The identification of beneficial owners for incomes from royalties under the Agreement on double taxation avoidance in Vietnam
I am currently researching the Agreement on double taxation avoidance. What is the identification of beneficial owners for incomes from royalties under the Agreement on double taxation avoidance in Vietnam?
Binh Minh (016***)
The identification of beneficial owners for incomes from royalties under the Agreement on double taxation avoidance in Vietnam (Image from the Internet)
According to the provisions of Article 23 of Circular 205/2013/TT-BTC guiding the implementation of the agreements on double taxation avoidance and prevention of tax evasion with respect to taxes on income and property between Vietnam and other states or territories and in force in Vietnam issued by the Minister of Finance. To be specific:
Under the Agreements, the provisions on taxation on royalties shall apply only to persons directly receiving and concurrently being beneficial owners of royalties, i.e. persons having the right to own, use or exploit copyright. And, therefore, shall not apply to:
1. Recipients of paid royalties, which are not persons having the right to own, use or exploit copyright; or
2. Royalties arising in Vietnam and directly related to a Vietnam-based permanent establishment of the beneficial owner being a resident of the Contracting State to an Agreement concluded with Vietnam; or
3. Royalties arising in Vietnam and paid to another Vietnamese company’s permanent establishment situated in the Contracting State to an Agreement concluded with Vietnam.
Example 39: A Vietnam-based branch of a British tobacco company permits a Vietnamese company to use the formula and trademark of the British tobacco company in the Vietnamese company’s products on the condition that the branch inspects and monitors the use process. In this case, the royalty from the use of the formula and trademark of the British tobacco company is directly related to the branch. Because the branch is a Vietnam-based permanent establishment of the British tobacco company, under the Vietnam- Great Britain Agreement (Clause 4 of Article 12: Royalties), Vietnam is entitled to tax this income in the same manner applicable to business income (Article 7: Business profits, of the Vietnam-Great Britain Agreement).
The above-said provisions on taxation on royalties are included in the Article Royalties (usually Article 12) of the Agreements.
Above is the content of regulations on identification of beneficial owners for incomes from royalties under the Agreement on double taxation avoidance. For more detailed information, you can refer to Circular 205/2013/TT-BTC.
Best regards!
