Foreign contractor tax in Vietnam: which contracts are caught and how the tax is worked out under the 2026 rules

Foreign contractor tax in Vietnam (FCT) is the value added tax (VAT) and corporate income tax (CIT) charged on what a foreign company earns from a contract with a Vietnamese party, where the foreign company does business or earns income in Vietnam without being a company incorporated under Vietnamese law. In the usual case the foreign supplier has no permanent establishment and no tax registration in Vietnam, so the Vietnamese customer withholds both taxes at deemed rates on the contract revenue (VAT usually at 2%, 3% or 5%, and CIT at 0.1% to 10%, depending on the activity), files a return for each payment or monthly, and pays the tax on the supplier's behalf. This is why FCT works in practice as a foreign contractor withholding tax: if you invoice a Vietnamese customer from abroad, expect to receive less than the invoiced amount unless the contract says otherwise.

The legal basis changed completely between July 2025 and July 2026, and Circular 103/2014/TT-BTC, which most guides still quote, has been fully repealed since 1 July 2026. This article sets out the rules in force on 13 October 2026, checked against the Official Gazette and the official scanned texts, in the order a foreign supplier or its Vietnamese customer needs them: is the contract caught, how much tax, who files and when.

Where the foreign contractor tax in Vietnam rules now sit#

Circular 103 was repealed in three steps:

1. From 1 July 2025, its VAT articles (Articles 6, 9, 12 and 15), by Article 10(3)(c) of Circular 69/2025/TT-BTC.
2. From 12 March 2026, its CIT provisions in Articles 1, 2, 7, 10, 13 (except Article 13(1)(b.11)) and 16, by Article 10(1) and (7)(a) of Circular 20/2026/TT-BTC.
3. From 1 July 2026, the whole circular, by Article 99(1) and (3)(b) of Circular 89/2026/TT-BTC.

There is no single circular on foreign contractor tax in Vietnam any more. The rules are spread across the law, decree and circular for each tax:

Topic	Instrument in force	Key provisions
VAT: taxpayer, deemed percentage, input credit	Law on VAT 48/2024/QH15 (effective 1 July 2025)	Article 4(3), Article 12(2), Article 14
VAT: taxable value, scope, exclusions, rate groups	Decree 181/2025/ND-CP; Circular 69/2025/TT-BTC (effective 1 July 2025)	Articles 13 and 25 of the Decree; Articles 5, 6 and 9 and Appendix I of the Circular
CIT: taxpayer, deemed percentage	Law on CIT 67/2025/QH15; Decree 320/2025/ND-CP	Article 2 of the Law; Article 2 and Article 12(3) of the Decree
CIT: scope, exclusions, taxable revenue	Circular 20/2026/TT-BTC (effective 12 March 2026, applying from the 2025 tax year)	Article 7
Registration, filing, payment, treaty relief	Law on Tax Administration 108/2025/QH15, Decree 252/2026/ND-CP, Circular 89/2026/TT-BTC (all effective 1 July 2026)	Articles 30 and 78 and Appendix I, item 15, of Circular 89

Decree 252/2026/ND-CP replaces Decree 126/2020/ND-CP, and Circular 89 replaces Circular 80/2021/TT-BTC. For a contract signed before 1 July 2026 but paid afterwards, returns for tax periods before that date use the old forms (Article 100(1) of Circular 89) and later periods follow Decree 252 and Circular 89. A contract already under the hybrid method of Circular 103 and signed before 12 March 2026 keeps the CIT rules in force when it was signed (Article 10(4) of Circular 20).

Is your contract caught by foreign contractor tax in Vietnam? Four questions#

Under Circular 20 (Article 7) and Circular 69 (Article 9), a foreign contractor is a foreign organisation, with or without a permanent establishment in Vietnam, that does business in Vietnam or earns income arising in Vietnam under a contract, agreement or undertaking with a Vietnamese organisation or individual; Circular 69 also covers foreign individuals doing business in Vietnam. A foreign subcontractor contracts with the foreign contractor to perform part of that work (Article 7(1)(a) of Circular 20; Article 9(8) of Circular 69).

