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How to calculate PIT for a foreigner who is not present in Vietnam but has income that was generated in Vietnam?

 

This is treated as expenses and his/her income shall be subject to FCT. Where a foreigner stays in Vietnam less than 183 days and the Vietnam-sourced income is not separately identified in his/her worldwide income, then the Vietnam-sourced income shall be computed as follows:

VWD

VSI

=

*

WI

+

OI

TWD

In which:

VSI         Total Vietnam sourced income

VWD      Number of working days in Vietnam

TWD       Number of days a year

WI           Gross world-wide income

OI            Other taxable income sourced in Vietnam

 
FOREIGN CONTRACTOR WITHHOLDING TAX (FCT)

 

FCWT is regulated under Circular 60/2012/TT-BTC of the MOF. FCT in is fact a term to imply total tax responsibility of foreign contractors in Vietnam, including VAT, CIT, PIT, special sales tax, import and export duties.

Who are considered as foreign contractors?

Foreign contractors are:

  • those practise independently or do business in Vietnam on the basis of a contract, agreement or commitment with a Vietnamese organisation or individual, or with another foreign organisation or individual doing business in Vietnam;
  • those that supply goods in Vietnam or supply goods accompanied by services provided in Vietnam; or
  • those that do business and have income (such as from royalties or technology transfer) in Vietnam but not present in Vietnam.

How is the tax withheld?

Foreign contractors pay VAT and CIT by way of withholding by the payer. The payer withholds in its payments to the contractor the amount owed to the tax authorities, and pay directly to the State.

 
How is VAT calculated?

 

VAT

=

Value added amount

*

VAT rate

Of which:

 

Value added amount

=

Taxable revenue

*

Value added ratio

 

VAT rate: see VAT section.

Value added ratio: is regulated as below:

Industry

Value added ratio (%)

1

Services (except for oil drilling service), insurance, leasing machinery equipments

50

2

Oil, gas drilling service

70

3

a) Construction and installation without supply of materials or equipments

30

Construction and installation with materials and/or equipments

50

4

Transportation, production and other services

30

 
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