On June 12th ,2020, Hanoi Tax Department issued Official Letter No. 51237/CT-TTHT. Whereby:
In case the Company signed a business contract with the foreign contractor which has an abroad headquarter address to provide online English education service in Vietnam.
- For foreign contractor’s income attained from the distribution of revenue arising from the customers’ service payment accounts:
- The Value Added Tax (VAT): if this service is determined as a software service as regulated in Decree No. 71/2007/ND-CP issued on July 3rd ,2007 by the Government, it shall not be subjected to VAT contribution. On the other hand, if this service is not determined as a software service as regulated in the afore-mentioned provision, it shall be subjected to VAT contribution at the tax rate of 5% on the service revenue.
- The Corporate Income Tax (CIT): if the foreign contractor’s income from transferring products and online English learning method is determined as income generated by the copyright as prescribed in Clause 3 Article 7 of the Circular No. 103/2014/TT-BTC issued on August 8th ,2020 by the Ministry of Finance, the CIT rate (on %) on such income shall be at 10%. If the above income is not generated by the copyright, the CIT rate (on %) on it shall be at 5%.
- Foreign contractor’s income from foreign teachers supplying service shall be subjected to VAT and CIT contribution at the rate of 5%.