1. Is the seller a Vietnamese company?#

If the seller is incorporated in Vietnam, including a wholly foreign-owned subsidiary, there is no foreign contractor tax in Vietnam: that company issues its own invoices and pays tax like any domestic business (Article 9(2)(a) of Circular 69). The scope also covers cases foreign groups do not always think of as "contracting": a foreign supplier distributing goods in Vietnam that keeps title to them, bears distribution, advertising or quality costs, or sets the resale price (Article 7(1)(b) of Circular 20); a foreign company that signs contracts in its own name through a Vietnamese organisation or individual (point d); and a foreign company exercising import, export or distribution rights in Vietnam (point dd).

An individual contractor is outside CIT, because CIT taxpayers are organisations (Article 2(1) of Law 67); the income is looked at under personal income tax, see personal income tax for foreigners in Vietnam.

2. Goods only, or goods with services in Vietnam?#

A plain sale of goods from abroad is normally outside foreign contractor tax in Vietnam. Both circulars exclude goods supplied without services performed in Vietnam, delivered at a foreign or a Vietnamese border gate, where the seller bears all responsibility, cost and risk up to the delivery point, even if the seller gives a warranty (Article 7(2)(a) and (b) of Circular 20; Article 9(2)(b) and (c) of Circular 69). Imported goods still bear import VAT in the normal way.

The contract is caught where the delivery point is inside Vietnam, or the goods come with services performed in Vietnam, such as installation, commissioning, warranty, maintenance, advertising or after-sales service, including free services and whether or not their price is built into the goods price (Article 7(1)(c) of Circular 20; Article 9(3)(c) of Circular 69). For VAT, the goods only bear import VAT and the service element bears the contractor's deemed VAT; if the contract does not separate the two, VAT is calculated on the whole contract.

3. Where are the services performed and consumed?#

The two circulars exclude these services from foreign contractor tax in Vietnam when performed outside Vietnam:

• Repair of means of transport, machinery or equipment (including submarine cables and transmission equipment).
• Advertising and marketing, except online advertising and marketing.
• Investment and trade promotion, and brokerage of sales of goods or services to other countries. The CIT list adds "except online" for both (Article 7(2)(dd) and (e) of Circular 20); the VAT list does not (Article 9(2)(e) and (g) of Circular 69).
• Training, except online training.
• Settlement of international telecommunications and postal charges, and leasing of foreign transmission lines and satellite bandwidth.
• Use of bonded warehouses and inland container depots to support international transport, transit, re-export, storage or processing.
• Any other service performed abroad and not consumed in Vietnam (Article 7(2)(l) of Circular 20; Article 9(2)(l) of Circular 69).

The CIT list also excludes qualifying intra-group restructurings of capital and certain sales of materials in bonded warehouses or non-tariff zones for export production (Article 7(2)(m) and (n) of Circular 20).

The word "and" in the last bullet matters: services supplied outside Vietnam but consumed in Vietnam are within the contractor VAT rules (Article 9(3)(b) of Circular 69). A market study prepared by a team in Singapore for use by a Vietnamese company will therefore rarely fit the exclusion, even if nobody travels to Vietnam; nor will online advertising or online courses.

4. Is the payment outside the scope of VAT?#

These payments bear no VAT but still bear contractor CIT:

• Interest: credit services and lending by a lender that is not a credit institution (Article 5(9)(a) and (b) of Law 48).
• Transfers of capital and securities (Article 5(9)(d) of Law 48), derivatives (point g) and reinsurance (Article 5(8)). A foreign company selling a capital stake pays CIT at 2% of taxable revenue; see corporate income tax on capital transfers.
• Technology transfer, transfer of intellectual property rights, and software products and services (Article 5(21) of Law 48).

If the contract is still in scope after these four questions, the next step is to find the FCT rates for each part of it. Purchases through e-commerce channels and digital platforms follow a separate regime, covered at the end.

FCT rates in Vietnam by activity#

The FCT rates for CIT are in Article 12(3) of Decree 320/2025/ND-CP. The VAT percentages are in Article 12(2)(b) of Law 48, and Appendix I to Circular 69 assigns each activity to a group (Article 5 and Article 9(6)(a) of Circular 69).

