft, aircraft engines, aircraft parts, ships), machinery, and equipment (including submarine cables, transmission equipment), whether with or without accompanying materials, and replacement equipment;

+ Advertising and marketing (excluding advertising and marketing on the Internet);

+ Investment and trade promotion;

+ Brokerage: selling goods and providing services abroad;

+ Training (excluding online training);

+ Sharing fees (payment fees) for international, telecommunications services between Vietnam and foreign countries where these services are performed outside Vietnam, leasing transmission lines and satellite bandwidth from abroad according to the Law on Telecommunications;

Sharing fees (payment fees) for international postal services between Vietnam and foreign countries according to the Law on Post and international postal treaties that the Socialist Republic of Vietnam is a party to, where these services are performed outside Vietnam.

- Foreign organizations or individuals using bonded warehouses or inland clearance depots (ICD) as warehouses for goods to support international transportation, transit, transshipment, storage of goods, or for other enterprises to process.

Which taxes are included in contractor tax in Vietnam?

According to Article 5 of Circular 103/2014/TT-BTC, the taxes applicable to contractor tax include:

- Foreign contractors, foreign sub-contractors as business organizations fulfilling obligations related to value-added tax (VAT), and corporate income tax (CIT).

- Foreign contractors, foreign sub-contractors as foreign individuals conducting business fulfilling obligations related to VAT, and personal income tax (PIT) according to the law on PIT.

- For other types of taxes, fees, and charges, foreign contractors, foreign sub-contractors shall comply with the current laws on other taxes, fees, and charges.