– Pursuant to the Consolidation Document of the Intellectual Property Law No. 07/VBHN-CPQH dated June 25, 2019 of the National Assembly of the Socialist Republic of Vietnam.
+ Clause 1, Article 3 provides for the subject matter of copyright:
“1. The subject matter of copyright shall comprise literary, artistic and scientific works; the subject matter of copyright related rights shall comprise performances, audio and visual fixation, broadcasts and satellite signals carrying coded programmes.”
+ Article 4 provides for the interpretation of some terms:
“2. Copyright means the rights of an organization or individual to works which such organization or individual created or owns.
Copyright related right (hereinafter referred to as related right) means the rights of an organization or individual to performances, audio and visual fixation, broadcasts and satellite signals carrying coded programmes.
…
Work means a creation of the mind in the literary, artistic or scientific sector, expressed in any mode or form.
Derivative work means a work translated from one language into another; or an adapted, modified, transformed, compiled, annotated or selected work.
Published work, audio and visual fixation means a work or audio and visual fixation which has been published with the permission of the copyright holder or related right holder in order to distribute it to the public in a reasonable amount of copies.”
+ Article 17 provides for subject matter of related rights eligible for protection:
“3. Broadcasts and satellite signals carrying coded programmes shall be protected if they fall into one of the following categories::
a) They belong to broadcasting organizations bearing Vietnamese nationality;
b) They belong to broadcasting organizations protected pursuant to an international treaty of which the Socialist Republic of Vietnam is a member.
Performances, audio and visual fixation, broadcasts and satellite signals carrying coded programmes shall only be protected pursuant to the provisions of clauses 1, 2 and 3 of this article on the condition that they are not prejudicial to copyright.”
– Pursuant to Clause 21, Article 4 of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance providing guidance on implementation of the Law on Value-Added tax and the Government’s Decree No. 209/2013/ND-CP dated December 18, 2013 providing guidance on some articles of the Law on Value-Added tax, stipulating subject matter not subject to VAT:
“21. Technology transfers according to the Law on Technology transfers; intellectual property right transfers according to the Law on Intellectual property. If a contract of technology transfer or intellectual property right transfer is associated with a transfer of machinery/equipment, only the value of transferred technology or intellectual property right is not subject to VAT. If such value cannot be separated, VAT shall be imposed on the total value of the transferred technology or intellectual property right and machinery/equipment.
Computer software includes software products and software services as prescribed by law.”
– Pursuant to Circular No. 103/2014/TT-BTC dated August 6, 2014 of the Ministry of Finance providing guidelines for fulfillment of tax liability of foreign entities doing business in Vietnam or earning income in Vietnam:
+ Article 1 provides for regulated entities:
“This Circular is applied to the entities below (except for the cases in Article 2 Chapter I):
Foreign business organizations having permanent establishments in Vietnam or not; foreign business individuals that are residents of Vietnam or not (hereinafter referred to as foreign contractors and foreign sub-contractors) who do business in Vietnam or earn income in Vietnam under contracts, agreements, or commitments between the foreign contractor and a Vietnamese entity or between a foreign sub-contractor and a foreign sub-contractor to perform part of the main contract…”
+ Clause 2 Article 4 provides for taxpayers:
“…2. Organizations established and operated under Vietnam’s law or registers its operation under Vietnam law; business entities that purchase services, services attached to goods, or pay income in Vietnam under main contracts or subcontracts; purchase goods in the form of domestic import or under Incoterms; distribute goods or provide services on behalf of foreign entities in Vietnam (hereinafter referred to as Vietnamese entities) include:
…Taxpayers defined in Clause 2 Article 4 Chapter I are obliged to withhold VAT and corporate income tax as prescribed in Section 3 Chapter II before paying foreign contractors and foreign sub-contractors.”
+ Clause 3 Article 7 provides for income subject to CIT:
“3. Incomes earned in Vietnam by foreign contractors and foreign sub-contractors are any incomes they receive under main contracts or subcontracts (except for the case described in Article 2 Chapter I), regardless of their business locations. Taxable incomes of foreign contractors and foreign sub-contractors in some cases:
– Income from transfer of the right to ownership or the right to enjoyment of property, transfer of the right to participate in business contracts/projects in Vietnam, transfer of right to property in Vietnam.
– Income from copyright means any income paid for the right to use, transfer of intellectual property rights and technology transfer, software copyright (including payments for the right to use, transfer of copyright, transfer of industrial property rights, transfer of technologies and software copyright).
“Copyright”, “industrial property rights”, “technology transfer” are defined in the Civil Code, the Law on Intellectual property, the Law on Technology transfers, and their guiding documents.”
+ Article 8 Section 2 Chapter II stipulates the requirements for foreign contractors to declare contractor tax according to the declaration method:
“A foreign contractor or foreign sub-contractor shall pay tax in accordance with instructions in section 2 Chapter II if the requirements below are satisfied:
- The contractor/subcontractor has a permanent establishment in Vietnam or the contractor/subcontractor is a resident of Vietnam;
- The period of business operation on Vietnam under the main contract or subcontract is 183 days or longer from the effective date of the contract;
- The contractor/subcontractor applies Vietnam’s accounting practice, has applied for tax registration and issued with a taxpayer ID number (TIN) by a tax authority.”
+ Article 11 Section 3 Chapter II stipulates the regulated entities and requirements for paying VAT and CIT according to fixed rates:
“If the foreign contractor or foreign sub-contractor fails to meet any of the requirements mentioned in Article 8 Section 2 Chapter II, the Vietnamese party shall pay tax on their behalf in accordance with instructions in Article 12 and Article 13 Section 3 of Chapter II”
+ Clause 2 Article 12 Section 3 Chapter II stipulates the VAT according to fixed rates:
“2. Revenue VAT rates:
| No | Trade | VAT rate |
| 1 | Services, rental of machinery and equipment, insurance; construction, installation exclusive of raw materials, machinery and equipment | 5 |
b) Determination of revenue VAT rates in some cases:
…b.2) With regard to contracts to provide machinery and equipment that include services performed in Vietnam, if value of machinery and equipment can be separated from value of services, corresponding VAT rates shall apply to corresponding parts of the contract. If the value of services cannot be separated from the value of machinery and equipment, 3% VAT shall apply.
+ Item a, Clause 2, Article 13, Section 3, Chapter II stipulates the CIT rate (%) of the revenue subject to CIT:
“2. CIT rate (%)
a) CIT rates (%) applied to trading:
| No | Trade | CIT rate |
| …
2 |
Services, lease of machinery and equipment, insurance, lease of oilrig | 5 |
| Private:
– Restaurant, hotel, casino management services; |
10 | |
| – Derivative financial services | 2 | |
| …
8 |
Income from copyright. | 10 |
Pursuant to the above provisions, in case the foreign contractor fails to meet the requirements to directly declare contractor tax in Vietnam as prescribed in Article 8 of Circular No. 103/2014/TT-BTC, the Vietnamese party is responsible for withholding VAT and CIT amounts according to the guidelines in Articles 4, 12, and 13 of Circular No. 103/2014/TT-BTC before making payments to foreign contractors.
And for example of the image storage access service, in case the revenue from providing the image storage access service is determined as income from copyright, it is not subject to VAT and the rate (%) of 10% CIT calculated on taxable revenue will be applied.
In case the revenue from providing image storage access services is not income from copyright, the contractor tax is calculated at the rate of 5% on the revenue subject to VAT and 5% on revenue subject to CIT (as regular service).