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MINISTRY OF FINANCE
GENERAL DEPARTMENT OF TAXATION
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SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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No.
4023/TCT-TNCN
Re:
requirements for exemption of taxes incurred by foreign experts participating
in ODA projects in Vietnam
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Hanoi, September 17, 2014
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To: Department
of Taxation of Vinh Phuc province
In response to
Dispatch No. 3390/CT-TNCN dated June 24, 2014 and dispatch No. 3663/CT-TNCN dated
July 02, 2014 of Department of Taxation of Vinh Phuc province requesting
guidance on requirements for exemption of taxes incurred by experts
participating in ODA projects in Vietnam:
1. With
regard to effective periods of the contract used as the basis for determination
of entities regulated by Decision No. 119/2009/QĐ-TTg.
- Article 2 of
the Prime Minister’s Decision No. 119/2009/QĐ-TTg dated October 01, 2009
promulgating Regulation on foreign experts participating in ODA projects
prescribes that:
“This
Decision takes effect on November 20, 2009".
- Article 2 of
Circular No. 12/2010/TTLT-BKHĐT-BTC dated May 28, 2010 of the Ministry of
Planning and Investment and the Ministry of Finance on guidelines for
implementation of Regulation on foreign experts participating in ODA projects
prescribes that:
“Article 2.
Regulated entities
... only
applies to the experts whose contracts take effect from November 20, 2009”
...
...
...
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“1. Experts
profiles:
…
- A copy of
the consultancy contract (of an individual expert or group of experts) with the
contractor, a Vietnamese authority or foreign authority”.
The documents
do not clarify that “their contracts” and “consultancy contracts” in the
experts’ profiles include both the Contractor’s consultancy contracts and the
consultancy contracts between the experts and the Contractor. Thus, the
Ministry of Planning and Investment has issued Dispatch No. 8712/BKH-KTĐN dated
December 06, 2010 providing guidance on requirements for tax incentives for
foreign experts participating in ODA projects in Vietnam. Pursuant to the
guidance provided by the Ministry of Planning and Investment, the Ministry of
Finance has issued Dispatch No. 144/BTC-TCT dated January 06, 2011 providing
guidance on contracts with foreign experts participating in ODA projects in
Vietnam prescribes that: (1) of 144/BTC-TCT prescribes that:
“1. With
regard to contracts of experts participating in ODA projects that take effect
from November 20, 2009 according to Article 2 of Circular No.
12/2010/TTLT-BKHĐT-BTC dated May 28, 2010:
- The
foreign party and the Vietnamese party signs a consultancy contract with the
individual expert or group of experts, which enclosed with a decision to
approve the result of bidding for consulting services;
- The
foreign party and the Vietnamese party signs a contract with the contractor
(company), the bidding documents of which enumerate the expert as a counselor,
enclosed with the bidding documents approved by a competent authority
(including the list of counselors);
- The
consultancy contract between the expert and the contractor (company): in this
case, if the contractor (company) appoints an expert of the contractor
(company) on the list of bidders instead of signing a contract with the expert,
the replacement of the contract with the decision on appointment is regulated
by the Circular No. 12/2010/TTLT-BKHĐT-BTC dated May 28, 2010.
Pursuant to
the aforementioned regulations, the effective date November 20, 2009 is applied
to both the consultancy contract between the contractor and the competent
authority, and the consultancy contract between the foreign expert and the
contractor. Where the contractor appoints a foreign expert on the list of
bidders instead of signing a contract with the foreign expert, the contract
shall be replaced with a decision on appointment.
...
...
...
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- Point 2 of
Dispatch No. 144/BTC-TCT dated January 06, 2011 of the Ministry of Finance
providing guidance on contracts with foreign experts participating in ODA
projects prescribes that:
“2. The
replacement and addition of experts after November 20, 2009 with regard to consultancy
contracts that take effect before November 20, 2009.
...Where
the contractor (company) replaces or adds experts after November 20, 2009 with
regard to the consultancy contracts that take effect before November 20, 2009,
the new experts shall replace the old ones. The new experts must satisfy the
criteria in the bidding documents, and such replacement must be approved by a
competent authority. If the new experts are eligible for incentives according
to Decision No. 211/1998/QĐ-TTg dated October 31, 1998, they shall be eligible
for the incentives in Decision No. 119/2009/QĐ-TTg”
The addition
of experts mentioned in (2) of Dispatch No. 144/BTC-TCT is applied when new
foreign experts are replaced or added for consultancy contracts that take
effect before November 20, provided the criteria in bidding documents of the
contractor (company) are satisfied, and such replacement is approved by a
competent authority. There are no instructions on replacement and addition of
foreign experts from November 20, 2009. As a result, the Ministry of Planning
and Investment has issued the Dispatch No. 2138/BKHĐT-KTĐN dated April 10,
2014, which prescribes that: “...Additional experts of the additional contract
(as in the case of the representative office of Nippon Koei) shall be eligible
for personal income tax incentives due to the addition, provided the addition
is approved by a competent authority.”
Pursuant to
the guidance of the Ministry of Planning and Investment, the Ministry of
Finance send the Dispatch No. 7313/BTC-TCT dated June, 02, 2014 to
representative office of Nippon Koei in Hanoi, which approves the effective
date before November 20, 2009 of the consultancy contract of the contractor. If
any appendix to the original contract is made to add new tasks, the tax
exemption for additional foreign experts shall be considered as if the
contracts take effect from November 20, 2009.
Similar cases
shall be handled in accordance with Dispatch No. 2138/BKHĐT-KTĐN dated April
10, 2014 of the Ministry of Planning and Investment.
Pursuant to
the aforementioned regulations, since the consultancy between the contractor
Nippon Koei – Poyry Infra takes effect before November 20, 2009, the exemption
of personal income tax incurred by their foreign experts shall be considered as
follows:
- The foreign
experts on the list of bidders of the consultancy contract which takes effect
before November 20, 2009 are not regulated by the Prime Minister’s Decision No.
119/2009/QĐ-TTg dated October, 01, 2009.
- The new experts
added after November 20, 2009 to the consultancy contract that takes effect
before November 20, 2009 shall be provided with incentives if they are eligible
as prescribed in Decision No. 119/2009/QĐ-TTg.
...
...
...
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Provincial
Departments of Taxation shall provide guidance on exemption of taxes incurred
by foreign experts participating in ODA projects in Vietnam in accordance with
effective regulations and guidance in this Dispatch.
Department of
Taxation of Vinh Phuc province is responsible for the implementation of this
Dispatch./.
PP DIRECTOR OF PERSONAL INCOME TAX
ADMINISTRATION
DEPUTY DIRECTOR
Ta Thi Phuong Lan