Foreign Contractor Tax Vietnam: Rates, Calculation and Filing Guide
Foreign contractor tax in Vietnam may apply when a Vietnamese company purchases services, leases equipment, pays royalties or interest, or enters into certain other transactions with an overseas business.
Although it is commonly called Foreign Contractor Tax or FCT, it is not a separate tax. It is a collection mechanism that generally includes value-added tax and corporate income tax imposed on income earned by foreign contractors from Vietnam.
The regulatory framework changed significantly in 2026. Circular 103/2014/TT-BTC, which many older guides still cite, was repealed from July 1, 2026. Businesses must now review Foreign Contractor Tax Vietnam under the current VAT, CIT and tax administration regulations.
This guide explains when FCT applies, the current tax rates, how to calculate tax on gross and net contracts, filing deadlines and the steps Vietnamese companies should take before paying an overseas supplier.
Foreign Contractor Tax Vietnam: Quick Answer
Foreign Contractor Tax Vietnam generally applies when a foreign organization or individual conducts business in Vietnam or receives Vietnam-sourced income without establishing a Vietnamese legal entity for the transaction.
The tax normally consists of:
Value-added tax, or VAT, calculated as a percentage of taxable revenue; and
Corporate income tax, or CIT, calculated as a percentage of taxable revenue.
For the commonly used direct method, the Vietnamese customer generally withholds, declares and pays the tax on behalf of the foreign contractor.
The applicable percentages depend on the nature of the payment. General services commonly attract 5% VAT and 5% CIT, while royalties, interest, equipment rental, construction and goods supplied with services may have different rates.
What Changed for Foreign Contractor Tax Vietnam in 2026?
Circular 89/2026/TT-BTC took effect on July 1, 2026 and repealed Circular 103/2014/TT-BTC. However, this did not eliminate Foreign Contractor Tax Vietnam.
The obligations are now distributed across several regulations:
Regulation | Main purpose |
Law on Value-Added Tax 2024 and Circular 69/2025/TT-BTC | VAT scope, taxable revenue and revenue-based VAT percentages |
Law on Corporate Income Tax 2025, Decree 320/2025/ND-CP and Circular 20/2026/TT-BTC | CIT scope, taxable revenue and deemed CIT percentages |
Law on Tax Administration 2025 and Decree 252/2026/ND-CP | Registration, filing, payment and administration |
Circular 89/2026/TT-BTC | FCT declaration forms, filing procedures and tax treaty applications |
Circular 90/2026/TT-BTC | Tax registration and tax identification numbers |
One important change concerns the CIT taxable base. Under the current rules, taxable CIT revenue includes the total revenue received by the foreign contractor before deducting applicable taxes. The previous wording that excluded VAT from the CIT revenue base has been removed.
For many net contracts, this means VAT and CIT can be grossed up using the same taxable revenue rather than through the older sequential calculation.
Another administrative change is that a final FCT return is generally required at the end of a contract only when an adjustment changes the tax previously declared and paid.
Companies should therefore stop using tax templates or internal procedures that rely only on Circular 103.
What Is Foreign Contractor Tax in Vietnam?
Foreign Contractor Tax is the common name for taxes collected from foreign contractors and foreign subcontractors that conduct business in Vietnam or earn income connected with Vietnam.
A foreign contractor may be:
An overseas consulting company;
A foreign software or technology provider;
A regional management company;
An overseas lender;
A foreign owner licensing intellectual property;
An equipment lessor;
A construction or installation contractor;
A foreign supplier providing goods with services in Vietnam; or
A foreign digital or e-commerce service provider.
The existence of a written document titled “contractor agreement” is not the only determining factor. Purchase orders, service agreements, licensing agreements, loan agreements and other commercial arrangements can also create FCT obligations.
The substance of the transaction, the place where the income arises, the services performed and the payment responsibilities stated in the contract must all be reviewed.
When Does Foreign Contractor Tax Vietnam Apply?
Foreign Contractor Tax Vietnam may apply to payments for the following activities:
Consulting, management and professional services;
Advertising and marketing services;
Technical support and maintenance;
Software, technology or digital services;
Royalties and intellectual property licences;
Loan interest;
Equipment, machinery or vehicle rental;
Construction and installation;
Goods supplied with installation, training, warranty or other services performed in Vietnam;
On-the-spot import or export transactions;
Securities transfers and certain financial transactions; and
E-commerce or digital platform activities generating revenue in Vietnam.
