Foreign Contractor Tax (FCT) in Vietnam
Hi DMS Law office in Vietnam! A foreign company (company A) has signed a general EPC contract with another foreign company (company B). Company B is the investor of a BOT project (Build-Operate-Transfer project) in Vietnam, the foreign company B shall pay the foreign company A by TTR method (Telegraphic Transfer Reimbursement) and L/C (Letter of Credit) from the bank in the country where the foreign company B is located, for works in the general EPC contract implemented by company A. Invoice for goods issued by company A shall be sent to company B’s the bank. Goods shall be delivered by company A to company B at the BOT project’s site in Vietnam. In this case, is the foreign company A required to pay foreign contractor tax (FCT) in Vietnam ?
Hi!
Foreign Contractor Tax (FCT) obligation in Vietnam:
Foreign entities providing goods in Vietnam in the form of domestic export and earn income in Vietnam under contracts between them and Vietnamese companies (except for cases in which goods are processed and then returned to foreign entities) or distribute goods in Vietnam or provide goods under Incoterms rules that require the sellers to be responsible for goods that have been taken into Vietnam’s territory (Clause 2 Article 1 Circular No. 103/2014/TT-BTC dated August 6, 2014).
Therefore, in case the foreign company A distributes goods in Vietnam or provides goods under Incoterms rules that require the sellers to be responsible for goods that have been taken into Vietnam’s territory, company A shall subject to Foreign Contractor Tax (FCT) in Vietnam.
In case the foreign company B implements BOT projects in Vietnam, in the form of setting up a company in Vietnam (the Vietnamese company) in accordance with the Law on Investment, such Vietnamese company signs contract to import machinery, equipment with the foreign company B or other foreign company (company A) in which goods are delivered at Vietnam’s border checkpoint without ancillary services in Vietnam, then the foreign company B or the foreign company A shall not subject to foreign contractor tax (FCT) in Vietnam (Clauses 1, 2 Article 2 Circular No. 103/2014/TT-BTC dated August 6, 2014).
Related topics:
Corporate Income Tax (CIT) rates in Vietnam.
Responsibility to submit VAT declaration in Vietnam
Conditions for input VAT deduction
Consulting services:
Phone: 0914 165 703 or email: dmslawfirm@gmail.com
Foreign Contractor Tax (FCT) in Vietnam
Prepared by: Thi-Ha Nguyen, ACCA | DMS Law firm in Vietnam Director (Signed) Lawyer Do Minh Son |
RELATING ITEMS
Fiscal and monetary policies to support enterprises in year 2022
08 Feb, 2022// Group: LAW ON ACCOUNTING AND TAXESLaw office in Danang advise about fiscal and monetary policies to support enterprises in year 2022
Allocation of Personal Income Tax on income from salaries and wages
25 Nov, 2021// Group: LAW ON ACCOUNTING AND TAXESLaw firm in Danang advise on personal Income Tax (PIT) on income from salaries and wages in Vietnam
Allocate Value-Added Tax payable to provinces where the production facility is located
25 Nov, 2021// Group: LAW ON ACCOUNTING AND TAXESLaw firm in Danang advise on VAT payable to provinces where the production facility is located
Withholding tax on goods and services purchased from overseas suppliers
25 Nov, 2021// Group: LAW ON ACCOUNTING AND TAXESLaw firm in Danang, Vietnam advise about tax management for e-commerce, digital-based business
Chief Accountant is a statutory position of companies in Vietnam
19 Jul, 2021// Group: LAW ON ACCOUNTING AND TAXESLawyers in Danang advise about Chief Accountant or to hire an outsourced Chief Accountant ?