Question
Answer
Tax obligation of foreign contractors in Vietnam ?
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)./.
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RELATING ITEMS
Law on Construction in Vietnam
Law on Construction in Vietnam No. 50/2014/QH13 dated June 18, 2014 took effect on January 01, 2015 (replaced the Law on Construction No. 16/2003/QH11 dated November 26, 2003, Law No. 38/2009/QH12 dated November 13, 2009).