WHT applies to certain payments made to foreign organisations and individuals undertaking business or earning income sourced from Vietnam, regardless of the residency status. Add this event to any of these … This will apply to goods and digital services. The VAT withheld by the contracting party is an allowable input credit in its VAT return. December 19, 2019 form 2-3 PM EDT . For more information, contact a KPMG tax professional in Vietnam: The KPMG logo and name are trademarks of KPMG International. This site uses cookies to collect information about your browsing activities in order to provide you with more relevant content and promotional materials, and help us understand your interests and enhance the site. According to all these statements, employers calculate monthly income taxes on wage incomes per the tariff of the relevant year and declare it to the Tax Office via the monthly Withholding and Premium Service … All rights reserved. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. We want to ensure that you are kept up to date with any changes and as such would ask that you take a moment to review the changes. Further to the clarification on tax obligations of foreign organisations and individuals operating e-commerce and digital based business activities that generate income from Vietnam in the Law on Tax Administration 38/2019/QH14, and the Decree 126/2020/ND-CP, this new circular delineates a guideline in regard to tax … Effective withholding tax management encompasses not only tax filing and compliance requirements but also controls on the correct rate of withholding, maintenance of comprehensive supporting documentation and procedures to ensure tax treaty claims and credits are claimed in full. Add to Calendar Add to Calendar. However, individual (personal) ownership of a Vietnamese company will result in a 5% withholding tax (for Personal Income Tax) being applicable and which is generally the responsibility of the Vietnamese company to … No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. U.S. Witholding Tax Rates on Ordinary As of Jan. 1, 2020 REIT Dividends to Non-U.S. Investors The form and content of this tax registration process is unknown as at the end of April 2020. To learn more about Viventium’s seamless solutions for 2020 withholding and other legislative and regulatory developments, request a demo here. However, individual investors are taxed differently depending upon the time and form of dividend payment governed by the Vietnamese Personal Income Tax (‘‘PIT’’) … Vietnam is to extend VAT to non-resident e-commerce sales to consumers from 1 July 2020. 0%, 5% and 10%) generally apply in the early years of the tax … Computer software licences, transfer of technology, and transfer of intellectual property (IP) rights (including copyrights and industrial properties) are VAT exempt. Interest earned from bonds (except for tax-exempt bonds) and certificates of deposit are subject to 5% FCT. For direct (non-deduction-method) foreign contractors, VAT and CIT will be withheld by the contracting party at deemed rates. Corporate Tax Rate in Vietnam averaged 26.77 percent from 1997 until 2020, reaching an all time high of 35 percent in 1998 and a record low of 20 percent in 2016. Vietnam introduced Decree 126/2020/ND-CP (Decree 126) guiding the implementation of the Law on Tax Administration 2019, which took effect in July 2020. Certain goods or services may be VAT exempt or subject to 5% VAT. The Corporate Tax Rate in Vietnam stands at 20 percent. Tuesday, September 15, 2020 (1:45 PM - 4 PM) Sep 15th . Zambia (Last reviewed 20 August 2020) The first tax year is 12 consecutive months from the individual’s first arrival, and the second tax year is the subsequent calendar year. The Withholding of Creditable Tax at Source or simply called Expanded Withholding Tax is a tax imposed and prescribed on the items of income payable to natural or juridical persons, residing in the Philippines, by a payor-corporation/person which shall be credited against the income tax liability of the taxpayer for the … Foreign contractors can pay FCT using a hybrid method. This FCT generally applies to payments derived from Vietnam, except for the pure supply of goods (i.e. for the Year 2020… Other royalties may attract VAT. You will not continue to receive KPMG subscriptions until you accept the changes. To apply this method, the foreign contractors need to satisfy certain conditions. Visit our. 126/2020/ND-CP guiding some provisions of the Law on Tax Administration (“Decree No. Vietnam Tax Incentives – Preferential tax rates of 10% and 20% for 15 and 10 years, respectively, are available for taxpayers engaged in encouraged investment projects or in socioeconomically disadvantaged locations as stipulated by the government. Offshore loans provided by certain government or semi-governmental institutions may obtain an exemption from the interest FCT where a relevant double tax agreement (DTA) or inter-government agreement (IGA) applies. By submitting your email address, you acknowledge that you have read the Privacy Statement and that you consent to our processing data in accordance with the Privacy Statement. Please contact for general WWTS inquiries and website support. On July 7, 2015, the U.S. and Vietnam signed a new tax treaty and protocol that generally would implement the same withholding rates as described in footnote 3 (not yet in effect). It is understood that the General Department of Taxation is currently working on the development of a new circular to be released in June 2020. Interest on pre-1999 loans may be exempt from FCT. