Vietnam

8 Chapter Tax Laws

    • Overview of tax in Vietnam

      With the “Doi Moi” policy, Vietnam changed its economy to a market based economy, with this changes reforms were made, aligning tax regulations with international regulations.

      The three major tax laws are the Corporate Income Tax, Value Added Tax and Special Sales Tax. The General Department of Taxation controls the Tax administration, under the Ministry of Finance.

      Most business activities and investments in Vietnam are taxed with Corporate income tax, value added tax, import duties, capital profits tax, taxes, personal income tax, social insurance tax. And for specific activities there are other taxes applied like special sales tax, property tax, export duties, environment protection tax, etc.

       

      The case of starting a business is not established in Vietnam

       [Permanent establishment]

      Is considered a fixed place of business in which a foreign company can have part of its business or production in Vietnam. Foreign companies with permanent establishments must pay tax on the taxable income generated in and outside Vietnam and from any activity related to permanent establishments, companies can avoid this taxes if their country has a tax treaty with Vietnam.

       

      The case of starting a business is established in Vietnam

       [Representative office]

      In Vietnam, by law the representative office is not a separate legal entity, its activities are limited to business promotion, identification of trade opportunities and supervising the implementation of contracts signed between the represented company and local companies.

      Under Article 4 of the Decree 72, a foreign business entity established and operating for at least one year under the laws of its head office country may apply for establishment of a resident representative office in Vietnam. The foreign company can establish a representative office in any province in Vietnam, the number of offices in Vietnam can be unlimited.

      A representative office is not subject to corporate income tax, but still must pay value-added tax when consuming goods or services from other companies in Vietnam and is responsible for declaring its employees’ personal income tax.

       

        [Branch]

      A branch is considered as the subsidiary of a parent company and doesn´t constitute a separate legal entity according to Vietnamese law. Branches are allowed to perform goods trading business, open bank accounts, transfer their profits to other countries and other commercial activities in accordance with their establishment licenses.

      For a foreign company to set up a branch in Vietnam, the parent company must have had conducted business in its home country for at least five years.

       

    • The flow of profits

      The flow of profits which is from the local corporation to parent company
      There are no withholding taxes imposed on profits paid to foreign corporate shareholders for dividends. Dividends are considered as income from capital investment and taxed at a flat tax rate.

       

       [Method of calculation]

      Taxpayers are required to prepare an annual Corporate Income Tax return with the adjustments between accounting profits and taxable profits.

       

       [Expenses deemed]

      Incomes earned from scientific research and technological development contracts are exempt from corporate income tax. 

    • Overview of transfer pricing taxation in Vietnam

      Companies in Vietnam into transfer pricing transactions need to disclose this in their annual tax returns 90 days after the end of the financial year. Companies must indicate the transfer pricing transactions, the value of the contracts, the arms’ length price of the transaction and explain the discrepancies if there are some.

      The Vietnamese tax bureau can request a company, at any time, an explanation of the pricing transfer contracts. This must include financial statements, copies of agreements between companies, etc. The company will have 30 days to send that requested information.

    • The definition of related party

      In the Vietnamese law, there is no definition for a related party transaction, but the enterprise law requires that transactions that generally could be considered as related party transactions such as transaction between joint stock companies and a counterpart related to its shareholders, must be approved by the Board or the shareholders meeting, this depends on the value of the transaction.

      Since 2014 the Ministry of Finance of Vietnam released a form named Form 03-7/TNDN or Form 3, which replaces Form GCN/01/QLT, this will be required to be filed with the corporate income tax return for all taxpayers with related-party transactions. 

    • Method of calculation is the price which is between independent companies

      Organizations engaged in production and business of goods or services and having transactions with affiliated parties shall be obliged to declare and calculate the corporate income tax obligation in Vietnam.

      The price of products in a transaction have to be calculated in accordance with market prices with a comparison between related transactions and independent transactions to select the appropriate method of calculation of price.

      This is regulated by Circular 66/2010/TT-BTC and there are many methods of calculation stipulated there. One is the method of comparison of prices in independent transactions, this method uses the unit price of products in independent transactions as the basis of calculation of a unit price of products in related transactions when those transactions have and equivalent transaction condition.

    • The system of writing documents

      As mentioned before, an annual declaration of related party transactions and transfer pricing methodologies used, must be declared with the annual Corporate Income Tax return. The tax documents must be signed and issued intra vires; the format must comply with law, and the language must be Vietnamese.

