Foreign Contractor Withholding Tax in Vietnam – What You Need to Know

In summary, the foreign contractor withholding tax occurs in Vietnam when a foreign company offers a paid service to any company in Vietnam.

In summary, the foreign contractor withholding tax occurs in Vietnam when a foreign company offers a paid service to any company in Vietnam. The Foreign Contractor Withholding Tax (also known as FCWT) was included in the Circular No. 103/2014/TT-BTC.

The FCWT Tax is applied to:

  1. This tax is withheld for monetary payments between a foreign company outside of Vietnam and a company that does business in Vietnam or earns income in Vietnam. Tax is withheld from contracts, agreements, or commitments between the foreign contractor and a Vietnamese entity or between a foreign sub-contractor and a foreign sub-contractor to perform part of the main contract.
  2. Foreign entities providing goods in Vietnam in the form of domestic exports and earn income in Vietnam under contracts between them and Vietnamese companies (except for cases in which goods are processed and then returned to the foreign entities) or distribute goods in Vietnam or provide goods under Intercompany terms & rules that require the sellers to be responsible for goods that have been taken into Vietnam’s territory.

Taxes are withheld in the form of VAT (Value added tax) and CIT (Corporate Income Tax) as explained below:

VAT Payable on Foreign Contract Agreements

No.TradeVAT rate (%)
1Services, rental of machinery and equipment, insurance; construction, installation exclusive of raw materials, machinery & equipment.5%
2Production, transportation, services attached to goods; construction, installation inclusive of raw materials, machinery & equipment.3%
3Other trades2%

CIT Payable on Foreign Contract Agreements

ITEM CIT Payable
Trading: distribution, supply of goods, raw materials, supplies machinery and equipment; distribution of goods, raw materials, supplies, machinery and equipment attached to services in Vietnam (including those provided in the form of domestic exports, except for goods processed under processing contracts with foreign entities); supply of goods under Incoterms1%
Services, lease of machinery and equipment, insurance, lease of oilrig.5%
Restaurant, hotel, casino management services10%
Derivative financial services2%
Lease of aircraft, aircraft engines, parts of aircrafts and ships2%
Construction, installation, whether or not inclusive of raw materials, machinery and equipment2%
Other business activities, transport (including sea transport and air transport)2%
Transfer of securities, certificates of deposit, ceding reinsurance abroad, reinsurance commission0.1%
Loan interest5%
Income from copyright10%

When does the obligation come into effect and what are the deadlines?

Whenever the first foreign contract is generated, we must register the tax number use only for FCWT 

The obligation is incurred once the payment is made. The deadline for submitting the foreign contractor tax declaration is the 10th day from the day on which payment is made.

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Vojtech Zehnalek

Verified by:​

Vojtech Zehnalek, MSc.

Vojtech Zehnalek is designated the Business Expansion Manager and specialises in providing complex advisory to foreign companies expanding to Indonesia. He graduated from Economics and International Trade from the University of Economics in Prague, the Czech Republic, and he also earned a Business Degree at the Vlerick Business School in Belgium.