Tổng quan Thuế nhà thầu nước ngoài – Foreign Contractor Tax FCT

Hướng dẫn tại Thông tư này áp dụng đối với các đối tượng sau (trừ trường hợp nêu tại Điều 2 Chương I): 1. Tổ chức nước ngoài kinh doanh có cơ sở thường trú tại Việt Nam hoặc không có cơ sở thường trú tại Việt Nam; cá nhân nước ngoài kinh doanh là đối tượng cư trú tại Việt Nam hoặc không là đối tượng cư trú tại Việt Nam (sau đây gọi chung là Nhà thầu nước ngoài, Nhà thầu phụ nước ngoài) kinh doanh tại Việt Nam hoặc có thu nhập phát sinh tại Việt Nam trên cơ sở hợp đồng, thỏa thuận, hoặc cam kết giữa Nhà thầu nước ngoài với tổ chức, cá nhân Việt Nam hoặc giữa Nhà thầu nước ngoài với Nhà thầu phụ nước ngoài để thực hiện một phần công việc của Hợp đồng nhà thầu

Originating from the fact that many FDI enterprises have to collect foreign contractor tax (FCT) through inspection and examination due to not being aware of this obligation. We wrote this newsletter hoping it will be useful for you in preventing tax compliance risks in Vietnam.

1/ Why is there foreign contractor tax?

To understand it in the simplest way, if a transaction involves a foreign contractor selling goods into Vietnamese territory, the Vietnamese Government will collect tax at the import stage through Customs declaration, then the foreign contractor will selling services into Vietnamese territory, there is no such declaration process. Therefore, the state established a mechanism to collect taxes on services sold into Vietnam, which is contractor tax.

2/ Signs to identify transactions that generate contractor tax

Derived from the general provisions right in Article 1. Subjects of application of Circular 103/2014/TT-BTC, the general characteristics of transactions generating contractor tax can be identified when the enterprise has

• > Transactions to purchase goods and services with foreign parties
• > Payment to foreign parties in any form (Transfer, Clearing…)

The guidance in this Circular applies to the following subjects (except for the cases stated in Article 2 Chapter I): 1. Foreign business organizations with permanent establishments in Vietnam or without permanent establishments in Vietnam Vietnam; Foreign individuals doing business who are residents of Vietnam or not residents of Vietnam (hereinafter collectively referred to as Foreign Contractors, Foreign Subcontractors) doing business in Vietnam or having income arising in Vietnam on the basis of contracts, agreements, or commitments between foreign contractors and Vietnamese organizations and individuals or between foreign contractors and foreign subcontractors to perform part of the work of Contractor contract

3/ When does the Vietnamese side deduct and pay tax instead?

When contractor tax arises, not in all cases does the Vietnamese party deduct and pay tax instead. The general diagram can be described as follow. Thus, only in cases where the contractor does not declare tax directly will the Vietnamese party deduct and pay tax instead. The majority of current cases fall into this group, then the following conditions need to be considered:

Basically, the deadline for submitting the declaration and paying FCT tax is 10 days from the date of payment to the foreign Contractor.

4/ Calculate the tax amount payable

When having to deduct and pay tax on behalf of the Vietnamese party, the Vietnamese party can understand how the tax calculation is determined as follows:

Contractor tax (VAT, CIT) = (1) Taxable revenue x (2) Tax rate

> Regarding determining revenue for calculating contractor tax: Determine 01 of the following 3 cases (Determine NET, Gross and how to convert)

Note that there are many different views on the conversion rate to calculate contractor tax, but the safest option is to apply the selling rate of the commercial bank where the payment is transferred.

> Regarding contractor tax rate: According to Circular 103/2014/TT-BTC, the tax rate is as follows:

5/ Illustrate how to declare foreign contractor tax