Do online foreign business organizations have to pay contractor taxes in Vietnam?

Do online foreign business organizations have to pay contractor taxes in Vietnam?

Clause 1, Article 1 of Circular 103/2014/TT-BTC stipulates the entities that are subject to tax obligations applicable to foreign organizations and individuals doing business in Vietnam or having income in Vietnam as follows:

1. Foreign business organizations having permanent establishments in Vietnam or not; foreign business individuals that are residents of Vietnam or not (hereinafter referred to as foreign contractors and foreign sub-contractors) who do business in Vietnam or earn income in Vietnam under contracts, agreements, or commitments between the foreign contractor and a Vietnamese entity or between a foreign sub-contractor and a foreign sub-contractor to perform part of the main contract.

Based on Clause 1, Article 3 of Circular 103/2014/TT-BTC, the interpretation of terms is as follows:

1. “Main contract” means a contract or agreement between a foreign contractor and a Vietnamese party.

Based on Clause 37, Article 4 of the 2013 Bidding Law, the interpretation of terms is as follows:

37. Foreign Contractor means an organization established under foreign law or an individual of foreign nationality making a bid in Vietnam.

In addition, Clause 4, Article 42 of the 2019 Tax Administration Law stipulates the rules for tax declaration and tax calculation as follows:

4. Regarding electronic commerce, digital business and other services provided by overseas providers without permanent establishments in Vietnam, the overseas providers shall directly or authorize representatives to apply for taxpayer registration, declare and pay tax in Vietnam in accordance with regulations of the Minister of Finance.

Therefore, between the foreign company and the company in Vietnam, they sign a contract to provide online film advertising services. Through advertising, users directly pay fees and use the services of the foreign company. The foreign company generates income in Vietnam through the contract signed between the foreign contractor and the Vietnamese organization.

Thus, it can be affirmed that foreign business organizations operating online film screenings in Vietnam, through a contract signed between the foreign business organization and the Vietnamese organization, generate income in Vietnam and are required to pay contractor taxes.

Do online foreign business organizations have to pay contractor taxes in Vietnam? (Image from the Internet)

What types of taxes apply to foreign contractors in Vietnam?

Based on Article 5 of Circular 103/2014/TT-BTC, the types of taxes applicable to foreign contractors are as follows:

1. Taxpayers defined in Clause 2 Article 4 Chapter I are obliged to withhold VAT and corporate income tax as prescribed in Section 3 Chapter II before paying foreign contractors and foreign sub-contractors.

2. Foreign contractors and foreign sub-contractors are foreign businesspeople that pay VAT as prescribed in this Circular or pay personal income tax as prescribed by regulations of law on personal income tax.

3. Foreign contractors and foreign sub-contractors shall pay other taxes, fees and charges in accordance with applicable regulations of law on taxes, fees and charges.

Best Regards!