Foreign contractor tax changes Vietnam 2026

Tax declaration for foreign contractors is always a complex issue due to the involvement of various tax calculation methods and different deadlines. In 2026, businesses need to pay special attention to the correct tax declaration procedures to avoid errors, late payments, or tax risks.

1. Tax Declaration Procedure for Foreign Contractors in 2026

Sub-section 7, Part II of the Appendix issued with Decision 216/QD-BTC of 2026 guides the tax declaration procedure for cross border taxation Vietnam update as follows:

– Step 1. Foreign contractors and foreign subcontractors paying VAT directly on the value added, and corporate income tax at a percentage rate on revenue for business activities and other types of income; Foreign contractors and foreign subcontractors paying VAT using the deduction method, and corporate income tax at a percentage rate on revenue, prepare tax declaration documents and submit them to the tax authority directly managing the Vietnamese party;

Tax declarations must be filed for each payment made to the withholding tax reform Vietnam services. The deadline for submitting tax declarations for each payment is no later than the tenth day from the date the tax liability arises.

Withholding tax reform Vietnam services

If the Vietnamese party makes multiple payments to the foreign contractor within a month, they may register to file monthly tax declarations instead of filing for each payment. The deadline for submitting monthly tax declarations is no later than the twentieth day of the month following the month in which the tax liability arises.

For construction and installation contracts, tax declarations and final tax settlement documents must be submitted to the Provincial/City Tax Office or the local Tax Office as stipulated by the Head of the Provincial/City Tax Office where the construction or installation activity takes place.

– Step 2. Tax Authority Receipt:

If the documents are submitted directly to the Provincial/Commune-level Public Administrative Service Center or sent via postal service: the tax authority will receive and process the documents according to regulations.

In cases where documents are submitted to the tax authority via electronic transactions, the receipt, verification, acceptance, and processing of the documents will be carried out through the tax authority’s electronic data processing system.

2. How is tax declaration carried out for foreign contractors?

According to sub-section 7, Part II of the Appendix issued with Decision 216/QD-BTC, the method of tax declaration for foreign contractors is stipulated as follows:

  • In person: At the provincial and commune-level Public Service Centers;
  • Through public postal services as prescribed by the Prime Minister, through hiring services from enterprises or individuals, or through authorization as prescribed by law;

FCT compliance Vietnam new regulation

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  • Online: via the National Public Service Portal or the National Identification Application for administrative procedures that have been completed and integrated with the Ministry of Finance’s Public Service Portal as stipulated in the regulations on implementing the one-stop shop and integrated one-stop shop mechanism in resolving administrative procedures / electronic information systems, information systems for resolving administrative procedures of the Tax Department.

3. Legal Regulations Related to Contractor Tax Rates

Foreign contractor tax changes Vietnam 2026 is regulated by numerous legal documents, aiming to ensure tax collection from foreign organizations and individuals with income from business activities in Vietnam. Below are important legal regulations that businesses need to comply with when calculating contractor tax rates.

  • Law on Value Added Tax No. 13/2008/QH12 dated November 26, 2024
  • Law on Corporate Income Tax No. 67/2025/QH15 dated June 14, 2025
  • Law on Tax Administration No. 38/2019/QH14 dated June 13, 2019
  • Circular No. 103/2014/TT-BTC dated August 6, 2014 guiding the implementation of tax obligations applicable to foreign organizations and individuals doing business in Vietnam or having income from foreign organizations and individuals.

4. Factors Affecting Contractor Tax Rates

The contractor tax rate that digital service tax Vietnam implications are subject to is not fixed but depends on many different factors. Below are the main factors affecting contractor tax rates in Vietnam:

  • Services: Services such as consulting, management, and training are subject to a corporate income tax (CIT) rate of 5% on taxable revenue.
  • Trade: Distribution and supply of goods have a CIT rate of 1% on taxable revenue.
  • Payment methods and contract conditions: The terms in the contract, especially the delivery conditions according to Incoterms, affect the determination of tax obligations. For example, if a foreign contractor bears the risks associated with goods entering Vietnamese territory, they may be subject to foreign direct investment (FDI).
  • Double Taxation Avoidance Agreements: Vietnam has signed DTAs with many countries to avoid double taxation and prevent tax evasion. If a contractor comes from a country with an DTA with Vietnam, they may be exempt from or receive a reduction in corporate income tax, depending on the specific terms of the agreement.

Understanding FCT compliance Vietnam new regulation is crucial for international businesses to operate efficiently and legally in Vietnam. The increasing contribution of foreign suppliers to the state budget, with nearly VND 8,700 billion in taxes paid in 2025, demonstrates the importance of proper tax management and fulfillment.

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