On June 7, 2023, the Tax Department of Bac Ninh province issued Official Letter No. 2105/CTBNI-TTHT, according to which:
In case Company A has an address in China, it signs a contract to sell machinery with installation and repair services after sales to Company B with an address in China. Company A then assigns Company X, which has an address in Vietnam, to deliver goods and provide after-sales services to Company Y in Vietnam, which is the purchasing unit of Company B. This activity is described as follows: following diagram:
Company A and Company B in China both provide goods and services in Vietnam and generate income in Vietnam on the basis of contracts signed between foreign organizations and enterprises in Vietnam Nam (signed 4 party contract). Therefore, Company A in China is subject to tax applicable to foreign contractors on the basis of the value of goods and services provided to Company B in China arising in Vietnam, Company B in China is subject to tax applicable to foreign contractors on the basis of the value of goods and services provided to Company Y in Vietnam.
Company A and Company B in China are responsible for registering, declaring and paying tax on income generated in Vietnam according to the provisions of Circular No. 103/2014/TT-BTC dated August 6, 2014 of the Ministry of Finance.
Currently, the General Department of Taxation has operated an electronic portal for foreign buyers not currently in Vietnam (http://etaxvn.gdt.gov.vn). Therefore, Company A and B in China can perform tax obligations arising in Vietnam through the above portal. In case Company A and Company B do not declare and pay tax directly in Vietnam, they can authorize X and Company Y in Vietnam respectively to register, declare and pay tax with changes to the tax revenue arising in Vietnam.