      According to Law on tax administration, taxpayers have to submit their tax returns with the required vouchers and tax documents to tax administration agencies, and must calculate by themselves the payable tax amounts, except when the calculation is made by tax administration agencies according to the regulations set by the government. The Government stipulates as well, taxes subject to monthly, annual, or quarterly declarations, calculations, declaration for tax finalization, and tax declaration dossiers for each case. If the calculation is made by the taxpayer, the deadline for payment is the last day of the time limit for submission of tax declaration dossiers, but, if the calculation is made by tax administration agencies the time limit for tax payment is stated in notices of tax administration agencies.

    • APA (Advance Pricing Agreement)

       [The Advance Pricing Agreement is an agreement in writing between the taxpayer and the tax authority or between the taxpayers and one or more tax authorities from one or more jurisdictions with which Vietnam has signed the avoidance of Double Tax Agreements for a specified period of time. The agreement also requires specific basis to determine the tax liabilities, its pricing method or the arm’s length price.][1]


      [1]https://www.linkedin.com/pulse/process-advanced-pricing-agreement-apa-vietnam-pham-ngoc

    • Tax treaty

      Overview of tax treaty

      Foreign investors may seek a tax exemption on income from the transfer of capital in Vietnam under a tax treaty between Vietnam and their country. From all tax treaties, currently in force, only the tax treaty with France provides tax exemption for interest on commercial loans.

       

      Countries which is conclude a treaty with Vietnam

      The countries with a tax treaty for avoidance of double taxation with Vietnam are:

       

      Australia

      Hungary

      Morocco

      Seychelles

      Austria

      Iceland

      Myanmar

      Singapore

      Bangladesh

      India

      Netherlands

      Slovak Republic

      Belarus

      Indonesia

      New Zealand

      Spain

      Belgium

      Ireland

      Norway

      Sri Lanka

      Brunei

      Israel

      Oman

      Sweden

      Bulgaria

      Italy

      Pakistan

      Switzerland

      Canada

      Japan

      Palestine

      Taiwan

      China

      Korea (Republic of)

      Philippines

      Thailand

      Cuba

      Korea (Democratic People´s Republic)

      Poland

      Tunisia

      Czech Republic

      Kuwait

      Qatar

      Ukraine

      Denmark

      Laos

      Romania

      United Arab Emirates

      Finland

      Luxemburg

      Russia

      United Kingdom

      France

      Malaysia

      Saudi Arabia

      Uzbekistan

      Germany

      Mongolia

      Serbia

      Venezuela

      Hong Kong

       

       

       

    • Kind of taxes

       In Vietnam, we can find Personal and Corporate income tax, direct and indirect taxes, Foreign contractor tax, Special sales tax, Stamp duty tax, inheritance or gift tax and property taxes, etc. 

    • Direct tax and indirect tax

        [Direct tax]

      The Direct tax levied on the profits earned by companies or organizations or individual.

      Personal Income tax and Corporate Income Tax.

       

       [Indirect tax]

      -Business license tax (BLT) is an indirect tax imposed on entities conducting business activities in Vietnam.

      -Valued Added Tax (VAT) is an indirect tax on goods and services used for the purposes of production, trading, and consumption.

      -Special Consumption Tax (SCT) is an indirect tax that applies to the production or importation of specific goods and the provision of certain services.

    • The tax law in Vietnam

       Laws related to taxes in Vietnam:
      -New Law on Corporate Income Tax (CIT)
      -New Law on Value Added Tax (VAT) 
    • Tax payer

      Companies established under Vietnamese laws are subject to Corporate Income Tax and taxed on worldwide income, 20% CIT shall be applicable to foreign income. There are no provisions for tax incentives.
       
       [The kind of foreign corporation]

      Foreign companies doing business in Vietnam without setting up a legal entity or having income from Vietnam are known as “foreign contractors”, payments to foreign contractors are subject to Foreign Contractor Tax (FCT), which consists of VAT and CIT elements.

    • Taxable income

      Taxable income is the income generated from production, trading of goods, provision of services, and other incomes like capital transfer and real estate transfer; ownership of or rights to use assets; etc.

    • Non-deductible income

       Examples of non- deductible income:

      ·         Salaries and wages of owners of private companies, remunerations paid to members of the member’s council or board of directors.

