Official Letter No. 2099/CT-TTHT dated Jul 27th 2020 of Long An province Tax Department about Foreign Contractor Tax policy on importing of machinery, software and providing service.
In case the Company has intended to sign the following two contracts with foreign contractors:
- Contract No.1: A contract for importing industrial computers and software with Company A based in Germany, this contract states that Company A only provides these computer and software, not provide any other services in Vietnam and delivery under CIF terms, delivery at Vietnamese border gate.
- Contract No.2: A contract for the installation of industrial computer system services signed with company B based in Malaysia.
The company A and B are two independent legal entities in the same Group. Accordingly,
- For contract No.1:
- Imported machinery is not a subject of application to the Foreign Contractor Tax.
- Imported software is a subject of application to Foreign Contractor tax at the rate of 10% of CIT (software is not a subject to VAT).
- For contract No.2:
- Income from the providing service is applicated to Foreign Contractor Tax at the rate of 5% CIT and 5% VAT
Please kindly find detail in the attached file.