THE MINISTRY OF FINANCE
THE GENERAL DEPARTMENT OF TAXATION
Official Dispatch No. 4023/TCT-TNCN dated September 17, 2014 of the General Department of Taxation on requirements for exemption of taxes incurred by foreign experts participating in ODA projects in Vietnam
To: Department of Taxation of Vinh Phuc province
In response to Dispatch No. 3390/CT-TNCN dated June 24, 2014 and dispatch No. 3663/CT-TNCN dated July 02, 2014 of Department of Taxation of Vinh Phuc province requesting guidance on requirements for exemption of taxes incurred by experts participating in ODA projects in Vietnam:
1. With regard to effective periods of the contract used as the basis for determination of entities regulated by Decision No. 119/2009/QĐ-TTg.
- Article 2 of the Prime Minister’s Decision No. 119/2009/QĐ-TTg dated October 01, 2009 promulgating Regulation on foreign experts participating in ODA projects prescribes that:
“This Decision takes effect on November 20, 2009".
- Article 2 of Circular No. 12/2010/TTLT-BKHĐT-BTC dated May 28, 2010 of the Ministry of Planning and Investment and the Ministry of Finance on guidelines for implementation of Regulation on foreign experts participating in ODA projects prescribes that:
“Article 2. Regulated entities
... only applies to the experts whose contracts take effect from November 20, 2009”
- Article 3 of Circular No. 12/2010/TTLT-BKHĐT-BTC dated May 28, 2010 of the Ministry of Planning and Investment and the Ministry of Finance prescribes that:
“1. Experts profiles:
…
- A copy of the consultancy contract (of an individual expert or group of experts) with the contractor, a Vietnamese authority or foreign authority”.
The documents do not clarify that “their contracts” and “consultancy contracts” in the experts’ profiles include both the Contractor’s consultancy contracts and the consultancy contracts between the experts and the Contractor. Thus, the Ministry of Planning and Investment has issued Dispatch No. 8712/BKH-KTĐN dated December 06, 2010 providing guidance on requirements for tax incentives for foreign experts participating in ODA projects in Vietnam. Pursuant to the guidance provided by the Ministry of Planning and Investment, the Ministry of Finance has issued Dispatch No. 144/BTC-TCT dated January 06, 2011 providing guidance on contracts with foreign experts participating in ODA projects in Vietnam prescribes that: (1) of 144/BTC-TCT prescribes that:
“1. With regard to contracts of experts participating in ODA projects that take effect from November 20, 2009 according to Article 2 of Circular No. 12/2010/TTLT-BKHĐT-BTC dated May 28, 2010:
- The foreign party and the Vietnamese party signs a consultancy contract with the individual expert or group of experts, which enclosed with a decision to approve the result of bidding for consulting services;
- The foreign party and the Vietnamese party signs a contract with the contractor (company), the bidding documents of which enumerate the expert as a counselor, enclosed with the bidding documents approved by a competent authority (including the list of counselors);
- The consultancy contract between the expert and the contractor (company): in this case, if the contractor (company) appoints an expert of the contractor (company) on the list of bidders instead of signing a contract with the expert, the replacement of the contract with the decision on appointment is regulated by the Circular No. 12/2010/TTLT-BKHĐT-BTC dated May 28, 2010.
Pursuant to the aforementioned regulations, the effective date November 20, 2009 is applied to both the consultancy contract between the contractor and the competent authority, and the consultancy contract between the foreign expert and the contractor. Where the contractor appoints a foreign expert on the list of bidders instead of signing a contract with the foreign expert, the contract shall be replaced with a decision on appointment.