      ·         Expenses for advertisement and promotion exceeding 10% of the total deductible expenses. For new companies with investment licenses on or after January 1, 2009, expenses are considered at 15% of the deductible expenses for the first three years from the date of establishment.

      ·         Fines for administrative violations, such as traffic law, tax law, business registration, accounting and statistics regulations and other administrative fines as indicated by Vietnamese laws.

      ·         Credited or refunded input value-added tax.

    • Expenditure of financial loss

       [The expenditure of advertising]

      Expenses for advertisement and promotion exceeding 10 % of total deductible expenses are non-deductible. For a new company with an investment license on or after January 1st of 2009, expenses are considered at 15% of deductible expenses for the first three years from the date of establishment. This is not applicable for new companies established by consolidation, separation, split, merger, and any type of ownership transformation.

       

       [The reserved fund of R&D]

      By the Vietnamese law companies can have a fund of up to 10% of its annual taxable income for research and development (R&D) purposes and deduct the same amount from its taxable income.

      Taxpayers determine the rate for Research & Development and have to report the details of its R&D expenditures to the tax authority with the annual tax return and invoices to prove this expenses.

       

       [Depreciation]

      Tangible fixed assets are all the things used to complete businesses such as buildings, structures, machinery, equipment, transportation machines.

       

      The Annual rate of depreciation of fixed assets is equal to the total rate of depreciation of 12 months in a year or by the following formula:

      Annual rate of depreciation of fixed assets = number of products yearly made X Average rate of depreciation for a unit of product.

       

       [Depreciation of intangible fixed assets]

      Intangible fixed assets represent the value of an investment such as costs for land use, issuance right, patent, copyright, etc. These assets depreciate in production activities, natural erosion, and technical advancements. Companies can determine the depreciation of intangible fixed assets only if they don’t exceed 20 years. The land depreciation is the time permitted to use the land by the companies and for copyright, intellectual property rights, etc., have a term of protection.

       

        [Allowance of doubtful debts]

      The allowance of doubtful debts is an account to record a withdrawal from accounts receivable for the accounts that will not be paid.

       Provisions for these debts are deductible with certain conditions, such as, debts must have original documentation to support them, there must be confirmation of the debts from clients, debts must be in accordance with an economic contract. If these conditions are not met the provisions will be deductible only if there are invoices.

       
    • Corporate tax

      Taxes are imposed for the whole country; the standard Corporate Income Tax rate is 20%. Companies operating in the oil and gas industry are subject to Corporate Income Tax rates 32% to 50%, this depends on the location and specific project conditions. Prospecting, exploration, and exploitation of mineral resources companies are subject to Corporate Income Tax rates of 40% or 50%, depending on the location of the project.

    • Declaration

       Vietnam tax year is the fiscal year, companies must present a declaration within 90 days after de fiscal year-end date. There are penalties for not filling at all or on time or for fraudulent information on the tax declaration.

       

       [Quarter declaration]

      Quarterly Corporate income returns are not required anymore but instead companies must make quarterly provisional CIT payments based on estimates. Excess of 20% on account payments are subject to late interests.

       

       [Final return]

      Companies and taxpayers must prepare an annual Corporate Income Tax return with adjustments between accounting profits and taxable profits. This must be filed and submitted not later than 90 days from the fiscal year end. 

    • Overview of personal income tax

       Personal Income tax is imposed depending on the residency status, for example, residents are taxed on their total worldwide income and non- residents are taxed on the income they received from Vietnam. 

       

    • The definition of resident and non-resident

      Residents are the ones that stay in Vietnam for more than 183 days in twelve consecutive months, and have a regular residential location in Vietnam.

      Non-residents are the ones who live in Vietnam for less than 90 days or more but less than 183 days in twelve consecutive months and are tax residents of another country.

       

       [Double taxation]

      Double taxation is not applicable only for foreigners from countries with tax treaties with Vietnam.

    • Taxable income

      Taxable income includes employment, non-employment, and business income. The following are examples: Salary, wages, remuneration, bonuses, allowances, subsidies, benefits in kind, income received from participating in professional and business associations, etc.