For example, a Vietnamese company hires a Singapore consultancy to advise on its Vietnam operations. If the payment represents Vietnam-sourced service income, the Vietnamese company may need to withhold and pay VAT and CIT on behalf of the Singapore supplier.
Similarly, payments from a Vietnamese subsidiary to its overseas parent for management support, trademarks, software access or intercompany loans should be reviewed before remittance.
When May Foreign Contractor Tax Not Apply?
FCT should not be assumed to apply to every overseas payment.
For example, a pure supply of goods may fall outside the conventional FCT withholding mechanism where:
The delivery point is outside Vietnam;
The foreign seller transfers responsibility, cost and risk outside Vietnam;
The Vietnamese buyer is responsible for importing the goods; and
The foreign supplier does not perform related services in Vietnam.
However, the result can change if the contract includes installation, testing, training, maintenance, marketing, warranty work or another service connected with Vietnam.
A transaction may also receive relief under a double taxation agreement, although treaty relief is not automatic and normally applies to the CIT component rather than VAT.
Each transaction should therefore be reviewed based on its contract, Incoterms, payment structure and actual performance.
Who Is Responsible for Paying Foreign Contractor Tax?
Under the most common arrangement, the Vietnamese party is responsible for:
Identifying whether FCT applies;
Determining the correct transaction category;
Calculating the VAT and CIT components;
Withholding the relevant amount where required;
Filing the FCT return;
Paying the tax to the Vietnamese tax authority; and
Maintaining the contract, payment and tax records.
The contract should clearly state whether the agreed fee is gross or net of Vietnamese taxes.
If this point is unclear, the parties may disagree over whether tax should be deducted from the foreign contractor’s fee or paid as an additional cost by the Vietnamese customer.
Foreign Contractor Tax Vietnam Rates
The direct method calculates VAT and CIT as percentages of taxable revenue. The rates should be determined separately because the VAT and CIT classifications do not always match.
VAT Rates for Foreign Contractor Tax Vietnam
Business activity | VAT percentage on taxable revenue |
Distribution or supply of goods | 1% |
Services and construction without materials | 5% |
Production and transportation | 3% |
Services associated with goods | 3% |
Construction with materials, machinery or equipment | 3% |
Other business activities | 2% |
Where a contract contains different activities, the revenue attributable to each activity should be separated.
If the contract does not separate the different activities, the highest applicable VAT percentage may be applied to the entire taxable contract value.
CIT Rates for Foreign Contractor Tax Vietnam
Business activity or income | CIT percentage on taxable revenue |
General services | 5% |
Restaurant, hotel or casino management services | 10% |
Distribution or supply of goods in Vietnam | 1% |
Royalties | 10% |
Loan interest | 5% |
Aircraft or ship leasing | 2% |
Machinery, equipment or vehicle leasing | 5% |
Construction and transportation | 2% |
Securities transfers and outward reinsurance | 0.1% |
Derivative financial services | 2% |
Capital transfers | 2% |
Other business activities | 2% |
These tables provide the common revenue percentages. The final treatment may differ where the transaction is VAT-exempt, benefits from treaty relief, involves an e-commerce platform or includes several inseparable activities.
How to Calculate Foreign Contractor Tax Vietnam
For the direct method, the basic formulas are:
VAT payable = VAT taxable revenue × Applicable VAT percentage
CIT payable = CIT taxable revenue × Applicable CIT percentage
The main practical issue is whether the contract price is gross or net of Vietnamese taxes.
Gross Contract
A gross contract generally means the stated amount includes the Vietnamese taxes to be withheld.
Assume a foreign contractor provides consulting services for a gross contract price of USD 10,000. The applicable VAT percentage is 5% and the CIT percentage is 5%.
VAT payable: USD 10,000 × 5% = USD 500
CIT payable: USD 10,000 × 5% = USD 500
Total FCT: USD 1,000
Net amount paid to the foreign contractor: USD 9,000
The Vietnamese party withholds USD 1,000 and pays it to the tax authority.
Net Contract
A net contract generally means the foreign contractor must receive the full contractual amount and the Vietnamese customer bears the Vietnamese taxes.
Under the current calculation approach, the taxable revenue for a transaction subject to both VAT and CIT may be calculated as follows:
Taxable revenue = Net payment ÷ (1 − VAT percentage − CIT percentage)
Assume the foreign contractor must receive a net consulting fee of USD 10,000. Both the VAT and CIT percentages are 5%.