Activity under the contract	VAT (% of revenue)	CIT (% of revenue)
Services generally: consulting, management, technical, advertising, data processing	5%	5%
Repair and maintenance of machinery; services attached to the sale of goods, such as training, maintenance or technology transfer sold with the product	3% (group 3 of Appendix I)	5%
Management of restaurants, hotels and casinos	5%	10%
Leasing of drilling rigs, machinery, equipment and vehicles	5% (leasing without operators)	5%
Leasing of aircraft, helicopters, gliders (including engines and parts) and sea vessels	Outside VAT where of a type not yet produced in Vietnam and leased for production, business or onward leasing (Article 5(17) of Law 48); otherwise 5%	2%
Construction and installation without supply of materials (including installation of industrial machinery)	5%	2%
Construction and installation with supply of materials; transport	3%	2%
Goods supplied with services in Vietnam	Goods: import VAT; services: at the group rate for each service	Goods 1%, services 5%; values not separated: 2%
Distribution of goods in Vietnam on an on-the-spot export/import basis or under Incoterms	Goods: import VAT (contractor VAT applies only to services and services attached to goods, Article 9(3) of Circular 69)	1%
Interest	Outside VAT	5%
Royalties	Technology transfer, transfer of IP rights, software: outside VAT	10%
Transfer of securities; reinsurance ceded abroad	Outside VAT	0.1%
Financial derivative services	Outside VAT	2%
Transfer of capital (except qualifying intra-group restructurings)	Outside VAT	2%
Other activities (for VAT, including services subject to the 5% VAT rate)	2%	2%

Points on reading the table:

1. Mixed contracts. Each part of the contract value takes its own rate; if the values cannot be separated, the highest rate applies to the whole contract (Article 7(5)(b) of Circular 20; Article 9(6)(b) of Circular 69). For construction with supply of materials or equipment where the values are not separated, CIT is 2% and VAT is 3% of the whole contract value; if the foreign contractor passes all the supply work to subcontractors and keeps only services, the rate for both taxes is 5%.
2. Machinery supplied with services in Vietnam without separate values: CIT 2% (Article 7(5)(c) of Circular 20) and VAT 3% (Article 9(6)(c) of Circular 69).
3. Three VAT levels for services. Installing machinery is in the 5% group, training or maintenance sold with goods in the 3% group, and services subject to the 5% VAT rate in the 2% group, so the contract should describe each service clearly.
4. Licences. Article 5(21) of Law 48 refers to "transfer of intellectual property rights"; the Ministry of Finance has advised that permitting use of a trademark is not a transfer of IP rights, so trademark licence fees, and franchise fees that grant only a right of use, are subject to VAT (Official Letters 15888/BTC-CST of 7 November 2016 and 18115/BTC-TCT of 27 December 2013, issued under the previous law with the same wording). A separately priced technology transfer element stays outside VAT.

The table does not reflect the temporary VAT reduction under Resolution 204/2025/QH15 (until 31 December 2026). The consolidated Law 48 notes only a 2-point cut to the 10% rate, with exclusions such as telecommunications, finance, banking, insurance and real estate; how the reduction applies to VAT withheld at a percentage of revenue should be checked against Resolution 204 or with the tax office before you file.

How foreign contractor tax in Vietnam is calculated, with examples#

Both taxes are taxable revenue multiplied by the deemed percentage.

• VAT: taxable revenue is the full revenue the contractor receives for VAT-able services and services attached to goods, before deducting any taxes payable, including costs the Vietnamese party pays on the contractor's behalf (Article 13 of Decree 181/2025/ND-CP; Article 9(4)(a) and (b) of Circular 69).
• CIT: taxable revenue is the full revenue the contractor receives, before deducting taxes payable, including costs the Vietnamese party pays on its behalf (Article 7(3) of Circular 20).

An open point. Under the old Circular 103 (Article 13), the contractor's CIT base was revenue excluding VAT. Article 7(3) of Circular 20 drops those words. Read literally, the VAT forms part of the CIT base, but as at 13 October 2026 we have not seen official guidance confirming that reading. Example 1 therefore shows both; where the amounts are significant, ask the Vietnamese party's tax office before the first return.

