where … Interest earned from bonds (except for tax-exempt bonds) and certificates of deposit are subject to 5% withholding tax. 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 … The content is current on 1 January 2020, with exceptions noted. 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. 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. 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. 126“), to be effective on 5 December 2020. For direct (non-deduction-method) foreign contractors, VAT and CIT will be withheld by the contracting party at deemed rates. If accounting records are adequate, the foreign contractor will pay CIT on actual profits, but otherwise on a deemed-profit basis. 8 Doing business in Vietnam 2020. 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. 0%, 5% and 10%) generally apply in the early years of the tax … The information you give your employer on Form W–4. 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). A failure to implement effective withholding tax controls for transactions with and into Vietnam … This page provides - Vietnam Corporate Tax Rate - actual values, historical data, forecast, chart, … This FCT generally applies to payments derived from Vietnam, except for the pure supply of goods (i.e. For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance. 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. Other royalties may attract VAT. VAT will not be payable where goods are exempt from VAT or where import VAT is paid upon importation. Dividends paid to a nonresident company or individual are subject to a 20% withholding tax (22% including the local surtax). 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 … December 19, 2019 form 2-3 PM EDT . 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. Foreign contractors can apply to be deduction-method VAT payers if they adopt the Vietnamese accounting system. Computer software licences, transfer of technology, and transfer of intellectual property (IP) rights (including copyrights and industrial properties) are VAT exempt. The Corporate Tax Rate in Vietnam stands at 20 percent. and treatment of withholding income tax, taking into account the amendments vide the Finance Act, 2019 (the Act). 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). 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 … 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. The sale of bonds and certificates of deposits are subject to deemed tax of 0.1% of the gross sales proceeds. 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. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. 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. And one of the methods is Vietnamese parties paying FCT on behalf of foreign companies by withholding a part of the Vietnam … PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. 5% VAT and 5% CIT is applicable to the rental charge if it is an operating lease. Register for our upcoming webinars on how to prepare for federal tax withholding in 2020. Visit our. 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. The obligation to collect the VAT will fall on banks and/or payment providers, including credit card issuers. KPMG International provides no audit or other client services. Originally, implementation of the new e-commerce withholding tax regime in Vietnam was to be effective 1 July 2020. 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 … Dividends paid to a resident individual are subject to a 14% withholding tax (15.4% including the local surtax). You will not continue to receive KPMG subscriptions until you accept the changes. An expatriate is tax resident in Vietnam if they spend 183 days or more in Vietnam in the tax year. 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. Vietnam NIL 10 10 10 72. A Vietnam-based lessee is required to withhold tax from payments to an offshore lessor. © 2017 - 2021 PwC. 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.. Since the last time you logged in our privacy statement has been updated. 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. The first tax year is 12 consecutive months from the individual’s first arrival, and the second tax year is the subsequent calendar year. © 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. If it is a finance lease, the interest portion will be exempt from VAT and subject to 5% CIT. This withholding tax will apply to all designated business-to-consumer (B2C) and business-to-business (B2B) transactions. 2020. Sales of bonds and certificates of deposit are subject to deemed tax rate of 0.1% of the gross sale proceeds. First tax year: 15 April 2018 to 14 April 2019: (126 + 57) = 183 days => resident However, individual investors are taxed differently depending upon the time and form of dividend payment governed by the Vietnamese Personal Income Tax (‘‘PIT’’) … Enterprises (generally companies) are subject to the tax rates imposed under the CIT Law. This FCT generally applies to payments derived from Vietnam, except for the pure supply of goods (i.e. For VAT, the FCT rate can also range from 2% to 5%. For interest and royalties, please refer to Vietnam's Corporate summary. We want to make sure you're kept up to date. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. 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. In general, this Tax … certain repairs, training, advertising, promotion). The above FCT rates may be affected by a relevant DTA. The content is straightforward. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. The application of tax treaties to the withholding process also remains unclear. Your message was not sent. 1600152300. Please note that your account has not been verified - unverified account will be deleted 48 hours after initial registration. Zambia (Last reviewed 20 August 2020) Given the involvement of financial intermediaries in the tax collection and reporting process, the existing FCT rules will require significant modification. 71. Certain goods or services may be VAT exempt or subject to 5% VAT. 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. 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. If you are on GIRO for withholding tax payment, the GIRO deduction date is on the 25th of the month the tax is due. The form and content of this tax registration process is unknown as at the end of April 2020. Vietnam: Taxation of e-commerce, withholding rules. All rights reserved. For more information, contact a KPMG tax professional in Vietnam: The KPMG logo and name are trademarks of KPMG International. Royalties, licence fees, etc. (i) There is no withholding tax … To apply this method, the foreign contractors need to satisfy certain conditions. 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