THE GENERAL DEPARTMENT OF TAXATION
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SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom – Happiness
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No. 2470/TCT-CC
Re: Guiding tax policy for foreign contractors
Hanoi, July 12, 2012
 
To: Vietnam Le Long Limited Liability Company
The General Department of Taxation has received the Official Letter No. LLVN20120502, of May 18, 2012 of Vietnam Le Long Limited Liability Company on requesting for guidance of tax policy for foreign contractor doing business in Vietnam under form of on-spot export and import. Regarding this problem, the General Department of Taxation responds as follows:
1. The tax liability of foreign contractor - Thye Ming Industrial Co., Ltd (the foreign contractor):
- Point 1, section I, part A of the Circular No. 134/2008/TT-BTC, of December 31, 2008 of the Ministry of Finance providing on applicable subjects of tax liability for foreign contractor as follows: “… This Circular applies to … Foreign businesses with or without Vietnam-based permanent establishments; and resident or non-resident foreign businessmen doing business in Vietnam or earning incomes in Vietnam under contracts, agreements or commitments between them and Vietnamese organizations and individuals (below collectively referred to as foreign contractors)”.
- Point 2, section II, part A of the Circular No. 134/2008/TT-BTC, of December 31, 2008 of the Ministry of Finance providing on non-applicable subjects of tax liability for foreign contractor as follows: “Guides in this Circular shall not applicable to: …2. Foreign organizations and individuals supplying goods for Vietnamese organizations and individuals without accompanying services in Vietnam in the following forms:
- Goods delivery at foreign border gates:  Sellers are liable for all obligations, expenses and risks related to the export and delivery of goods at foreign border gates; buyers are liable for all obligations, expenses and risks related to the receipt and transportation of goods from foreign border gates to Vietnam.
- Goods delivery at Vietnamese border gates:  Sellers are liable for all obligations, expenses and risks related to the transportation of goods to places of delivery at Vietnamese border gates; buyers are liable for all obligations, expenses and risks related to the receipt and transportation of goods from Vietnamese border gates…”
The foreign contractor sells goods for the Vietnam Le Long Co., Ltd under the form of appointing the Vietnam Thye Ming Co., Ltd (unit being outsourced by the foreign contractor for processing) to deliver goods to Vietnam Le Long Company.    Because the delivery of goods is not “at foreign border gate” or “at Vietnamese border gate”, the contractor is not non-applicable subject of tax as prescribed in point 2, section II, part A of the mentioned Circular No. 134/2008/TT-BTC, of December 31, 2008 of the Ministry of Finance mentioned above.