ACCA – F6TAXATION
FOREIGN CONTRACTOR TAX
Part E
Learning Objectives
On completion of this course, you will be able to:
1. Identify the scope of the foreign contractor tax (FCT) regime
a. Applicable and non-applicable objects/ transactions
b. Explain the inter-relationship between FCT regime and CIT, VAT and PIT
c. Define the terms “Foreign contractor”, “Sub-contractor”, “Income arising in Vietnam”, “Income from the transfer of ownership or right to use assets”, “Royalty”, and “Loan interest”
Learning Objectives
2. Compute the FCT liabilities
a. Computation of VAT and CIT liabilities for foreign contractors adopting the Vietnamese Accounting System (VAS)
b. Computation of VAT and CIT liabilities for foreign contractors NOT adopting the Vietnamese Accounting System (VAS)
c. Application of the double taxation relief provisions in the context of the FCT regime
Key Points
Scope of the Foreign Contractor Tax (FCT) regime
Applicable and non-applicable objects/ transactions
Inter-relationship between the FCT regime and CIT, VAT and PIT
Definition of a number of terms
Computation of FCT liabilities
For foreign contractor adopting the VAS
For foreign contractor not adopting the VAS
Administration of the FCT regime Registration procedures applicable to foreign contractors
Applicable objects/ transactions
WHO ARE FOREIGN CONTRACTORS (1/3)
Foreign organisations with or without a permanent establishment(PE) in Vietnam, and foreign individuals being a resident or a non-resident of Vietnam (briefly called Foreign Contractors ), doing business in VN or having income arising fromVietnam on a basis of a contract (or an agreement, a commitment) signed with a Vietnamese organisation or individual
Applicable objects/ transactions
WHO ARE FOREIGN CONTRACTORS (2/3)
Foreign organisations with or without a permanent establishment (PE) in Vietnam, and foreign individuals being a resident or a non-resident of Vietnam, (briefly called Foreign Sub-Contractors ), doing business in Vietnam or having income arising fromVietnam on a basis of a contract (or an agreement, a commitment) signed with a Foreign Contractor to perform a part of the Foreign Contractor’s contract
Applicable objects/ transactions
WHO ARE FOREIGN CONTRACTORS (3/3)
What is a permanent establishment?
The determination of a permanent establishment of a foreign contractor/ sub-contractor is in accordance with the Corporate Income Tax (CIT) Law
What is a resident individual?
The determination of a resident individualof a foreign individual is in accordance with the Personal Income Tax Law (PIT)
Applicable objects/ transactions
WHO ARE SUB-CONTRACTORS?
Sub-contractors comprise foreignsub-contractors and Vietnamesesub-contractors
Applicable objects/ transactions
SOME DEFINITIONS
What is a contractor’s contract?
A contract (agreement, commitment) signed between a foreign contractor and a Vietnamese party
What is a sub-contractor’s contract?
