Official Letter Guiding Foreign Contractor Withholding Tax for online training service

In case the enterprise signs a contract with a foreign organization, which does not have a permanent establishment in Vietnam, to provide online training services in Vietnam for the enterprise’s experts for technical, professional purposes, the income received by such foreign organization is subject to FCWT. Vietnamese enterprise is responsible for withholding, declaring and paying the taxes on behalf of the foreign organization (foreign contractor). The online training service is not subject to Value Added Tax, but subject to Corporate Income Tax, with the applicable rate of 5% on the tax assessable revenue. At the same time, the enterprise should apply for tax registration as stated under Clause 4, Article 7, Circular 95/2016/TT-BTC dated 28 June 2016 issued by the Ministry of Finance Guiding tax registration.