On October 22, 2019, Hanoi Tax Department issued Official Letter No.79762/CT-TTHT. Whereby:
In case a foreign individual signs a technology transferring contract of manufacturing new products with a company in Vietnam:
If the foreign individual is a business entity, he/she is determined as business individual; his/her income from technology transferring contract for manufacturing new products is then subjected to FCT on business income. The company in Vietnam shall be responsible for deducting, declaring and paying VAT and PIT on behalf of foreign business individual according to the declaration form No. 01/CNKD issued in Circular No. 92/2015/TT-BTC on June 15, 2015 by the Ministry of Finance.
If the foreign individual is not a business entity, he/she is not determined as business individual; his/her individual income from technology transferring contract of manufacturing new products is then a service-providing activity which is only subjected to PIT for income from salaries and wages. The company in Vietnam shall be responsible for deducting PIT at the rate of 10% if the foreign individual has the status of resident individual, or 20% for non-resident individual, or according to progressive tax table if he/she has the status of resident individual and the corresponding contract is labor contract.
Foreign individuals being business entity must have their business registration under provisions of foreign laws or documents proving that they are recognized by foreign laws. Foreign papers and documents, when used in Vietnam, must be consularly legalized in accordance with Circular No.01/2012/TT-BNG on March 20, 2012 of the Ministry of Foreign Affairs guiding on consular certification and legalization.