A contract (agreement, commitment) signed between a foreign contractor with a sub-contractor
Applicable objects/ transactions
WHO ARE FCT PAYERS? (1/6)
1
2
Applicable objects/ transactions
WHO ARE FCT PAYERS? (2/6)
Foreign parties : Foreign contractors and/or foreign sub-contractors who do business in Vietnam (including the sea territories) or have income arising from VN
The business activities are conducted on a basis of:
a contractor’s contract signed with a Vietnamese organisation/ individual, or
a subcontractor’s contract signed with another foreign organisation/ individual who is currently doing business in VN
Applicable objects/ transactions
WHO ARE FCT PAYERS? (3/6)
Vietnamese parties include:
Organisations established and operated under the laws of VN;
Organisations registered for business operations under the laws of VN;
Business organisations/ individuals buying services, or services accompanied with goods;
Organisations/ individuals paying income sourced from Vietnam on a basis of a contractor’s or a sub-contractor’s contract
Applicable objects/ transactions
WHO ARE FCT PAYERS? (4/6)
Vietnamese parties , specifically: Companies established under the laws of VN like Law on
Enterprises, Law on Investment, Law on Co-operatives
Economic organisations owned by political organisations, socio-political organisations, social organisations, social-professional organisations, armed forces, not-for-profit organisations and other organisations
Petroleum contractors operating under the Law on Petroleum
Applicable objects/ transactions
WHO ARE FCT PAYERS? (5/6)
Vietnamese parties , specifically:
Branch of foreign companies licensed to operate in VN
Foreign organisations or representative of foreign organisations licensed to operate in VN
Booking office and representative office of foreign airlines operating in Vietnam
Organisations/ individuals providing ocean shipping services for foreign ocean shipping companies, agents of foreign forwarding companies, foreign express delivery companies
Applicable objects/ transactions
WHO ARE FCT PAYERS? (6/6)
Vietnamese parties , specifically:
Securities companies, securities issuing companies, fund management companies, commercial banks where securities investment funds have opened securities investment accounts
Other organisations in Vietnam and individuals doing business in Vietnam
Non-applicable
THERE ARE 4 CASES
objects/ transactions
1. Foreign organisations/ individuals doing business in VN under the Law on Investment , Law on Petroleum , Law on Credit Organisations
2. Foreign organisations/ individuals providing goods to a Vietnamese party, without accompanying services to be carried out in VN – See Example 2
3. Foreign organisations/ individuals having income from services that are provided and consumed outside VN –Ex. 3
4. Foreign organisations/ individuals providing a number of services to a Vietnamese party where the services are performed outside VN – See Example 4
Non-applicable objects/ transactions
EXAMPLE OF CASE 2
“ Provision of goods without accompanying services ” means
Goods are delivered at a foreign border gate where:
The seller is responsible for delivering goods to a foreign border gate
The buyer is responsible for receiving and bringing goods to
Goods are delivered at a Vietnamese border gate where:
The seller is responsible for delivering goods to a Vietnamese border gate
The buyer is responsible for receiving and bringing goods to VN
Non-applicable objects/ transactions
EXAMPLE OF CASE 3
“ Having income from services provided and consumed outside Vietnam ”
Company A of Vietnam makes a payment to Company H of Hong Kong for the stevedoring services when the fleet Compnay A anchored in Hong Kong
In this case case the stevedoring services are provided and consumed in Hong Kong, therefore Company H is not subject to FCT
Non-applicable objects/ transactions
EXAMPLE OF CASE 4
“Services provided to Vietnamese organisations/ individuals that are performed outside VN”include:
Repair of means of transportation, equipment (with or without replacement materials, accessories)
Advertising, marketing services
Investment and trade promotion (xúc tiế n đầ u t ư và tm
Brokerage services for selling goods (môi gi
Training services
ớ i bán hàng)
Fees sharing of international tele-communication, leased lines, leased satellite channels (chia c ước thanh toán)
Basis & Methods of Tax Assessment
2 important issues:
1
2
Services and goods subject and/ or not subject to FCT
Methods of tax assessment: Self-assessment vs Withholding
Basis & Methods of Tax Assessment
Issue 1
Basis & Methods of Tax Assessment
SERVICES SUBJECT TO VAT
Services and/or services attached to goods that are provided in VN by a foreign contractor and consumed in
VN that are provided outside VN by a foreign contractor and
consumed in VN Goods provided into the territory of VN , or goods attached
with services to be carried out in VN such as installation, commissioning, warranty, maintenance, …
Goods are subject to VAT at the import stage: services are subject to FCT (whether in 1 or 2 separate contracts)
If the value of goods is not stated, VAT is imposed on the total
Basis & Methods of Tax Assessment
SERVICES SUBJECT TO VAT - Example
Company V in VN enters into a contract with Company F in overseas, to buy a line of equipment for a cement project in VN, at a total cost of USD100 million , of which USD20 million is the fee for installation, commissioning and maintenance
Company V will be responsible for paying VAT of the line of equipment at the import stage
Company F will be responsible for pay VAT on the cost of services of USD20 million ,
Company F will pay FCT on the total contract value of USD100 million if the cost of services is not clearly stated
Basis & Methods of Tax Assessment
SERVICES SUBJECT TO CIT
Income from provision of services and/or income from provision of services attached to goods in VN
Income from provision of goods into the territory of VN , or income from provision of goods attached with services to be carried out in VN such as installation, commissioning, warranty, maintenance, …
The provision of services, irrespective of whether or not it is included in the contract of provision of goods, the FCT will still be imposed on the total cost of services and goods
Basis & Methods of Tax Assessment
SERVICES SUBJECT TO CIT - Example
Company V in VN enters into a contract with Company F in overseas, to buy a line of equipment for a cement project in VN, at a total contract value of USD100 million , of which USD20 million is the fee for installation, commissioning and maintenance.