    • Non-taxable income

       Non-taxable income examples are:
      ·         Interest on money deposited at banks, credit institutions and life insurance policies in Vietnam.
      ·         Overtime salaries or wages over the normal hours by law.
      ·         Compensation payments from life and non-life insurance policies.
      ·         Training expenses
      ·         Pension payments to individuals in accordance with law.
      ·         Income from property transfers, inheritance or gifts between husband and wife, parents, and children
      ·         Allowance for relocation to Vietnam
      ·         School fee for expatriate employees’ children from primary to high school in Vietnam
    • Deducting income

       [Individual´s deduction]

      The individual deduction is 9 million VND per month.

       [Deduction for dependent]

      Dependents are spouses or the parents unable to work, children below 18 years old, or over 18 years old but earning a low income, which does not exceed VND 500,000 per month, the tax reduction for each dependent is up to 3,600,000 VND per month.

       

       [Social insurance premium which is enforcement joining]

      Employees are required to make SI, HI and UI contributions at rates 5%, 1.5% and 1% Expatriates are only subject to the HI.

       

       [Donation´s deduction]

      Donations must be made to approved charities, human aid, and education funds and may be deducted in full from taxable income and are granted to resident individuals only.

    • The calculation of taxable income

        [Business income]

      Individuals’ business income exceeding 100 million VND per year is subject to PIT

      Tax rate for residents: 0.5% - 5% (based on the type of business income)[1]

      Types of Business

      Rate

      Distribution and supply of goods

      0.5%

      Services and construction not including supply of raw materials

      2%

      Leasing out assets, insurance agency, lotteries agency and multi-level sales agency

      5%

      Production, transportation, service attached to goods, construction including supply of raw materials

      1.5%

      Other business activities

      1%

       

      Tax rate or non-residents: 1% - 5% (based on the type of business income)[2]

      Business type

      Rate

      Goods trading

      1%

      Service provision

      5%

      Production, construction, transportation, and other business activities

      2%

       

       [Capital gains]

      Income earned by nonresidents from transfer of real estate is taxed at a flat rate of 0.10%. Income from capital investment and capital assignment are considered as non-employment income and taxed under the personal income tax regime.

       

       [Income for royalties]

      Tax rate for personal income tax for residents:  5%

      Tax rate for personal income tax for non-residents: 5%

      (more than 10 million VND per payment)

       

       [Income for franchises]

      Tax rate for personal income tax for residents:  5%

      Tax rate for personal income tax for non-residents: 5%

      (more than 10 million VND per payment)

       

       [Income from winning prices]

      Tax rate for personal income tax for residents:  10%

      Tax rate for personal income tax for non-residents: 10%

      (more than 10 million VND per payment)

       

       [Income for inheritances]

      Tax rate for personal income tax for residents:  10%

      Tax rate for personal income tax for non-residents: 10%

      (more than 10 million VND per payment)



      [1] Tax and Investment Facts, A glimpse at taxation and investment in Vietnam, Grunkorn & Partner Law Co., Ltd, Vietnam.

      [2] Tax and Investment Facts, A glimpse at taxation and investment in Vietnam, Grunkorn & Partner Law Co., Ltd, Vietnam.

    • Tax rates for resident’s employment income

        

      Annual Taxable Income (million VND)

      Monthly Taxable Income

      (million VND)

      Tax rate

      0-60

      0-5

      5%

      60-120

      5-10

      10%

      120-216

      10-18

      15%

      216-384

      18-32

      20%

      384-624

      32-52

      25%

      624-960

      52-80

      30%

      More than 960

      More than 80

      35%

    • Operation for declaration

       [Registration of tax payer]
      To obtain the certificate for tax code registration companies must apply the following files:
      1. Tax registration declaration
      2. Business registration certificate or license for foreign investment in Vietnam
      3. Establishment decision
       
       The process of application takes 5 to 10 working days. Registration is inspected by tax authorities and customs authorities.
      [Declaration of personal income tax]
       

      Taxes on employment income is withheld by the employer and remitted to the tax authorities, for these, employees are required to obtain their individual tax number and to declare their dependents to qualify for tax relief.

      Employees must complete their tax return at the end of the year. Companies must complete a quarterly tax declaration and annual tax finalization return on its employees’ taxable employment income and submitted to the tax authority on the 20th of the following month or the end of the first month of the following quarter, and 90 days after the year ends.

