The Ministry of Finance has proposed a tax rate of 20% for income from compensation of foreign contractors.
This is part of a draft circular which has been completed by the Ministry of Finance which provides detailed guidance on certain provisions of the Corporate Income Tax Law and the Decree detailing the implementation of the Law.
Under the draft, there will be two options for foreign contractors who have to pay tax for revenue from a compensation.ỉ The first is to declare and pay corporate income tax based on the tax rate calculated on revenue. The second is to declare revenue and expenses with a tax rate of 20%.
The draft also clarifies the method of tax declaration, the determination of taxable revenue, and the application for EPC contracts with subcontractors.
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