Company F will pay CIT on USD80 million being the value of equipment and USD20 million being the services fees, at different deemed CIT rates
Company F will pay CIT on the total contract value of USD100 million at one single rate, if the cost of services is not clearly stated in the contract
Basis & Methods of Tax Assessment
SERVICES SUBJECT TO CIT
Other income sourced from VN, under any form, irrespective of the place where the business is carried on:
Income from commissioning, warranty, maintenance, …
Royalty income
Income from disposal of fixed assets
Compensation of offense of economic contracts
Interest income
Securities income
Basis & Methods of Tax Assessment
What is royalty income?
Royalty income is income paid for the “use right”, for the “transfer of intellectual property rights” and for “technology transfer” (including payments for the right to use, for “transfers of rights of an author”, and “rights of the owner of a work”; for “transfer of industrial property rights”; for “technology transfer”)
“Right of an author”, “rights of the owner of a work”, “industrial property rights”, “technology transfer” are stipulated in the Civil Code of the VN
Basis & Methods of Tax Assessment
What is interest income?
Is “income of lenders earned from loans” in any form, irrespective of whether such loans are secured by a mortgage or whether the lenders are entitled to income of the borrower; income from interest on deposits (except interest on deposits of foreign individuals, etc…), including any bonuses accompanying deposits; and income from interest on late payments on economic contracts
Interest income includes all the charges payable by the Vietnamese party in accordance with the loan agreement
Basis & Methods of Tax Assessment
Issue 2
1
2
3
Basis & Methods of Tax Assessment
SELF-ASSESSMENT METHOD
Conditions for self-assessment Having a PE in VN or being a resident individual in VN
Doing business in VN for a period from 183 days and above
Keeping Vietnamese accounting system (VAS)
While the old contract is on-going , a new contract is entered
After the old contract is completed , a new contract is entered and meets all the above-mentioned conditions
Many contract are entered at the same time , one of them satisfy the above-mentioned conditions
Basis & Methods of Tax Assessment
SELF-ASSESSMENT METHOD
VAT filing and payments
File and pay VAT like a Vietnam-based company
Register for VAT, receive a tax code and buy VAT invoices
Net VAT payable is the VAT output minus (-) the VAT input
CIT filing and payments
File and pay CIT like a Vietnam-incorporated company
Pay provisional CIT on a quarterly basis
Pay final CIT at the end of the year
Basis & Methods of Tax Assessment
WITHHOLDING METHOD
Withholding tax applied to the following cases
Having NO PE in Vietnam or being a Non-resident individual of Vietnam
Doing business in Vietnam less than 183 days
Keeping no Vietnamese accounting system
Notes:
The Vietnamese party is responsible for registration and payment of VAT and CIT on behalf of the foreign contractor within 20 days from day of signing foreign contractor’s contract
Withholding Method
APLICABLE TAXES
For organisations
For individuals
Value added tax
Corporate income tax
Value added tax
Personal income tax
Withholding Method
ASSESSMENT OF VAT PAYABLE
The basis for assessment of VAT payable is the value addedand the VAT rates
VAT Payable
= Value Added *
VAT Rates
Value Added
= Taxable turnover * Deemed value
added Rate
Withholding Method
TAXABLE TURNOVER FOR VAT (1/8)
Taxable turnover for VAT calculation of a foreign contractor is the total turnover from provision of service, or services attached to VAT-able goods, before all types of tax (including VAT), receivable by a foreign contractor or a foreign sub-contractor, plus ( + ) all the costs born by a Vietnamese partyof a foreign contractor and/or a foreign sub-contractor, if any