       

        [1]

      Taxable income

      Tax Rates for Residents

      Tax Rates for Non- Residents

      Income from capital investments

      5.0% No PIT payment for income from capital investments of individuals

      5.0%

      Income from capital assignment

      20% on net gain

      0.1% on gross sale proceeds

      Income from security transfer

      0.1% on gross sale proceeds

      0.1 % on gross sale proceeds

      Income from property transfer

      2.0% on gross sale proceeds

      2.0 % on gross sale proceeds

      Income from royalty, technology transfer/franchising with value more than 10 million VND for each receipt

      5.0%

      5.0%

      Income from lottery winning, promotions, games with prizes valued more than 10 million VND for each reward

      10%

      10%

      Income from inheritance, gifts valued over 10 million VND for each receipt

      10%

      10%



      [1] https://home.kpmg.com/xx/en/home/insights/2011/12/vietnam-income-tax.html

    • Overview of VAT

       The value-added tax applies for goods and services at a 10% rate that is calculated based on the selling price.

    • Tax payer

       All companies and individuals that produce or trade taxable goods and services must register for VAT. Registration takes around 10 days to issue the companies registration certificate, after that a Tax code is given to the company or individual.

    • VAT exemptions

       The following are the stipulated categories of VAT exemptions, including[1]:

      Certain agricultural products.

      Goods/services provided by individuals having annual revenue of VND 100 million or below.

      Imported or leased drilling rigs, airplanes and ships of a type which cannot be produced in Vietnam.

      Transfer of land use rights (subject to limitations).

      Financial derivatives and credit services (including credit card issuance, finance leasing and factoring); sale of VAT able mortgaged assets by the borrower under the lender’s authorization to settle a guaranteed loan and provision of credit information.

      Various securities activities including fund management.

      Capital assignment.

      Foreign currency trading.

      Debt factoring.

      Certain insurance services (including life insurance, health insurance, agricultural insurance, and reinsurance).

      Medical services.

      Teaching and training.

      Printing and publishing of newspapers, magazines and certain types of books.

      Passenger transport by public buses.

      Transfer of technology, software and software services except exported software which is entitled to 0% rate.

      Gold imported in pieces which have not been processed into jewelry; • Exported unprocessed mineral products such as crude oil, rock, sand, rare soil, rare stones, etc.

      Imports of machinery, equipment and materials which cannot be produced in Vietnam for direct use in science research and technology development activities-

      Equipment, machinery, spare parts, specialized means of transport and necessary materials which cannot be produced in Vietnam for prospecting, exploration and development of oil and gas fields.

      Goods imported in the following cases: international non-refundable aid, including from Official Development Aid, foreign donations to government bodies and to individuals (subject to limitations).

      Fertilizer, feed for livestock, poultry, seafood and other animals, machinery and equipment specifically used for agriculture.



      [1] https://www.pwc.com/vn/en/publications/2016/pwc-vietnam-pocket-tax-book-2016-en.pdf

    • The calculation of declared tax

        [Deduction Method for VAT]

      This method applies for companies with annual revenue subject to VAT of 1 billion VND or more; and certain cases registered for VAT declaration under the deduction method.

      VAT payable = Output VAT – Input VAT

      -Calculation of output VAT: is calculated by multiplying the taxable price by the applicable VAT rate.

      -Calculation of input VAT: For domestic purchases is based on VAT invoices,

      for imports credits are based on the tax payment voucher.

       

       [Direct Method for VAT]

      This method applies to companies with annual revenues subject to VAT of less than 1 billion VND; individuals and business households; companies that don’t have books of account and foreign organizations, individuals with activities not regulated in the Law on Investment and companies engaging in trading in gold, silver, and precious stones.

      Determination of VAT payable VAT payable = value added of goods or services sold x VAT rate

    • Taxable standard

      The Law on Value-added Tax No. 13/2008/QH12 and Law Amending and Supplementing a number of Articles of the Law on Value-Added Tax (No. 31/2013/QH13) states the following:

       

      For goods and services sold by business establishments.

      The taxable price is the selling price of value added tax.

      For imported goods.

      The taxable price is border gate import plus import tax, excise, and environmental protection tax if applicable.

      For goods and services used for barter, internal consumption, or donation.

      The taxable price is the price for calculation value added tax on goods and services of the same equivalent kinds.

      For asset lease.

      The taxable price is the rent exclusive of value added tax.

       

    • The rate of tax

       There are 3 VAT rates in Vietnam.[1]

      0%

      5%

      10%

      This rate applies to exported goods and services, including the ones sold outside of Vietnam on areas with no tariff, or goods sold to duty free companies, certain exported services, construction, and installation carried out for export processing enterprises, aviation, marine and international transportation services.