Taxable revenue: USD 10,000 ÷ (1 − 5% − 5%) = USD 11,111.11
VAT payable: USD 11,111.11 × 5% = USD 555.56
CIT payable: USD 11,111.11 × 5% = USD 555.56
Total FCT: approximately USD 1,111.12
Total cost to the Vietnamese customer: approximately USD 11,111.12
This example assumes that both taxes apply, no treaty exemption is available and the Vietnamese party bears all FCT.
Contracts involving exempt services, royalties, goods, multiple activities or different tax-allocation clauses require a separate calculation.
Foreign Contractor Tax Vietnam Filing Methods
Foreign contractors may be subject to different filing methods depending on their presence, registration, accounting arrangements and the nature of the contract.
1. Direct Method
The direct method is the most common method for overseas suppliers without an established accounting and tax presence in Vietnam.
Under this method:
VAT is calculated directly on taxable revenue;
CIT is calculated using the applicable percentage of taxable revenue; and
The Vietnamese party normally withholds and pays the tax on behalf of the foreign contractor.
The main declaration used by the Vietnamese withholding party is Form 01/NTNN,NCCNN under Circular 89/2026/TT-BTC.
2. Deduction Method
A qualifying foreign contractor may register and declare VAT under the credit or deduction method and calculate CIT based on revenue and expenses.
This method usually requires the contractor to satisfy relevant requirements concerning its business presence, contract duration, accounting system and tax registration in Vietnam.
It is more suitable for contractors with substantial or longer-term operations in Vietnam.
3. Hybrid Method
Under the hybrid method, the foreign contractor may declare VAT using the credit method while paying CIT based on a percentage of taxable revenue.
Businesses with contracts signed under earlier regulations should also review the transitional provisions. Certain contracts that applied the previous hybrid method before Circular 20 took effect may continue under the rules effective when the contract was signed.
Foreign Contractor Tax Filing Deadlines
For FCT declared on each payment, the filing deadline is generally the tenth day counted from the day following the date on which the tax obligation arises.
If the Vietnamese party makes several payments to the foreign contractor during a month, it may register to file monthly. The monthly return is generally due by the twentieth day of the following month.
The practical deadlines can be summarized as follows:
Filing obligation | General deadline |
Filing for each payment | No later than the tenth day from the day after the tax obligation arises |
Monthly filing | No later than the twentieth day of the following month |
Contract finalization, where required | No later than 45 days after contract termination |
From July 1, 2026, finalization at the end of a contractor agreement is generally required only when an adjustment changes the amount of tax previously declared and paid.
The first filing for a contract normally includes a copy of the contractor agreement and relevant subcontractor agreements.
Tax Registration for Foreign Contractors
The appropriate tax registration arrangement depends on who declares and pays the tax.
A foreign contractor that registers and pays tax directly is generally issued a ten-digit tax identification number for each contract. The registration deadline is generally ten working days from the relevant triggering event, such as signing the contractor agreement.
Where the Vietnamese party withholds and pays FCT, it must use the appropriate tax identification number for withholding and payment on behalf of the foreign contractor.
Tax registration should be addressed before the first filing or payment rather than after the money has already been remitted overseas.
Can a Double Taxation Agreement Reduce FCT?
Vietnam has signed double taxation agreements with many jurisdictions, including Singapore and Hong Kong.
A treaty may reduce or eliminate the CIT component where the required conditions are satisfied. For example, treaty protection may be available where the foreign enterprise does not have a permanent establishment in Vietnam and the income falls within the treaty’s business-profits article.
However:
Treaty relief does not automatically remove VAT;
The legal classification of the income must be correct;
Permanent establishment risk must be assessed;
The foreign contractor must be a qualifying tax resident; and
The required application must be submitted to the tax authority.
Under Circular 89, the treaty-relief application is generally submitted with the first FCT return. Typical documents include:
Form 01/HTQT;
A legalized certificate of tax residence;
A copy of the relevant contract; and
A power of attorney where an authorized representative submits the application.
The tax authority may take up to 30 working days to review a treaty relief application. Companies should therefore evaluate treaty eligibility before the first payment.
Common Foreign Contractor Tax Mistakes
Using Circular 103 as the Current Legal Basis
Circular 103 ceased to be effective on July 1, 2026. Calculations and filing checklists should be updated to reflect Circulars 20, 69, 89 and 90, together with the relevant laws and decrees.