on behalf
Withholding Method
TAXABLE TURNOVER FOR VAT (2/8)
In case of a NET contract, the taxable turnover must be grossed up following the below formula
Taxable Turnover =
Turnover before VAT
1 – (% deemed value added x VAT rate)
See Example on the next Slide
Withholding Method
TAXABLE TURNOVER FOR VAT (3/8)
Example
Foreign contractor X enters into a supervision service with a Vietnamese party to build a cement plant in VN, at a contract value of USD300,000 . In addition, the Vietnamese party also provides the accommodation for foreign engineers during their stay in VN amounting to USD40,000 . This is a net contract.Taxable turnover for VAT is determined as follows:
Taxable turnover =
300,000 + 40,000
1 – (50% x 10%)= 357,894.73
Withholding Method
TAXABLE TURNOVER FOR VAT (4/8)
The taxable turnover of a foreign contractor will not includethe cost of work sub-contracted to a foreign sub-contractor or a Vietnamese sub-contractor who pays taxes on a self-assessment basis
The taxable turnover of a foreign contractor will not excludethe costs of goods and services purchased in VN from Vietnamese suppliers in order to implement a project
See Example on the next Slide
Withholding Method
TAXABLE TURNOVER FOR VAT (5/8)
Example
Foreign contractor F enters into a construction service with a Vietnamese party to build a cement plant in VN, at a contract value of USD10 million . Foreign contractor F sub-contracts a part of work to a Vietnamese contractor, at a cost of USD1 million . Taxable turnover for VAT calculation of Foreign contractor F is as follows:
Taxable turnover for VAT = USD10 mil - USD1 mil = USD9 mil
Withholding Method
TAXABLE TURNOVER FOR VAT (6/8)
The taxable turnover of a foreign contractor will include the cost of work sub-contracted to a foreign sub-contractor if the latter registers and pays taxes on a withholding method
And in this case, the foreign sub-contractor is notbe responsible for paying the VAT on the part of work being sub-contracted
Withholding Method
TAXABLE TURNOVER FOR VAT (7/8)
For forwarding services , the taxable turnover will not include the freight payable to international transportation companies (airlines, …)
For express delivery services , the taxable turnover is total freight received by the foreign contractor in case of outbounddelivery services (from VN to overseas)
Withholding Method
TAXABLE TURNOVER FOR VAT (8/8)
For property leasing , such as machinery, equipment, means of transportation, taxable turnover will be the total lease amount
Taxable turnover will not include the costs directly paid by the lessor such as insurance, maintenance, registration, operator, transportation (from overseas to VN) if supporting documents are available
Withholding Method
DEEMED VALUE ADDED RATES (1/4)
No Business activities Deemed value added (%)
1
2
3
4
Services, equipment leasing, insurance
Construction, installation with materials or equipment
Construction, installation without materials or equipment
Transportation, manufacturing, other businesses
50
30
50
30
Withholding Method
DEEMED VALUE ADDED RATES (2/4)
The deemed value added rateswill apply to a foreign contractor’s contract and/ or a foreign sub-contractor’ s contract that includes many activities (including non VAT-able ones) as follows:
A specific value added rate will apply to a specific activity if the value of each activity is clearly stated
The highest value added rate of the activity and the highest VAT rate will apply to the total contract value if the value of each activity is not clearly stated
Withholding Method
DEEMED VALUE ADDED RATES (3/4)
The deemed value added ratewill apply to a contract that provide goods accompanied by services like installation, commissioning, warranty, maintenance, … as follows:
A specific value added rate will apply to a specific service if the value of such service is separated from the value of the goods (which is not subject to VAT)