The examples use assumed figures to illustrate how foreign contractor tax in Vietnam is calculated, in millions of VND, and ignore tax treaties.

Example 1: gross contract for consulting services. Company A, a Vietnamese company using the VAT credit method, hires a Singapore consulting firm with no permanent establishment in Vietnam. The fee is 1,000, inclusive of all Vietnamese taxes (a gross contract).

• VAT: 1,000 × 5% = 50.
• CIT on the literal reading of Circular 20: 1,000 × 5% = 50. Total tax 100; the Singapore firm receives 900.
• CIT if VAT is excluded, as under Circular 103: (1,000 − 50) × 5% = 47.5. Total tax 97.5; the Singapore firm receives 902.5.

Company A files and pays the 50 of VAT and can credit it as input VAT if the conditions below are met.

Example 2: net contract, loan from the parent. Company B, a foreign-invested company, borrows from its overseas parent. The loan agreement says the parent receives 95 of interest in full, with all Vietnamese taxes borne by Company B (a net contract). Interest is outside VAT, so only 5% CIT applies.

• Taxable revenue for CIT = 95 ÷ (1 − 5%) = 100 (gross-up formula in Article 7(4)(a) of Circular 20).
• CIT = 100 × 5% = 5. Company B remits 95 to the parent and pays 5 to the state budget.

Because the contract states that the lender's revenue excludes CIT, the 5 is carved out of the list of non-deductible expenses for Company B's own CIT (Article 10(12) of Decree 320). Because the loan from the parent is a related-party transaction, Company B's total deductible interest expense is also capped at 30% of net operating profit plus net interest expense plus depreciation (Article 9(2)(d) of Law 67; Article 16(3) of Decree 255/2026/ND-CP); see how to calculate corporate income tax in Vietnam and transfer pricing in Vietnam.

Example 3: machinery with services, separated or not. Company C buys a production line from a German manufacturer, delivered to its factory in Bac Ninh, with installation, commissioning and operator training in Vietnam. The total price is 2,200 on a gross basis.

• If the contract separates the machine (2,000) and the services (200): CIT = 2,000 × 1% + 200 × 5% = 30. The contractor's VAT applies only to the 200 of services, at the group rate for each (installation 5%, training sold with the goods 3%), so between 6 and 10; the machine bears import VAT.
• If it does not: CIT = 2,200 × 2% = 44, and VAT is calculated on the whole contract at 3%, which is 66.

Examples 1 and 2 show that a net or a gross contract changes both the tax and the amount the supplier receives; example 3 shows why the price should be split in the first draft.

Net vs gross contracts and subcontractors: drafting the tax clause#

Most disputes over foreign contractor tax in Vietnam start in the contract rather than in the return.

• Net contracts need a gross-up. Where revenue excludes CIT, taxable revenue = revenue excluding CIT ÷ (1 − CIT rate) (Article 7(4)(a) of Circular 20). Where it excludes VAT: revenue excluding VAT ÷ (1 − VAT rate) (Article 9(5)(a) of Circular 69). When the Vietnamese party bears both taxes, the two formulas depend on each other, and on whether VAT is part of the CIT base. The contract should say who bears each tax and how much the foreign party actually receives.
• Costs paid by the Vietnamese party (flights and hotels for visiting experts) are part of the taxable revenue. For equipment leasing, costs the lessor pays directly, such as insurance, maintenance, registration, operators and shipping the equipment to Vietnam, are excluded if supported by actual documents (Article 7(4)(d) of Circular 20; Article 9(5)(d) of Circular 69).
• Subcontractors must be named. The foreign contractor's taxable revenue excludes work done by subcontractors listed in the contract or an appendix with the Vietnamese party; Circular 20 requires that list to be signed before the subcontractor starts work. Purchases of materials, machinery or services from suppliers in Vietnam cannot be deducted (Article 7(4)(b) of Circular 20; Article 9(5)(b) of Circular 69). Where a foreign subcontractor also pays at deemed rates, the Vietnamese party files and pays for both, and the subcontractor does not file again for the part already paid (point c).
• The payment schedule drives the FCT filing deadlines (see below), so instalment contracts should set it out clearly.

LexData drafts and reviews tax, price, subcontracting and payment clauses in bilingual contracts with Vietnamese counterparties through our commercial contracts service.

