According to the regulations at Article 8 of Circular No. 103/2014/TT-BTC, a foreign contractor that meets the following requirements may pay value added tax (VAT) using the credit-invoice method, pay enterprise income tax (EIT) according to declaration but the foreign contractor must directly declare and pay the taxes:
(1) Having a permanent establishment or being a resident in Vietnam;
(2) The business duration in Vietnam under a contractor or subcontractor contract is 183 days or more;
(3) Applying the Vietnamese accounting principles; carrying out tax registration and obtaining the tax code.
In case the foreign contractor fails to meet the aforesaid requirements, the Vietnamese party shall be responsible for withholding, paying tax on behalf of the foreign contractor according to the fixed rates.
|Published||Vietlaw's Newsletter No. 568|