The highest value added rate (30%) will apply to the total contract value if the value of services is not separated from the value of the goods (a lump-sum contract)
Withholding method
DEEMED VALUE ADDED RATES (4/4)
Example
Korean contractor K enters into a contract with a Vietnamese party to provide a line of equipment attached with services suchas installation, commissioning, etc. at a lump sum amount of USD10 million
Korean contractor K does not adopt the Vietnamese accounting system
Korean contractor K will pay VAT at 30% deemed value added on the total contract value of USD10 million
Withholding method
ASSESSMENT OF CIT PAYABLE
The basis for CIT assessment is the Taxable turnover and the Deemed CIT rates (%)
CIT Payable
= Taxable turnover
* Deemed CIT rates
What is Taxable turnover ?
What are Deemed CIT rates ?
Withholding method
TAXABLE TURNOVER FOR CIT (1/12)
Taxable turnover for CIT calculation purposes of a foreign contractor is the total turnover from the provision of services or services attached to goods receivable by a foreign contractor or a foreign sub-contractor, before all types of tax , but after VAT payable , plus ( + ) all the costs born by a Vietnamese party on behalf of a foreign contractor and/or sub-contractor, if any
Withholding method
TAXABLE TURNOVER FOR CIT (2/12)
In case of a NET contract, the taxable turnover must be grossed up in accordance with the below formula
Taxable turnover =
Turnover before CIT
(1 – % deemed CIT rate)
See Example on the next Slide
Withholding method
TAXABLE TURNOVER FOR CIT (3/12)
Example
Foreign contractor F enters into a supervision service contract (NET) with a Vietnamese party to construct a cement plant in VN at a contract amount of USD300,000 . The Vietnamese party also provides accommodation for foreign engineers during their stay in VN amounting to USD23 000 . The taxable turnover for CIT calculation is as follows:
Taxable 300,000 + 23,000turnover = (1 – 0.05) = 340,000
Withholding method
TAXABLE TURNOVER FOR CIT (4/12)
Taxable turnover of a foreign contractor will not includethe cost of work and the cost of equipment sub-contracted to aforeign sub-contractor or a Vietnamese sub-contractor who pays tax on a self-assessment basis – SeeExample
The taxable turnover of a foreign contractor will not excludethe costs of goods and services purchased in VN from Vietnamese suppliers in order to implement a project
See Example on the next Slide
Withholding method
TAXABLE TURNOVER FOR CIT (5/12)
Example Foreign contractor F enters into a construction service with a
Vietnamese party to construct a cement plant in VN at a contract amount of USD10 million . Foreign contractor Fsub-contracts a part of work to a Vietnamese contractor, at a cost of USD1 million . The taxable turnover of Foreign contractor F is calculated as follows:
Taxable turnover for CIT = USD10 mil - USD1 mil = USD9 mil
Withholding method
TAXABLE TURNOVER FOR CIT (6/12)
For property leasing , such as machinery, equipment, means of transportation, the taxable turnover will be the total lease amount
Taxable turnover will not include the costs directly paid by the lessor such as insurance, maintenance, registration, operator, transportation (from overseas to VN) if supporting documents are available
For foreign airlines companies , the taxable turnover is the total sales of air tickets, airways bills and other receipts – See next slide for example
Withholding method
TAXABLE TURNOVER FOR CIT (7/12)
Example Airlines Company F has a total sales of USD100,000 for the
1st quarter 2009, of which, sale of air tickets: USD85,000 sale of airways bills: USD10,000 sales of MCO (Miscellaneous Charges Order): USD5,000 . The airlines also receives airport fees of USD1,000for the State, and accept tickets returned from customers amounting to USD2,000 . Taxable turnover of airlines company F is calculated as follows:
Taxable turnover =100,000 - (1,000 + 2,000)= 97,000
for CITNote: See FCT declaration for airlines in Cir. 134
CỘ NG HOÀ XÃ H Ộ I CH Ủ NGH ĨA VI Ệ T NAM
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T Ờ KHAI N Ộ P THU Ế
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Mã số thu ế
Tài kho ả n ti ền g ử i số : Mở t ạ i Ngân hàng
PHẦ N KÊ KHAI THUẾ
Đơ n vị tính: Đồ ng Việt Nam
STT Ch ỉ tiêu S ố phát sinh quí này Số luỹ kế nă m
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Circ
ular
134
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FC
T
Withholding method
TAXABLE TURNOVER FOR CIT (8/12)
For sea transport firms , the taxable turnover is the total fees earned from transporting passengers, cargoes from a port in Vietnam to a final destination port, and other income, if any
The total fees mentioned above do not include:
the fees that a foreign transport firm has been assessed for CIT at a Vietnamese port, and
The fees earned by a Vietnamese sea transport company that participates in the process of transportation
Withholding method
TAXABLE TURNOVER FOR CIT (9/12)
Example
Company A (VN) , agent of a foreign sea transport firm, i.e. Company F , to transport goods, issue invoices and collect feesCompany B (VN), through Company A , hires Company F to transport goods from VN to USA at a fee of USD100,000Company A hires Company B to transport goods from VN to Singapore in order for Company F to continue to transport goods from Singapore to USD, at a fee of USD20,000 .Taxable turnover of Company Fis calculated as follows: USD100,000 - USD20,000 = USD80,000
Withholding method
Company A (VN): Agent of a foreign sea transport firm - Company F - to transport goods and collect fees
USD100,000VN SIN
Company B (VN) : Transporting goods from VN to SIN
USD20,000Company F : Transporting goods from VN to USA
USA
Taxable turnover for CIT: 100,000 – 20,000 = 80,000
Withholding method
TAXABLE TURNOVER FOR CIT (9/12)
Transport Enterprise
VN
Agent AAgent A SIN
VAT Invoice
USD100.000
VAT Invo USD80.000
ice
BB
US
USD20.000 Taxable turnover for FCT: 80.000
Company VN
10% VAT on freight
Company NNNN
Withholding method
TAXABLE TURNOVER FOR CIT (10/12)
For forwarding services , the taxable turnover will not includethe freight payable to international transportation companies (airlines, …)
For express delivery services , the taxable turnover is total freight received by the foreign contractor in case of outbounddelivery services (from VN to overseas)
For re-insurance services , the taxable turnover is the total re-insurance premium payment to overseas
Withholding method
TAXABLE TURNOVER FOR CIT (11/12)
For securities activity , the taxable turnover is:
For securities transfer : the total transfer proceeds (excluding non-taxable bonds)
For interest from bonds transfer : the total transfer proceeds (excluding non-taxable bonds)
For interest payment from offshore loans:
Any contract signed after 1/1/1999 : taxable
Any contract signed before 1/1/1999 : depending on the extension of loan contracts – See next Slide for details
Withholding method
TAXABLE TURNOVER FOR CIT (12/12)
Extended contracts that are not subject to FCT: If the extension does not change the interest rate, terms of
payment and the maximum time not exceeding operating cycle: For short-term loans: no more than 12 months For medium and long-terms: no more than ½ time of the old
loan If a new contract is signed, it must be more favorable than the old
contractExtended contracts that are subject to FCT:
If a new contract changes interest rate, payment terms, etc… If the extended contract exceeds the time frame
Withholding method
DEEMED CIT RATES (1/6)No Business Activities Deemed
Rates (%)1
2
3
4
5
6
7
8
9
Commerce: distribution, provision of goods attached with servicesServices, equipment leasing, insurance