Is foreign contractor tax in Vietnam creditable or deductible?#

Yes for the VAT, if the conditions are met. The CIT withheld is not VAT and cannot be credited; it can only be a deductible expense under a net contract.

When a Vietnamese business buys services from a foreign organisation without a permanent establishment, the Vietnamese business itself is the VAT taxpayer (Article 4(3) of Law 48). The tax therefore goes through its own return and is credited as its own input VAT (Article 20(3) of Decree 181) where:

1. The Vietnamese party uses the VAT credit method and the services are used for VAT-able business; where they also serve non-VAT-able activities, only the proportionate part is creditable (Article 14(1) of Law 48).
2. It holds the receipt for VAT paid on behalf of the foreign party (Article 14(2)(a) of Law 48), including VAT paid as a percentage of revenue (Article 25 of Decree 181); this is the state budget payment receipt (Article 6 of Circular 69).
3. Payments of VND 5 million or more, VAT included, are made by non-cash means such as a bank transfer (Article 14(2)(b) of Law 48; Article 26 of Decree 181).

CIT paid on behalf is deductible only where the contract provides that the foreign party's revenue excludes CIT (Article 10(12) of Decree 320); otherwise CIT is a non-deductible item (Article 9(2)(l) of Law 67). A foreign contractor taxed at deemed percentages cannot credit input VAT on what it buys to perform the contract (Article 9(4)(c) of Circular 69).

Three ways to pay foreign contractor tax in Vietnam: direct, hybrid, declaration#

Article 30 of Circular 89 organises the filing of foreign contractor tax in Vietnam into three methods, each with its own forms in item 15 of Appendix I:

Method	VAT	CIT	Who files	Forms
Direct (Article 30(2))	Percentage of revenue	Percentage of revenue	Vietnamese party withholds, files and pays	01/NTNN; final return 02/NTNN, 02-1/NTNN, 02-2/NTNN
Hybrid (Article 30(3))	Credit method	Percentage of revenue	Foreign contractor	03/NTNN; final return 04/NTNN, 02-2/NTNN
Declaration (Article 30(1))	Credit method	Declared revenue and expenses	Foreign contractor	Under Articles 19 (VAT) and 21 (CIT) of Circular 89

The direct method applies to a foreign organisation without a permanent establishment that does not yet fully apply Vietnamese accounting, invoicing and documentation rules (Article 12(2)(a)(a3) of Law 48). CIT at a percentage of revenue applies to a foreign company without a permanent establishment, or with one where the income is not connected with it (Article 2(2)(c) and (d) and Article 11(2)(a) of Law 67; Article 12(3) of Decree 320).

To use the VAT credit method, the contractor must fully apply the accounting, invoicing and documentation rules (Article 11(2) of Law 48); a foreign organisation with a permanent establishment and revenue in Vietnam may opt in (Article 21(2)(e) of Decree 181). A permanent establishment under Vietnamese law includes a building site, construction, installation or assembly works; a place for providing services, including consulting through employees; an agent; and a representative who regularly delivers goods or services (Article 2(3) of Law 67), with no time threshold in that article. Thresholds such as 183 days or six months usually appear in the permanent establishment article of a tax treaty; check the treaty concerned.

A contractor that files itself must register for tax within 10 working days of signing the contract (Article 6(3)(a)(a.3) of Decree 252). If a contractor with a Vietnamese tax code says it files under the declaration or hybrid method (Article 30(1) and (3) of Circular 89), ask for its registration documents and invoices before paying without withholding. A foreign supplier planning a long-term presence often looks at a branch or a foreign-owned company instead of a series of contractor arrangements.

FCT filing deadlines and documents#

Under the direct method, the Vietnamese party withholds and pays the tax and files with its own tax office (Article 30(2)(a) of Circular 89). In this foreign contractor withholding tax model, the withholding party must withhold, file and pay the amounts withheld, and the contractor does not pay them again (Article 12(3)(a) and (c) of Law 108).

