THE MINISTRY OF FINANCE
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No. 60/2012/TT-BTC
Hanoi, April 12, 2012
 
CIRCULAR
GUIDING THE EXECUTING OF TAX LIABILITY APPLICABLE TO FOREIGN ORGANIZATIONS, INDIVIDUALS DOING BUSINESS OR EARNING INCOMES IN VIETNAM
 
Pursuant to the Law on Value-added tax No. 13/2008/QH12 of June 03, 2008, the Government's Decree No. 123/2008/ND-CP of December 08, 2008 on detailing and guiding the implementation of a number of articles of the Law on Value-added tax; the Government's Decree No. 121/2011/ND-CP of December 27, 2011 on amending and supplementing a number of articles of the Government's Decree No. 123/2008/ND-CP of December 08, 2008 on detailing and guiding the implementation of a number of articles of the Law on Value-added tax;
Pursuant to the Law on Enterprise income tax No. 14/2008/QH12 of June 03, 2008; the Government's Decree No. 124/2008/ND-CP of December 11, 2008 on detailing and guiding the implementation of a number of articles of the Law on Enterprise income tax; the Government's Decree No. 122/2011/ND-CP of December 27, 2011 on amending and supplementing the Government's Decree No. 124/2008/ND-CP of December 11, 2008 on detailing and guiding the implementation of a number of articles of the Law on Enterprise income tax;
Pursuant to the Law on Tax administraten of 78/2006/QH11 of November 29, 2006;
Pursuant to the Government's Decree No. 118/2008/ND-CP of November 27, 2008 on defining the functions, tasks, powers and organizational structure of the Ministry of Finance;
At the proposal of the Director of the General Department of Taxation;
The Ministry of Finance promulgates the Circular on guiding  the executing of tax liability applicable to foreign organizations, individuals doing business or earning incomes in Vietnam as follows:
Chapter I
GENERAL PROVISION
Article 1. Subjects of application
This Circular is applicable to the following subjects (except for the subjects stated in Article 4 Chapter I of this Circular);
1. Foreign business organizations having or not having Vietnam-based permanent establishments; foreign business individuals being resident or non-resident objects in Vietnam (hereinafter referred to as foreign contractors, foreign sub-contractors) that do business in Vietnam or earn incomes in Vietnam on the basis of contracts, agreements or commitments between foreign contractors and Vietnamese organizations, individuals, or between foreign contractors and foreign sub-contractors to perform a part of the Contractor agreement.
2. Foreign organizations and individuals supplying goods in Vietnam by on-spot export/import and earning incomes in Vietnam on the basis of the contracts signed between foreign organizations, individuals and enterprises in Vietnam (except for the case of processing and re-exporting goods to foreign organizations, individuals), or providing goods under the DDP, DAT, DAP delivery conditions (incoterms)
Example 1:
- Case 1: The overseas enterprise X overseas signs the contract to purchase cloth from the Vietnamese enterprise A and request the Vietnamese enterprise A to deliver to the Vietnamese enterprise B (by on-spot export and import as prescribed by law). The enterprise X earns incomes in Vietnam on the basis on the contract signed between the enterprise X and the enterprise B (the enterprise X sells cloths to the enterprise B).
In this case, the enterprise X is the subject of application as prescribed in this Circular. The enterprise B is responsible to declare, deduct and pay tax on behalf of the enterprise X as prescribed in this Circular.
- Case 2: The overseas enterprise Y signs the contract for cloth processing with the Vietnamese enterprise C and request the enterprise C to deliver to the Vietnamese enterprise D to continue producing (by on-spot export and import as prescribed by law). The enterprise Y earns income in Vietnam on the basis of the contract signed between the enterprise Y and the enterprise D (the enterprise Y sells goods to the enterprise D).