Construction
Transportation, manufacturing, others
Lease of aircraft, aircraft engines, aircraft accessories
Re-insurance
Securities transfer
Interest income
Royalty income
1
5
2
2
2
2
0.1
10
10
Withholding Method
DEEMED CIT RATES (2/6)
The deemed CIT ratewill apply to a foreign contractor’s contract that includes many activities as follows:
A specific deemed CIT rate will apply to a specific activity if the value of each activity is clearly stated
The highest deemed CIT rate will apply to the total contract value if the value of each activity is not clearly stated (a lump-sum contract)
Withholding Method
DEEMED CIT RATES (3/6)
The deemed CIT ratewill apply to a contract that provide goods accompanied by services like installation, commissioning, warranty, maintenance, … as follows:
A specific deemed CIT rate will apply to a specific service and a specific deemed CIT rate will apply to goods, if the value of services is separated from the value of the goods
The highest deemed rate (2%) will apply to the total contract value if the value of services is not separated from the value of the goods (a lump-sum contract)
Withholding method
DEEMED CIT RATES (4/6)
Example
Foreign contractor F provides equipment accompanying with services to a Vietnamese party to build a cement plant in VN, at a total contract value of USD70 mil , of which USD50 mil is equipment, USD5 mil is design, USD10.5 milis construction, USD3 mil is supervision and USD1.5 milis training servicesDeemed CIT rates applied to this contract are as follows: 1%for equipment, 5% for design, 2% for construction, 5% for supervision, and 5% for trainingDeemed CIT rate of 2% will apply on the total contract value if the contract does not specify clearly
Hybrid method
CIRCULAR 197/2009/BTC-TT DATED 9/10/2009
Allows foreign contractors paying VAT on a self-assessment basis and CIT on a deemed basis
Effective 45 days after this Circular is gazetted
REQUIREMENTS
Foreign contractors must adopt the Vietnamese accounting system
Register to pay FCT under the hybrid method
Within 20 days from signing a contract, the Vietnamese party must notify the local tax office where the foreign contractor has registered in writing
Special method
JOINT OPERATING COMMITTEE
Where a joint operating committee(JOC) is set up by the parties in a business co-operation , the responsibility for paying FCT is regulated as follows:
The JOC will keep accounting books, open bank accounts, issue VAT invoices and pay taxes
Or the Vietnamese party will be responsible for keeping accounting book, sharing profits to each party, then either the JOC or the Vietnamese party will be liable for paying FCT on the total contract value
Special method
JOINT OPERATING COMMITTEE
Where the parties do not set up a joint operating committee(JOC), each party will accounts for its own work performed or its turnover shared, or products shared, then:
Each party will be responsible for determination of its taxable turnover
And each party will be responsible for registration, filing and paying its own taxes
Tax administration
Registration and tax code
Follow the Law on Tax Administration No. 78/2006and Circular 85/2007 dated 18 July 2007 of the Ministry of Finance
Tax filing, tax payment and tax withheld
Follow the Law on Tax Administration No. 78/2006and Circular 60/2007 dated 14 June 2007 of the Ministry of Finance
Handling of tax violations and tax complaints
Follow the Law on Tax Administration No. 78/2006and Circular 61/2007 dated 14 June 2007 of the Ministry of Finance and the Law on Complaints
Foreign Contractor Tax (FCT)
Law on VAT No 13/2008/QH12 dated 3 June 2008
Law on CIT No. 14/2008/QH12 dated 3 June 2008
Law on tax administration No. 78/2006/QH11 dated 29 November 2006
Circular 134/2008 dated 31 December 2008 of the Ministry of Finance
Circular 197/2009 dated 9 October 2009 of the Ministry of Finance