• Per payment. Direct-method FCT is filed each time a payment is made, by the 10th day following the day the tax obligation arises (Article 30(2)(a) of Circular 89; Article 10(1) of Decree 252).
• Or monthly where the contractor is paid several times in a month, by the 20th day of the following month (Article 10(2) of Decree 252). No return is needed for a month with no withholding (Article 11(8) of Decree 252).
• First filing: form 01/NTNN with a copy of the contract and any subcontract (Appendix I, item 15.2, of Circular 89).
• Final return on completion only if the tax declared and paid has changed (Article 30(2)(a) of Circular 89), on form 02/NTNN with schedules 02-1/NTNN and 02-2/NTNN, by the 45th day from the taxpayer's decision on termination of the contract (Article 10(5)(b) of Decree 252); where a contract ends with a liquidation minute, confirm the starting date with the tax office.
• Payment is due by the last day of the filing deadline (Article 14(1)(a) of Law 108).

Late payment. A withholding party that pays late or short pays late-payment interest on the taxpayer's behalf at 0.03% per day (Article 16(1)(h) and (2)(a) of Law 108). Administrative penalties remain governed by Decree 125/2020/ND-CP, as amended by Decrees 102/2021/ND-CP, 310/2025/ND-CP and 291/2026/ND-CP, which continues in force after 1 July 2026 until replaced (Article 74(4) of Decree 252). Penalties and late-payment interest are not deductible for CIT (Article 9(2)(b) and (l) of Law 67).

Treaty relief from foreign contractor tax in Vietnam#

Exemption or reduction under a double tax agreement is decided by the tax authority (Article 32(1)(d) of Decree 252). Those agreements cover taxes on income (each treaty states its scope), and Article 78 of Circular 89 speaks only of the contractor's income, so in practice relief reaches the CIT element; the VAT element remains payable. The procedure is in Article 78 of Circular 89:

1. Where and when: the foreign contractor, or the Vietnamese party that signs the contract or pays the income, files with the Vietnamese party's tax office (or where the contractor is registered), together with the first tax return (Article 78(1)).
2. Documents: a request on form 01/HTQT (Appendix III); the original or a certified copy of a certificate of residence for the relevant tax year, with consular legalisation (if that year's certificate is not yet available, the one for the year before); a copy of the contract certified by the taxpayer; and a power of attorney if a representative acts (Article 78(1)(a) to (d)). Capital transfer income also needs the transfer contract and the investment certificate of the Vietnamese company (Article 78(3)).
3. Processing time: 30 working days from the tax office's acknowledgement, excluding time for explanations or additional documents (Article 33(2)(a) of Decree 252).

Circular 89 still refers to consular legalisation, while Decree 293/2026/ND-CP implementing the Apostille Convention has been in force since 11 September 2026; ask the tax office in advance whether it will accept an apostille instead. A long services contract may also lose relief if the experts' days in Vietnam exceed the permanent establishment threshold in the treaty.

Foreign suppliers selling through e-commerce and digital platforms#

Alongside the general rules on foreign contractor tax in Vietnam, a foreign supplier without a permanent establishment that sells through e-commerce or digital platforms to organisations or individuals in Vietnam has its own regime (Article 4(4) of Law 48). It registers, files and pays through the tax authority's system, monthly or per transaction (Article 40(1) and (2) of Decree 252; Article 31 of Circular 89). Its services bear 10% VAT (Article 9(3) of Law 48, before any Resolution 204 reduction), and CIT at the Decree 320 percentages, for example 5% for services.

A Vietnamese business using the VAT credit method that buys services from such a supplier through e-commerce channels or digital platforms must withhold and pay the supplier's tax (Article 4(4) of Law 48; filing under Article 32 of Circular 89). Where all of the supplier's Vietnamese revenue is covered in that way, the supplier need not register (Article 40(1)(a) of Decree 252). Advertising on foreign platforms, software subscriptions and cloud services paid by company card are therefore not automatically "taken care of".

Whether foreign contractor tax in Vietnam comes out right is usually decided in the contract: who bears each tax, whether the price is split, whether subcontractors are named and whether the treaty relief file is ready. LexData is a law firm; tax returns are prepared by the business or with its accountants and tax advisers. If you are choosing between contracting from abroad and setting up an entity in Vietnam, see what an FDI company is in Vietnam and our foreign investment services.