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. The 14th National Assembly of Vietnam (term 2016-2021) has 489 Assembly, which is the highest-level representative body of Vietnamese people, has the power to exercise constitutional and legislative rights and to decide on critical issues of the country. Companies. Originally, implementation of the new e-commerce withholding tax regime in Vietnam was to be effective 1 July 2020. Keep up-to-date on significant tax developments around the globe with EY’s Global Tax Alert library. Originally, implementation of the new e-commerce withholding tax regime in Vietnam was to be effective 1 July 2020. This effective date has been postponed for six months, and will be effective 1 January 2021 (even though the mandated effective date in the law is 1 July 2020). © 2017 - 2021 PwC. Investing in Vietnam, … Zimbabwe NIL 10 10 10 (*) Withholding tax rate of 10% is only applicable for interest payment paid or incurred by an enterprise in an industrial undertaking. In case they provide a commitment indicating they have income less than the personal and dependent relief; no withholding tax is required. Enterprises (generally companies) are subject to the tax rates imposed under the CIT Law. Vietnam NIL 10 10 10 72. Interest earned from bonds (except for tax-exempt bonds) and certificates of deposit are subject to 5% withholding tax. You will not receive KPMG subscription messages until you agree to the new policy. The Law introduces a new mechanism to collect tax from cross-border e-commerce traders and digital platform-based service providers. GMT+7. This effective date has been postponed for six months, and will be effective 1 January 2021 (even though the mandated effective date in the law is 1 July 2020). The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Navigate the tax, legal, and economic measures in response to COVID-19. By continuing to browse this site you agree to the use of cookies. Royalties, licence fees, etc. It is understood that these new withholding tax rules will become an extension of Vietnamâs existing foreign contactor tax (FCT) rules and that a new circular is currently being drafted to provide administrative guidance. KPMG International provides no audit or other client services. The withholding tax rates to be applied to the subject transactions are. FCT on payments to foreign contractors applies where a Vietnamese contracting party (including a foreign-invested enterprise incorporated in Vietnam) contracts with a foreign party that does not have a licensed presence in Vietnam, irrespective of whether the services are provided in Vietnam or overseas. Monthly tax is calculated by dividing the yearly tax by 12, and daily tax by dividing the monthly tax by 30." Our privacy policy has been updated since the last time you logged in. For help with your withholding, you may use the Tax Withholding Estimator. DITS includes current rates for corporate income tax; domestic withholding tax; withholding tax on dividends, interest and royalties under tax treaties; value added tax/goods and services tax/sales tax … This FCT generally applies to payments derived from Vietnam, except for the pure supply of goods (i.e. The Deloitte International Tax Source (DITS) is an online database featuring tax rates and information for 66 jurisdictions worldwide and country tax highlights for more than 130 jurisdictions. EXTERNAL CIRCULAR: WITHHOLDING TAX SEASON 2020 29 June 2020 To Our Valued Client Taxpayer, OBJECTIVE: FILING OF ITW10 and ITW10O RETURNS You are reminded that the WHT season is upon us and the following returns are due for filing on or before 31 July 2020. Foreign contractors can apply to be deduction-method VAT payers if they adopt the Vietnamese accounting system. Register for our upcoming webinars on how to prepare for federal tax withholding in 2020. This page provides - Vietnam Corporate Tax Rate - actual values, historical data, forecast, chart, … 1:45 PM - 4 PM. Sales of bonds and certificates of deposit are subject to deemed tax rate of 0.1% of the gross sale proceeds. A failure to implement effective withholding tax controls for transactions with and into Vietnam … For interest and royalties, please refer to Vietnam's Corporate summary. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006. The Vietnamese government is currently developing a new centralized IT platform to specifically deal with this withholding tax collection matter. Furthermore, e-commerce businesses will need to understand how to claim tax refunds when no underling primary tax liability arises or when there is an over collection of taxes through the withholding process. Since the last time you logged in our privacy statement has been updated. Decree 126 took effect on December 5, 2020. Error! FCT applies on management fees and head office charges/services at the rates applicable to services (see above). Interest derived by certain government bodies is exempt from withholding tax (WHT). In general, this Tax … 71. Financial institutions will remain responsible for collecting the withholding tax on the subject transactions (how they are to do this remains unclear). [WEBINAR] The EVFTA and Logistics Industry: Domestic Value Added Tax (VAT) and withholding tax in Vietnam. The standard CIT rate is 20%. We want to make sure you're kept up to date. A summary of VAT and CIT FCT rates for certain activities follows: The FCT applied to interest payments to an overseas lender is 5%. