Which taxes in Vietnam must individuals who are foreign contractors pay?

Which taxes in Vietnam must individuals who are foreign contractors pay?

According to the regulations in Article 5 Circular 103/2014/TT-BTC:

Applicable Taxes

1. Foreign contractors and foreign subcontractors as business organizations are subject to value-added tax (VAT), corporate income tax (CIT) as guided in this Circular.

2. Foreign contractors and foreign subcontractors as foreign individuals in business are subject to VAT as guided in this Circular and personal income tax (PIT) under the law on PIT.

3. For other types of taxes, fees, and charges, foreign contractors and foreign subcontractors shall comply with the relevant current legal documents on taxes, fees, and charges.

Thus, foreign individual contractors are required to pay the following taxes: VAT as guided in this Circular, and PIT according to the law on PIT.

Which taxes in Vietnam must individuals who are foreign contractors pay? (Image from Internet)

Which entities subject to VAT regarding foreign organizations and individuals doing business in Vietnam?

entities subject to VAT regarding foreign organizations and individuals doing business and earning in Vietnam as stipulated in Article 6 Circular 103/2014/TT-BTC are as follows:

* Services or services attached to goods subject to VAT provided by foreign contractors and foreign subcontractors based on contractor contracts and subcontractor contracts for consumption, production, and business in Vietnam (except for cases specified in Article 2 Circular 103/2014/TT-BTC), including:

- Services or services attached to goods subject to VAT provided and consumed in Vietnam by foreign contractors and foreign subcontractors.

- Services or services attached to goods subject to VAT provided outside Vietnam by foreign contractors and foreign subcontractors but consumed in Vietnam.

* In cases where goods are provided under contract forms where the delivery point for goods is within Vietnam territory (except for cases specified in Clause 5, Article 2 Circular 103/2014/TT-BTC);

Or in cases where the goods supply includes services performed in Vietnam such as installation, trial run, warranty, maintenance, replacement, and other accompanying services (including cases where these services are provided for free), even if the service values are or are not included in the goods supply contract value:

The goods value is only subject to VAT at the importation stage as stipulated. The value of services is subject to VAT as guided in Circular 103/2014/TT-BTC.

In cases where the contract does not separately outline the goods value and the accompanying services value (including cases where these services are provided for free), the VAT is calculated for the entire contract.

What is the taxable income for CIT of foreign organizations and individuals doing business in Vietnam?

According to Article 7 Circular 103/2014/TT-BTC, taxable income for CIT of foreign organizations and individuals doing business in Vietnam includes:

(1). Taxable income for CIT of foreign contractors and foreign subcontractors is income generated from supplying, distributing goods; providing services, services attached to goods in Vietnam based on contractor contracts and subcontractor contracts (except for cases specified in Article 2 Chapter I Circular 103/2014/TT-BTC).

(2). In cases where goods are supplied under contract forms where the delivery point for goods is within Vietnam territory (except for cases specified in Clause 5 Article 2 Chapter I Circular 103/2014/TT-BTC); or where the goods supply includes certain services performed in Vietnam such as advertising, marketing, trade promotion, after-sales services, installation, trial run, warranty, maintenance, replacement, and other accompanying services (including cases where these services are provided for free), even if the service values are or are not included in the goods supply contract value, the taxable income for CIT of foreign contractors and foreign subcontractors is the entire goods and services value.

(3). Generated income in Vietnam by foreign contractors and foreign subcontractors is the income received in any form based on contractor contracts and subcontractor contracts (except for cases specified in Article 2 Chapter I Circular 103/2014/TT-BTC), regardless of the location where the business activities are carried out by foreign contractors and foreign subcontractors.

Taxable income for foreign contractors and foreign subcontractors in some specific cases includes:

- Income from the transfer of ownership, right to use assets; transfer of the right to participate in economic contracts/projects in Vietnam, transfer of property rights in Vietnam.

- Income from royalties which are income received in any form for the right to use, transfer ownership of intellectual property rights, and technology transfer, including software copyright

(including: payments for the right to use or transfer copyright and ownership rights to works; transfer of industrial property rights; technology transfer, software copyright).

"Copyright and ownership rights to works", "Industrial property rights", and "Technology transfer" are defined in the Civil Code, Intellectual Property Law, Technology Transfer Law 2017, and guiding documents.

- Income from the transfer, liquidation of assets.

- Income from loan interest: the income of lenders from any form of lending where the loan is or is not secured by collateral, where the lender does or does not share in the profits of the borrower; income from deposit interest (excluding deposit interest of foreign individuals and deposit interest arising from deposit accounts maintained for activities in Vietnam by representative offices of diplomatic agencies, representative offices of international organizations, non-governmental organizations in Vietnam), including bonuses associated with deposit interest (if any); income from late payment interest in accordance with contract terms; income from bond interest, bond discount (excluding tax-exempt bonds), Treasury bills; income from interest on deposit certificates.

Loan interest also includes any fees that Vietnamese parties must pay according to the contract.

- Income from stock transfers.

- Penalty charges and compensation received from a partner for contract violations.

- Other income as prescribed by law.