| THE MINISTRY OF FINANCE ------------ No. 197/2009/TT-BTC | SOCIALIST REPUBLIC OF VIETNAM Independence- Freedom- Happiness -------------- Hanoi, October 9, 2009 |
CIRCULAR
Supplementing the Finance Ministry’s Circular No. 134/2008/TT-BTC dated December 31, 2008, guiding the performance of tax obligations of foreign organizations and individuals doing business or earning incomes in Vietnam
Pursuant to the Socialist Republic of Vietnams current laws and ordinances on taxes, fees and charges and the Government’s decrees detailing laws and ordinances on taxes fees and charges;
Pursuant to June 3, 2008 Law No. 13/2008/QH12 on Value-Added Tax and the Government’s Decree No. 123/2008/ND-CP dated December 8, 2008, detailing and guiding a number of articles of the Law on Value-Added Tax (VAT);
Pursuant to June 3, 2008 Law No. 14/2008/QH12 on Enterprise Income Tax and the Government’s Decree No. 124/2008/ND-CP dated December 11, 2008, detailing and guiding a number of articles of the Law on Enterprise Income Tax (EIT);
Pursuant to the Government’s Decree No. 118/2008/ND-CP dated November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;
The Ministry of Finance supplements Circular No. 134/2008/TT-BTC dated December 31, 2008, guiding the performance of tax obligations of foreign organizations and individuals doing business or earning incomes in Vietnam as follows:
Article 1.
To add Section IV to Part B of Circular No. 34/2008/TTBTC as follows:
"IV. VAT payment according to the credit method and EIT payment according to a percentage of taxable turnover
Foreign contractors and subcontractors that satisfy conditions (i) and (ii) prescribed at Point 1, Section II, Part B of the Finance Ministry’s Circular No. 134/2008/TT-BTC dated December 31, 2008 accounting under the accounting law and the Finance Ministry’s guidance shall register with tax offices for VAT payment according to the credit method under Point 2, Section II, Part B and EIT payment under Point 3, Section III, Part B of the Finance Ministry’s Circular No. 134/2008/TT-BTC dated December 31, 2008.
Within 20 working days after signing a contract, the Vietnamese party signing a contract with a foreign contractor or a foreign contractor signing a contract with a foreign sub-contractor shall notify in writing the tax office in the locality where the foreign contractor or sub-contractor makes tax payment registration of the foreign contractor’s or sub-contractor’s direct VAT registration and payment according to the credit method and EIT payment according to a percentage of taxable turnover.
Article 2.
To add to the first paragraph, Part C of Circular No. 134/2008/TT-BTC the following:
"In case a contract or subcontract was signed before the effective date of Circular No. 134/2008/TT-BTC, the determination of VAT and EIT obligations will still comply with the Finance Ministry’s Circular No. 05/2005/TT-BTC dated January 11, 2005, guiding tax regimes applicable to foreign organizations without Vietnamese legal entity status and foreign individuals doing business or earning incomes in Vietnam until that contract terminates, except the following cases:
- For goods and services supplied by foreign contractors or subcontractors which were not liable to VAT under VAT laws effective prior to January 1, 2009, but subject to VAT from January 1, 2009, turnover for VAT calculation for foreign contractors and sub-contractors will be determined under Circular No. 134/2008/TT-BTC.
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