If a foreign contractor signs a contract with a Vietnamese sub-contractor to reduce part of the work value, how is the revenue in Vietnam for CIT calculation determined?
Answering questions about taxable revenue in Vietnam in case a foreign contractor signs a contract with a Vietnamese sub-contractor?
Pursuant to Official Dispatch 27325/CTHN-TTHT in 2022 dealing with contractor tax problems, Hanoi Tax Department replied to taxpayers in principle as follows:
- In case the foreign contractor signs a contract with a Vietnamese sub-contractor or a foreign sub-contractor pays tax according to the declaration method or the foreign sub-contractor pays tax by the mixed method to reduce a part of the cost value of the work or item specified in the contract the contractor signed with the Vietnamese party and the list of Vietnamese subcontractors and foreign subcontractors performing the corresponding part of the work or item listed together with the contract the contractor, the foreign contractor's CIT taxable turnover does not include the value of the work performed by the Vietnamese subcontractor or the foreign subcontractor.
- Suggest that the Company base on the actual situation and compare with the above regulations to comply with the provisions of law.
- In the process of implementing tax policy, if there are still problems, the unit can refer to the guiding documents of the Hanoi Tax Department posted on the website http://hanoi.gdt.gov.vn or Contact the Business Household, Personal and Other revenue in Vietnam Management Department for assistance in solving.
Thus, the answers to questions about contractor tax are prescribed by the Hanoi Tax Department as follows.
If a foreign contractor signs a contract with a Vietnamese sub-cntractor to reduce part of the work value, how is the revenue in Vietnam for CIT calculation determined?
What are the regulations on the basis for calculating CIT?
Pursuant to the provisions in Clause 1, Article 13 of Circular 103/2014/TT-BCT on corporate income tax as follows:
The tax base is the turnover for calculating CIT and the rate (%) of CIT calculated on the taxable turnover.
Amount of CIT payable = Taxable turnover x CIT ratio calculated on taxable revenue in Vietnam
- Revenue subject to CIT
+ Revenue subject to CIT
+ Revenue subject to CIT is the total revenue in Vietnam excluding VAT received by foreign contractors and foreign sub-contractors, excluding payable taxes. The revenue for calculating CIT includes expenses paid by the Vietnamese party on behalf of the foreign contractor, foreign sub-contractor (if any).
+ Determination of taxable revenue in Vietnam for some specific cases:
In case, according to the agreement in the contractor contract, sub-contractor contract, the revenue in Vietnamreceived by the foreign contractor or foreign sub-contractor does not include the payable CIT, the revenue subject to CIT calculation shall be determined according to the company's regulations. following formula:
Revenue subject to CIT = Revenue excluding CIT/(1 - Ratio of CIT calculated on taxable turnover)
Determining CIT taxable revenue in Vietnam for some specific cases?
Pursuant to Point b.2 Clause 1 Article 13 of Circular 103/2014/TT-BCT stipulates as follows:
- In case the foreign contractor signs a contract with a Vietnamese sub-contractor or a foreign sub-contractor pays tax according to the declaration method or the foreign sub-contractor pays tax by the mixed method to reduce a part of the cost The value of the work or item is specified in the Contract signed by the contractor with the Vietnamese Party and the list of Vietnamese and foreign subcontractors performing the corresponding part of the work or item is listed together with the Contract. contract, the foreign contractor's CIT taxable revenue in Vietnam does not include the value of the work performed by the Vietnamese subcontractor or the foreign subcontractor.
- In case a foreign contractor signs contracts with suppliers in Vietnam to purchase supplies, materials, machinery and equipment to perform the contractor contract, and goods and services to serve domestic consumption, If the goods and services are not included in the items or tasks performed by the foreign contractor under the contract, the value of these goods or services shall not be deducted when determining the foreign contractor's taxable revenue. .
Pursuant to Point b.3 Clause 1 Article 13 of Circular 103/2014/TT-BCT stipulates as follows:
- In case the foreign contractor signs a contract with a foreign sub-contractor to pay tax by the direct method, the Vietnamese party shall declare and pay CIT on behalf of the foreign contractor or foreign sub-contractor at the rate (%) ) CIT calculated on the taxable turnover corresponding to the business line that the foreign contractor or foreign sub-contractor performs under the contractor contract or sub-contractor contract. The foreign sub-contractor is not required to declare and pay CIT on the value of the work performed by the foreign sub-contractor in accordance with the provisions of the subcontractor contract signed with the foreign contractor that the Vietnamese party has declared and paid on behalf of.
Thus, the determination of taxable revenue in Vietnam is specified as above.
See the content of Official Dispatch 27325/CTHN-TTHT in 2022: Here
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