Whether a Domestic Enterprise is Required to Declare and Pay Taxes on Behalf of a Foreign Supplier Who Has Registered for Taxpayer, Declared, and Paid Taxes Directly in Vietnam?
How is the identification code used when a foreign supplier declares tax?
Pursuant to Clause 4, Article 77 of Circular 80/2021/TT-BTC and Article 78 of Circular 80/2021/TT-BTC as follows:
Direct tax declaration and calculation of foreign suppliers
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4. Foreign suppliers shall use the electronic transaction authentication code issued by the directly managing tax authority for authentication when declaring, or adjusting.
5. After a foreign supplier declares tax and makes any necessary adjustments (if any), the directly managing tax authority shall issue and notify the foreign supplier of the identification code for the amount payable to the state budget, which serves as the basis for the foreign supplier to pay tax.
6. Foreign suppliers are responsible for storing information used to determine transactions of organizations and individuals purchasing goods and services arising in Vietnam as prescribed in Clause 3 of this Article for the purpose of the tax authority’s inspection, audit. The storage shall be carried out in accordance with relevant provisions of the Law on Tax Administration.
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Direct tax payment of foreign suppliers
1. For foreign suppliers, after receiving the identification code for the amount payable to the state budget notified by the directly managing tax authority, they shall pay the tax in freely convertible foreign currency into the state budget collection account as notified on the electronic portal of the General Department of Taxation, ensuring that the identification code for the amount payable to the state budget provided by the directly managing tax authority is accurately recorded.
2. In the event the foreign supplier pays more than the tax amount payable according to the declaration, the foreign supplier may offset the excess tax amount against the tax amount payable in the next tax period.
Thus, foreign suppliers shall use the electronic transaction authentication code issued by the directly managing tax authority for authentication when declaring, or adjusting.
After receiving the identification code for the amount payable to the state budget notified by the directly managing tax authority, foreign suppliers shall pay the tax in freely convertible foreign currency into the state budget collection account as notified on the electronic portal of the General Department of Taxation, ensuring the identification code for the amount payable to the state budget provided by the directly managing tax authority is accurately recorded.
If a foreign supplier has registered, declared, and paid tax directly in Vietnam, does a domestic enterprise still have to declare and pay tax on their behalf?
How is the principle for determining the revenue of foreign suppliers arising in Vietnam for tax declaration and calculation?
The principle for determining the revenue arising in Vietnam for tax declaration and calculation is prescribed in Clause 3, Article 77 of Circular 80/2021/TT-BTC as follows:
- The types of information used to determine the transactions of organizations and individuals purchasing goods and services arising in Vietnam are as follows:
+ Information related to the payment from organizations and individuals in Vietnam, such as information on credit cards based on the Bank Identification Number (BIN), bank account information, or similar information used by the purchasing organization or individual to pay the foreign supplier.
+ Information related to the residency status of the organization (individual) in Vietnam (payment address, shipping address, home address, or similar information declared by the purchasing organization (individual) to the foreign supplier).
+ Information related to the access of the organization (individual) in Vietnam, such as information on the national phone area code of the SIM card, IP address, fixed landline location, or similar information of the purchasing organization or individual.
- When determining a transaction arising in Vietnam for tax declaration and calculation, foreign suppliers shall do the following:
+ Use two non-conflicting pieces of information, including one piece of information related to the payment from the organization (individual) in Vietnam and one piece of information on the residency status or access information of the organization or individual in Vietnam as mentioned above.
+ In the case where information related to the payment from the organization or individual cannot be collected or conflicts with the other information, the foreign supplier is permitted to use two non-conflicting pieces of information, including one piece of information on the residency status and one piece of information on the access of the organization or individual in Vietnam.
In which cases do domestic enterprises not have to declare, deduct, and pay tax on behalf of foreign suppliers?
Regarding this issue, Official Dispatch 4643/CTHN-TTHT in 2023 issued by the Hanoi Tax Department guides a similar case between VCCORP Joint Stock Company and Google - a foreign supplier as follows:
In the case where Google - a foreign supplier has already registered, declared, and paid tax directly in Vietnam according to the regulations in Articles 76, 77, 78, and 79 of Circular 80/2021/TT-BTC, VCCORP Joint Stock Company is not obligated to declare, deduct, and pay tax on behalf of the foreign supplier for the tax amount payable as regulated in Circular 103/2014/TT-BTC.
Thus, according to the above guidance, when a foreign supplier has already registered, declared, and paid tax directly in Vietnam, domestic enterprises do not have to declare, deduct, and pay tax on behalf of the foreign supplier.
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