COMMON PRACTICE ON BASIC UNDERSTANDING OF FCT IN VIETNAM

VN entity bears the FCT (Net basis):

This indicates that the agreed fee is the net amount payable to the overseas entity. VN entity will bear the responsibility of grossing up and calculating the Foreign Contractor Tax (FCT), remitting it to the tax authority, while paying the full billed amount to the overseas entity.

 

Overseas entity bears the FCT (Gross basis):

In this scenario, the billed amount represents the gross amount inclusive of the FCT. VN entity will deduct the FCT from the billed amount, remit it to the tax authority, and then pay the remaining amount to the overseas entity.

 

• Special case:

In accordance with the contract value excluding VAT (contractor’s income tax deducted):
VAT = Taxable revenue for VAT x Percentage rate to calculate VAT on revenue
CIT = Contract value x Contractor’s income tax rate

The formula to calculate taxable revenue for VAT is:

Taxable revenue = (Contract value) / (1 – Percentage rate to calculate VAT on revenue)

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Tính theo trị giá hợp đồng chưa bao gồm thuế GTGT (thuế TNDN nhà thầu chịu):
Thuế GTGT = Doanh thu tính thuế GTGT x Tỷ lệ % để tính thuế GTGT trên doanh thu
Thuế TNDN = Giá trị hợp đồng x Tỷ lệ thuế TNDN

Công thức tính doanh thu tính thuế GTGT là:

Doanh thu tính thuế = (Giá trị hợp đồng) / (1 – Tỷ lệ % tính thuế GTGT trên doanh thu)