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Find out how KPMG's expertise can help you and your company. International transportation is subject to 0% VAT. The hybrid method allows foreign contractors to register for VAT and accordingly pay VAT based on the deduction method but with CIT being paid under the direct method rates on gross turnover. Recognizing that the sale or supply of goods and services to individuals via an e-commerce business model may have historically fallen outside the scope of the Vietnamese income tax system, the new withholding tax rules are intended to address this gap. Click anywhere on the bar, to resend verification email. Chapter by chapter, from Albania to Zimbabwe, we summarize corporate tax systems in more than 160 jurisdictions. Such services are provided solely by member firms in their respective geographic areas. If you are on GIRO for withholding tax payment, the GIRO deduction date is on the 25th of the month the tax is due. If it is a finance lease, the interest portion will be exempt from VAT and subject to 5% CIT. Get the latest KPMG thought leadership directly to your individual personalized dashboard. And one of the methods is Vietnamese parties paying FCT on behalf of foreign companies by withholding a part of the Vietnam … It is worth noting that dividends paid to corporate investors are exempted from tax in Vietnam regardless of whether they are foreign or domestic corporate entities. The information summarized herein is general and based on our interpretation of the Income Tax Ordinance, 2001 and significant amendments thereto vide the Act effective from July 01, 2019becoming Tax – i.e. FCT on payments to foreign contractors applies where a Vietnamese contracting party (including a foreign-invested enterprise incorporated in Vietnam) contracts with a foreign party that does not have a licensed presence in Vietnam, irrespective of whether the services are provided in Vietnam or overseas. Details on how financial intermediaries will identify transactions subject to these new rules are pending. Dividends paid to a nonresident company or individual are subject to a 20% withholding tax (22% including the local surtax). For VAT, the FCT rate can also range from 2% to 5%. The development of various definitions will be key to the effective operation of these new withholding tax rules. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. The obligation to collect the VAT will fall on banks and/or payment providers, including credit card issuers. Companies operating in the oil and gas industry are subject to CIT rates ranging from 32% to 50% depending on the location and specific project conditions. Each payment from VND2,000,000 to individual sale agents or individual service providers is subject to 10 percent withholding tax. As a payer, you are required to e-file and pay the withholding tax to IRAS by the 15th of the second month from the date of payment to the non-resident.. where … A Vietnam-based lessee is required to withhold tax from payments to an offshore lessor. A 10% royalty FCT applies in the case of payments made to a foreign party for transfers of technology or software licence. 5% VAT and 5% CIT is applicable to the rental charge if it is an operating lease. New withholding tax rules applicable to non-resident enterprises selling goods and services into Vietnam via digital and e-commerce supply chains are effective in Vietnam beginning 1 January 2021. RELATED: Dezan Shira & … (i) There is no withholding tax … The content is current on 1 January 2020, with exceptions noted. An expatriate is tax resident in Vietnam if they spend 183 days or more in Vietnam in the tax year. Certain contracts for the transfer of technology must be registered with the competent authorities. Under certain circumstances, foreign contractor tax can be seen as withholding tax in Vietnam. 1600152300. certain repairs, training, advertising, promotion). Specifically, payments made to ânon-resident e-commerce businessesâ (a term not yet defined) will be subject to a new withholding tax, to be collected by financial intermediaries such as banks. The content is straightforward. The amount of income tax your employer withholds from your regular pay depends on two things: The amount you earn. The foreign contractor withholding tax (FCWT) will be applicable for payments received from Vietnam for services in the country not including the pure supply of goods, services performed and consumed outside Vietnam and other services performed wholly outside the country. For CIT, the FCT rate varies from 0.1% to 10%. Enforcement for Compliance (Other than for withholding tax on non-resident public entertainers and resident individuals) The following constitutes non-compliance: The payer fails to pay withholding tax at the prescribed rate (whether deducted or not). Financial institutions will need to update their customer terms and conditions to accommodate this new law (and specifically regarding the obligation to withhold amounts from payment under instructions received from account holders). Vietnam: Taxation of e-commerce, withholding rules. Please note that your account has not been verified - unverified account will be deleted 48 hours after initial registration. Form C-S (Lite) - Simplified Tax Return for Companies With Revenue $200,000 or Below; Filing Estimated Chargeable Income (ECI) and … In addition, certain distribution arrangements where foreign entities are directly or indirectly involved in the distribution of goods or provision of services in Vietnam are subject to FCT (e.g. The Income Tax Department appeals to taxpayers NOT to respond to such e-mails and NOT to share information relating to their credit card, bank and other … The application of tax treaties to the withholding process also remains unclear. Dividends paid to a resident individual are subject to a 14% withholding tax (15.4% including the local surtax). Foreign contractors can pay FCT using a hybrid method. WHT rates are nil for dividends. This is because of the fact that there are 3 methods for foreign companies to pay FCT in Vietnam. It is not yet known whether these new rules will have much broader application than originally intended. Please see www.pwc.com/structure for further details. 