Failing to State Whether the Contract Is Gross or Net
A short tax clause can determine whether the overseas supplier receives less than the stated price or the Vietnamese customer must bear an additional cost.
Treating Every Overseas Payment as Tax-Free
A service can create FCT exposure even when all work appears to be performed remotely. The income source, place of consumption and connection with Vietnam must be examined.
Applying One Rate to a Mixed Contract
A contract may include goods, consulting, installation, training and maintenance. If the price is not separated, a higher rate may apply to the entire contract.
Paying the Supplier Before Reviewing FCT
After the full invoice has been remitted overseas, recovering the tax amount from the foreign contractor may be commercially difficult.
Assuming a Tax Treaty Applies Automatically
Treaty relief requires a substantive analysis and supporting documents. A supplier’s foreign address alone is not sufficient.
Ignoring Related-Party Issues
Management fees, technical service fees, royalties and interest paid to an overseas parent or affiliate may also require transfer pricing support, proof of services and documentation showing that the expense is deductible.
Foreign Contractor Tax Vietnam Compliance Checklist
Before paying an overseas supplier, a Vietnamese company should:
Identify the actual goods, services or rights being purchased.
Review where the activities are performed and consumed.
Check the contract, purchase order, invoice and payment terms.
Confirm whether the payment represents Vietnam-sourced income.
Determine whether the transaction is conducted through an e-commerce or digital platform.
Separate goods, services, royalties, interest and other components.
Identify the correct VAT and CIT percentages.
Confirm whether the price is gross or net of tax.
Calculate any required gross-up.
Review treaty eligibility before the first payment.
Complete the appropriate tax registration.
File Form 01/NTNN,NCCNN or the applicable return.
Pay the tax within the required deadline.
Retain the contract, invoice, payment documents and tax receipts.
Review whether finalization is required when the contract ends.
How VINEX Can Help
Foreign Contractor Tax Vietnam requires more than applying a percentage to an overseas invoice. The company must correctly classify the transaction, review the contract, determine the tax base, apply the correct VAT and CIT rates and meet the filing deadline.
VINEX can support foreign-invested and Vietnamese companies with:
Reviewing cross-border contracts and payment structures;
Determining whether FCT applies;
Calculating VAT and CIT on gross or net contracts;
Registering the appropriate tax identification number;
Preparing and filing FCT returns;
Reviewing double taxation agreement eligibility;
Preparing treaty relief documentation;
Reconciling tax records with accounting and bank payments;
Supporting contract finalization; and
Advising on related VAT, CIT and transfer pricing obligations.
Businesses should complete the FCT review before signing a cross-border contract or making the first payment. Correcting the tax treatment after funds have been transferred is often more expensive and time-consuming.
Contact VINEX for practical assistance with foreign contractor tax registration, calculation, filing and treaty relief in Vietnam.
Frequently Asked Questions
What is Foreign Contractor Tax Vietnam?
Foreign Contractor Tax Vietnam is the common term for VAT and CIT imposed on qualifying income earned by foreign contractors from business activities or transactions connected with Vietnam.
Is Foreign Contractor Tax a separate tax?
No. FCT generally consists of VAT and CIT collected through a withholding, declaration and payment mechanism.
Who pays Foreign Contractor Tax in Vietnam?
Under the commonly used direct method, the Vietnamese customer withholds, declares and pays the tax on behalf of the foreign contractor.
What is the FCT rate for consulting services?
General consulting services commonly attract 5% VAT and 5% CIT on taxable revenue. The final treatment depends on the service, contract and any applicable treaty.
Does Foreign Contractor Tax apply to software?
It may apply, but the VAT and CIT treatment depends on whether the payment is for software, a licence, copyright, digital access, implementation, maintenance or another service. Each component should be reviewed separately.
Does Foreign Contractor Tax apply to loan interest?
Loan interest paid to a foreign lender is generally subject to 5% CIT. VAT treatment should be reviewed separately based on the nature of the transaction.
Can a tax treaty eliminate Foreign Contractor Tax?
A tax treaty may reduce or eliminate the CIT component if the relevant requirements are met. It does not automatically eliminate VAT.
When is an FCT return due?
A return filed for each payment is generally due no later than the tenth day counted from the day following the date the tax obligation arises. A registered monthly return is generally due by the twentieth day of the following month.
Is FCT finalization required when the contract ends?
From July 1, 2026, finalization is generally required only where an adjustment changes the tax previously declared and paid. Where required, the deadline is generally 45 days after contract termination.
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