Contractors Tax
Foreign Contractors Tax

Foreign Contractor Tax – a special tax of Vietnam

What is Foreign Contractor Tax?

Foreign Contractor Tax or Foreign Contractor Withholding Tax –
abbreviated as FCT, FCWT, is a tax applied when foreign legal entities provide services to a Vietnamese legal entities.
In other words , it’s the tax that applies to the expenses payable by Vietnamese legal entity
(not the revenue/profit of the Vietnamese legal entity). The taxable party can be a foreign legal entity or a Vietnamese legal entity,
it’s depending on the provisions of the contract. However, taxpayer must be a Vietnamese legal entity.

Subjects to FCT Technical support fees: 10,000,000 JPY
※ Either party can bear the tax.


FCT includes 2 types of taxes – Value Added Tax (VAT) and Corporate Income Tax (CIT), each tax have difference

Content VAT
Product trading with services, exporting on the spot Tax Exemption 1
Construction, installation which does not include bidding for materials or machinery and equipment 5 2
Construction, installation which is including materials or machinery and equipment; transportation services, production 3 2
General services, equipment rental 5 5
Interest rate Tax Exemption 5
Copyright fee Tax Exemption 10
Copyright fee management services for the trademark use ; restaurant , hotel, casino management services 5 10
Securities transfer, reinsurance Tax Exemption 0.1
Derivative financial products Tax Exemption 2

The reason why FCT
is important

FCT is only in Vietnam, so the regulations are difficult to explain.
However, FCT has a big effect on Vietnamese businesses that have transactions with foreign partners, so this tax is quite important.

  • Wide range of taxable objects
  • Contract signed with foreign organization, individual.
  • Many points need to attention on the way specified in the contract
  • The taxable party is definite in the contract
  • Declare and pay tax within 10 days from the date of payment
  • Easily pointed out as a violation when tax inspection in Vietnam

Examples when consulting
on Foreign Contractor Tax

We provide a wide range of consultations from basic questions to specific cases.

  • What is FCT?
  • Do all transactions need to be reviewed to check which transactions are subject to contractor tax?
  • Until now we have not filed the FCT, is there any retrospective tax payment during tax inspection?
  • Will tax amount change based on the ways on writing the contract?
  • How is the FCT different from the Japanese withholding tax?
  • If already taxed in Japan, is it possible to avoid being taxed according to the regulation of the agreement to avoid double taxation? Is it possible to deduct taxes paid abroad?
  • Is it true that when sending people to work under a technical support contract, we need to pay both FCT and PIT?
  • FCT is a tax applied on services, so is it taxable when importing equipment items?
  • Is FCT applicable in international trade terms?

I-GLOCAL also supports
Foreign Contractor Tax
related services

I-GLOCAL also has a lot of knowledge and practical experience in Foreign Contractor Tax.

I-GLOCAL is providing Tax – Accounting services for over 1,000 Japanese enterprises currently, we solved problems with a high expertise.
Based on practical experiences, I-GLOCAL is confident to support enterprises invest in Vietnam
by the most suitable way to help businesses avoid potential risks or unnecessary taxes.
With a variety of support forms, we will try to support companies to expand investment to Vietnam
Consulting on Foreign Contractor Tax is
conducted any time through Annual Consulting Contract!

FCT related reports

I-GLOCAL ・Vietnam Report 
~Accounting and Tax
Vietnam Foreign Contractor Tax (FCT) Overview and Practical Considerations
I-GLOCAL ・Vietnam Report 
~Accounting and Tax
Foreign Contractor Tax and Incoterms in Vietnam
I-GLOCAL ・Vietnam Report 
~Accounting and Tax
Main transactions subject to foreign contractor tax in Japanese companies in Vietnam

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