2020. Supply of goods in Vietnam or associated with services rendered in Vietnam (including in-country import-export and imports, distribution of goods in Vietnam or delivery of goods under Incoterms where the seller bears risk relating to goods in Vietnam), Restaurant, hotel, and casino management services, Construction, installation without supply of materials, machinery, or equipment, Construction, installation with supply of materials, machinery, or equipment. For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance. KPMG International and its member firms are legally distinct and separate entities. 126“), to be effective on 5 December 2020. where the responsibility, cost, and risk relating to the goods passes at or before the border gate of Vietnam and there are no associated services performed in Vietnam), services performed and consumed outside Vietnam, and various other services performed wholly outside Vietnam (e.g. Registration for this event is now closed. The supply of goods and/or services to the oil and gas industry is subject to the standard 10% VAT rate. Please take a moment to review these changes. To apply this method, the foreign contractors need to satisfy certain conditions. Recently, the MoF has consistently sought to impose a 5% VAT on the payments for the right to use a trademark. © 2021 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. of Vietnam. Given the involvement of financial intermediaries in the tax collection and reporting process, the existing FCT rules will require significant modification. First tax year: 15 April 2018 to 14 April 2019: (126 + 57) = 183 days => resident On 19 October 2020, the government issued Decree No. You can use the Tax Withholding Estimator to estimate your 2020 income tax. If accounting records are adequate, the foreign contractor will pay CIT on actual profits, but otherwise on a deemed-profit basis. In most cases, the limits set by the DTA are higher than the present withholding rates under domestic law; consequently, the domestic rates will apply. Various rates are specified according to the nature of the contract performed. The information you give your employer on Form W–4. The sale of bonds and certificates of deposits are subject to deemed tax of 0.1% of the gross sales proceeds. Your message was not sent. 8 Doing business in Vietnam 2020. Worldwide VAT, GST and Sales Tax Guide 19 May 2020 (pdf) Download 4 MB As a result, there is increased risk that taxpayers will be caught unprepared, making a current, detailed guide like the Worldwide VAT, GST and Sales Tax … The new rules also call for tax registrations to be undertaken by non-resident e-commerce businesses (or they must appoint someone to act on their behalf). The above FCT rates may be affected by a relevant DTA. Foreign Contractor Tax (FCT) is withheld on payments to foreign contractors. and treatment of withholding income tax, taking into account the amendments vide the Finance Act, 2019 (the Act). Transfers of technology are defined very broadly. As described in our previous article on tax administration, the regulations allow tax authorities additional power … Follow Viventium on our social … This withholding tax will apply to all designated business-to-consumer (B2C) and business-to-business (B2B) transactions. Vietnam’s National Assembly approved, in June 2019, a new Law on Tax Administration 38/2019/QH14 (the Law) which became effective on 1 July 2020. VAT will not be payable where goods are exempt from VAT or where import VAT is paid upon importation. where the foreign entity retains ownership of the goods; bears distribution, advertising, or marketing costs; is responsible for the quality of goods or services; makes pricing decisions; or authorises/hires other Vietnamese entities to carry out part of the distribution of goods/provision of services in Vietnam). Circular 105 takes effect from 17 January 2021 and replaces Circular … All rights reserved. Tax Alert December 2020 Circular 105 on tax registration On 3 December 2020, the Ministry of Finance issued Circular 105/2020/TT-BTC (“Circular 105”) providing guidance on the tax registration in accordance with the Law on Tax Administration 2019. While the tax collection burden has been imposed on financial intermediaries (that will be required to report and collect taxes from nominated transactions), it is not known what rates of withholding tax will be applied, or how these taxes will be determined at this time. Please try again. Withholding Tax Unit 7th Floor, Block 8 Government Office Complex. For example, while these changes appear targeted at the digital economy, there is a risk that they could also apply to digital transactions undertaken by anyone including related-party transactions. The Income Tax Department NEVER asks for your PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts through e-mail.. The hybrid method allows foreign contractors to register for VAT and accordingly pay VAT based on the deduction method but with CIT being paid under the direct method rates on gross turnover. 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