Foreign Contractor Tax (FCT) is withheld on payments to foreign contractors. The VAT withheld by the contracting party is an allowable input credit in its VAT return. You will not continue to receive KPMG subscriptions until you accept the changes. 1600152300. where … For interest and royalties, please refer to Vietnam's Corporate summary. The content is current on 1 January 2020, with exceptions noted. Follow Viventium on our social … Registration for this event is now closed. 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). This FCT generally applies to payments derived from Vietnam, except for the pure supply of goods (i.e. Originally, implementation of the new e-commerce withholding tax regime in Vietnam was to be effective 1 July 2020. 126/2020/ND-CP guiding some provisions of the Law on Tax Administration (“Decree No. 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. Register for our upcoming webinars on how to prepare for federal tax withholding in 2020. 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. A Vietnam-based lessee is required to withhold tax from payments to an offshore lessor. 1:45 PM - 4 PM. Form C-S (Lite) - Simplified Tax Return for Companies With Revenue $200,000 or Below; Filing Estimated Chargeable Income (ECI) and … Please contact for general WWTS inquiries and website support. KPMG International and its member firms are legally distinct and separate entities. On 19 October 2020, the government issued Decree No. 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. If it is a finance lease, the interest portion will be exempt from VAT and subject to 5% CIT. A summary of VAT and CIT FCT rates for certain activities follows: The FCT applied to interest payments to an overseas lender is 5%. If accounting records are adequate, the foreign contractor will pay CIT on actual profits, but otherwise on a deemed-profit basis. 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. Keep up-to-date on significant tax developments around the globe with EY’s Global Tax Alert library. The content is straightforward. Companies. This FCT generally applies to payments derived from Vietnam, except for the pure supply of goods (i.e. In general, this Tax … It is understood that these new withholding tax rules will become an extension of Vietnam’s existing foreign contactor tax (FCT) rules and that a new circular is currently being drafted to provide administrative guidance. This withholding tax will apply to all designated business-to-consumer (B2C) and business-to-business (B2B) transactions. KPMG International provides no audit or other client services. 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.. A failure to implement effective withholding tax controls for transactions with and into Vietnam … 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. This is because of the fact that there are 3 methods for foreign companies to pay FCT in Vietnam. All rights reserved. [WEBINAR] The EVFTA and Logistics Industry: Domestic Value Added Tax (VAT) and withholding tax in Vietnam. Certain contracts for the transfer of technology must be registered with the competent authorities. Originally, implementation of the new e-commerce withholding tax regime in Vietnam was to be effective 1 July 2020. First tax year: 15 April 2018 to 14 April 2019: (126 + 57) = 183 days => resident Our privacy policy has been updated since the last time you logged in. Foreign contractors can pay FCT using a hybrid method. (i) There is no withholding tax … The amount of income tax your employer withholds from your regular pay depends on two things: The amount you earn. December 19, 2019 form 2-3 PM EDT . 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. The sale of bonds and certificates of deposits are subject to deemed tax of 0.1% of the gross sales proceeds. 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 … 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). To apply this method, the foreign contractors need to satisfy certain conditions. The first tax year is 12 consecutive months from the individual’s first arrival, and the second tax year is the subsequent calendar year. Please see www.pwc.com/structure for further details. Error! If you are on GIRO for withholding tax payment, the GIRO deduction date is on the 25th of the month the tax is due. For VAT, the FCT rate can also range from 2% to 5%. WHT applies to certain payments made to foreign organisations and individuals undertaking business or earning income sourced from Vietnam, regardless of the residency status. for the Year 2020… As described in our previous article on tax administration, the regulations allow tax authorities additional power … The standard CIT rate is 20%. However, individual investors are taxed differently depending upon the time and form of dividend payment governed by the Vietnamese Personal Income Tax (‘‘PIT’’) … This will apply to goods and digital services. Decree 126 took effect on December 5, 2020. 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. Monthly tax is calculated by dividing the yearly tax by 12, and daily tax by dividing the monthly tax by 30." Please take a moment to review these changes. Tuesday, September 15, 2020 (1:45 PM - 4 PM) Sep 15th . To apply this method, the foreign contractors need to satisfy certain conditions. The form and content of this tax registration process is unknown as at the end of April 2020. 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. Get the latest KPMG thought leadership directly to your individual personalized dashboard. All rights reserved. The supply of goods and/or services to the oil and gas industry is subject to the standard 10% VAT rate. Your message was not sent. The Vietnamese government is currently developing a new centralized IT platform to specifically deal with this withholding tax collection matter. An expatriate is tax resident in Vietnam if they spend 183 days or more in Vietnam in the tax year. 71. The Corporate Tax Rate in Vietnam stands at 20 percent. 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. 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. The obligation to collect the VAT will fall on banks and/or payment providers, including credit card issuers. 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. 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. 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. For direct (non-deduction-method) foreign contractors, VAT and CIT will be withheld by the contracting party at deemed rates. And one of the methods is Vietnamese parties paying FCT on behalf of foreign companies by withholding a part of the Vietnam … By continuing to browse this site you agree to the use of cookies. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The Law introduces a new mechanism to collect tax from cross-border e-commerce traders and digital platform-based service providers. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. Such services are provided solely by member firms in their respective geographic areas. Please try again. The information you give your employer on Form W–4. The development of various definitions will be key to the effective operation of these new withholding tax rules. Interest derived by certain government bodies is exempt from withholding tax (WHT). 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. 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. 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. Under certain circumstances, foreign contractor tax can be seen as withholding tax in Vietnam. 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). Add this event to any of these … Transfers of technology are defined very broadly. 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. Vietnam NIL 10 10 10 72. Each payment from VND2,000,000 to individual sale agents or individual service providers is subject to 10 percent withholding tax. 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. RELATED: Dezan Shira & … The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. 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. Certain goods or services may be VAT exempt or subject to 5% VAT. Dividends paid to a resident individual are subject to a 14% withholding tax (15.4% including the local surtax). 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. 126“), to be effective on 5 December 2020. 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