On August 06, 2014, the Ministry of Finance issued the Circular No. 103/2014/TT-BTC guiding the fulfillment of tax liability of foreign entities doing business in Vietnam or earning income in Vietnam, regulates that the contractor/subcontractor has a permanent establishment in Vietnam or the contractor/subcontractor is a resident of Vietnam;
The period of business operation on Vietnam under the main contract or subcontract is 183 days or longer from the effective date of the contract and the contractor/subcontractor applies Vietnam’s accounting practice, has applied for tax registration and issued with a taxpayer ID number (TIN) by a tax authority shall be incurred tax (including VAT and enterprise income tax) in accordance with legal regulations.
In particular, from October 01, 2014, revenue subject to VAT is total revenue from provision of services and services attached to goods subject to VAT received by the foreign contractor or foreign sub-contractor inclusive of subtracting taxes payable and any costs (if any) paid by the Vietnamese party instead of the foreign contractor or foreign sub-contractor.
Also from October 01, 2014, income from transfer of the right to ownership or the right to enjoyment of property, transfer of the right to participate in business contracts/projects in Vietnam, transfer of right to property in Vietnam shall incur the enterprise income tax.
This Circular takes effect on October 01, 2014 and supersedes Circular No. 60/2012/TT-BTC dated April 12, 2012.
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