      This rate is generally to areas of the economy concerned with the provision of essential goods and services. These include: clean water; teaching aids; books; unprocessed foodstuffs; medicine and medical equipment; husbandry feed; various agricultural products and services; technical/scientific services; rubber latex; sugar and its by-products; certain cultural, artistic, sport services/products and social housing.

      This "standard" rate applies to activities not specified as not-subject to VAT, exempt or subject to 0% or 5%.

       

       

       



      [1] Vietnam Pocket tax Book 2016, PWC.

    • Declaration

        [Return requirements of VAT]

      The filling requirements are every month, fill and pay the outstanding VAT made on or before the 20th of the following month. Quarterly VAT filling and payment is allowed for certain taxpayers that are due by the 30th day of the following quarter.

    • Types of VAT invoices

       VAT invoices are invoices for organizations and individuals that declare and calculate VAT by the Deduction method that are involved in activities such as, sale of goods and provision of services, international transportation, and exportation of goods.

    • Requirements for a company to issue VAT invoices

      The companies that required to provide VAT invoices are companies established under law in industrial parks, economic zones, processing, export zones, Hi-Tech parks, and companies with a charter capital level as indicated by the Ministry of Finance.

      VAT invoices can be declared and claimed any time before the company receives notice of a tax audit by the tax authorities.

    • Overview of foreigner contractors

      Under Circular 103 a foreign contractor is a foreign entity or an individual that does business or generates income in the country by having an agreement with a Vietnamese company or foreign sub-contractor.
       
       

      The Foreign Contract Tax its imposed on:

      1.Foreign contractors that sell goods into Vietnam under an Incoterm delivery clause, for goods delivered at Vietnam´s border and foreign border gate.

      2.Foreign contractors that receive a compensation more than its actual damages. 

    • The calculation of standard tax

       Under this method foreign contractors must be registered to pay taxes according to the deduction method, and adopt the Vietnamese Accounting system for filling VAT and CIT returns. The VAT credit method is:

        Payable VAT amount = Output VAT amount – Creditable input VAT amount

       

      The Corporate income tax payable is the 22% of the taxable income.

      This method is for companies with an annual revenue of 1 billion VND or more, subject to VAT.

      ·         Output VAT: this is calculated by multiplying the taxable price by the applicable VAT rate.

      ·         Input VAT: is the total VAT based on invoices and can be declared and claimed any time before the company receives the tax audit notice.

       

        This method is determined by the turnover, when companies use this method by law Vietnamese companies must be withheld with FCT, before making a payment to the Foreign Contractor.

      ·         VAT under the Direct Method.

      VAT payable = VAT Assessable Turnover x VAT rate as percentage of tax assessable income.

      • CIT under the Direct Method.

      CIT payable = CIT Assessable Turnover x CIT rate as a percentage of taxable turnover.

    • Deemed Tax rate

       The deemed tax rates on VAT and CIT may vary, depending on the goods and services provided:[1]

       

      Business Activities

      Deemed CIT rate

      Deemed VAT rate

      Supply of goods in Vietnam or associated with services rendered in Vietnam.

      1%

      1%

      Services, leasing of machinery and equipment. Except for:

      5%

      5%

      -       Services with supply of machinery and equipment.

      2%

      3%

      -       Restaurant, hotel, and casino management services.

      10%

      5%

      -       Financial derivatives

      2%

      Exempt

      Leasing of aircraft, vessels and drilling rigs (including components).

      2%

      Exempt

      Construction, installation without supply of materials, machinery or equipment.

      2%

      3%

      Transportation (Sea and Air).

      2%

      3%

      Re-insurance, commission for insurance transfer of securities.

      0.1%

      Exempt

      Insurance, Interest.

      5%

      Exempt

      Royalties.

      10%

      Exempt



      [1] http://es.slideshare.net/ac-cconsulting/taxation-in-vietnam-2014-2015

    • Hybrid method

      This method is a combination of the deduction and direct method, to use this method Foreign Contractors must have a PE or be a tax resident, operate in Vietnam under a contract with a term of more than 182 days and have accounting records in accordance with Vietnamese regulation. This method lets companies to register for VAT and pay VAT accordingly to the deduction method, but CIT equals the gross revenue multiplied by the applicable deemed rate, it is paid under the direct method.