Vietnam’s foreign contractor tax (FCT) is a tax that is applied to transactions conducted in Vietnam between a foreign company or sub-contractor and a Vietnamese company. It is made up of two kinds of taxes. Accordingly, the foreign contractor will be subject to FCT including: (1) value-added tax (VAT) and (2) corporate income tax (CIT) if it is an enterprise / or personal income tax (PIT) if it is an individual in accordance with the provisions of the foreign contractor tax law.


Vietnam’s foreign contractor tax is applicable when carrying out business in Vietnam under a contract signed with a Vietnamese party or signed with a foreign sub-contractor. This includes the following transactions.

  1. A foreign entity’s sale of goods or commodities within Vietnam: This means goods delivered to places within the territory of Vietnam or whereby the foreign entity still retains ownership of the goods, bears distribution, advertising or marketing costs, is responsible for the quality of goods, making pricing decisions, or authorizes/hires Vietnamese entities to carry out part of the distribution of goods in Vietnam.
  2. A foreign entity’s sale of goods or commodities which are associated with services to be performed in Vietnam: This includes but is not limited to: installation, commissioning, maintenance, and other types of services.
  3. A foreign entity’s provision of services in Vietnam: This includes online advertising and marketing, vehicles and machinery repair services, brokerage, training (except for online training), and shared telecommunications service charges. Note that there are certain exceptions stated in the regulations for tax exemption, including services performed and consumed completely outside Vietnam and a number of specific services performed outside Vietnam including advertising and marketing (not online).
  4. Other incomes receivable in Vietnam in any form. This is irrespective of the location where the business is carried out. It includes:
  • income from asset transfers/assignments/liquidations;
  • income from royalties and interest; and
  • compensation from contractual breaches.


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