Foreign contractor tax regulations regarding transfer of ownership and usage rights of images or videos
- Le Ngoc Quoc Bao
Vietnamese companies often use the ownership of foreign suppliers’ images or footage for advertising and business purposes in Vietnam. As a result, income earned by foreign suppliers will be subject to foreign contractor tax. Furthermore, the rate of foreign contractor tax differs depending on whether the income comes from “transfer of ownership” or “transfer of right to use.”
This article describes the foreign contractor tax provisions regarding the transfer of ownership and usage rights to images or footage of foreign suppliers.
1. Vietnam Intellectual Property Law Provisions
According to Vietnam’s 2005 Intellectual Property Law, which was amended in 2009 and 2022, intellectual property rights are rights held by organizations or individuals, including copyrights, neighboring rights, industrial property rights, and plant varieties. It is said to include the rights of
The Intellectual Property Law stipulates the following regarding the distinction between the transfer of copyright and related rights and the transfer of the right to use copyright and related rights.
Article 45 General provisions regarding transfer of copyright and neighboring rights
Transfer of copyright and related rights refers to the transfer of the owner’s property rights stipulated in the Intellectual Property Law by the copyright owner and the owner of related rights to another organization or individual based on a contract or related laws and regulations. It is a transfer to a person.
Article 47 General provisions regarding the transfer of the right to use copyright and related rights
The transfer of the right to use copyright or related rights refers to the transfer of the right to use copyright or related rights by the owner of copyright or related rights to another person or organization, which is one of the owner’s rights stipulated in the Intellectual Property Law. It is to permit the use of part or all of a certain amount for a certain period of time.
2.Tax regulations regarding transfer of copyright and related rights of foreign companies
(1) Corporate tax regulations
Circular No. 103/2014/TT- dated August 6, 2014 issued by the Ministry of Finance regarding the tax and declaration obligations of foreigners and foreign companies that provide intellectual property rights and intellectual property usage rights in Vietnam. Article 7, Paragraph 3 of the BTC stipulates as follows:
“Income from copyright refers to the transfer of intellectual property rights and the right to use intellectual property, the transfer of technology, the transfer of software licenses (the transfer of the right to use copyright and neighboring rights, the transfer of ownership of works, industrial (including transfers of ownership, technology and software licenses),
Furthermore, based on Article 4, Paragraph 2 of Circular No. 103/2014/TT-BTC, a 10% corporate tax will be applied to taxable income from copyright.
(2) Value-added tax provisions
Article 4, Paragraph 21 of Circular No. 219/2013/TT-BTC specifies “technology transfer based on the Technology Transfer Act and transfer of intellectual property rights based on the provisions of the Intellectual Property Act” as transactions exempt from value added tax. It has established.
Furthermore, pursuant to Article 12(2)a of Circular No. 219/2013/TT-BTC, a 5% value-added tax rate will be applied to taxable income from service provision activities.
The above contents can be summarized as follows.
・When a Vietnamese company signs an image or video ownership transfer agreement with a foreign supplier, the foreign supplier’s income from this transfer activity is subject to foreign contractor tax.
Since it falls under the transfer of intellectual property rights, it is not subject to value added tax, but sales from this transfer activity are subject to a 10% corporate tax.
・Vietnamese companies that enter into a contract with a foreign supplier to use images or videos for a certain period of time (without changing ownership) are also subject to foreign contractor tax.
In this case, 5% value added tax and 10% corporate tax will be levied on sales as they are treated the same as service provision activities.
Above, we have explained the foreign contractor tax when transferring ownership and usage rights of images or footage with foreign suppliers.
Please pay attention to the above points and be sure to declare foreign contractor tax appropriately in practice.
Intellectual Property Act 2005 (as amended by 2009 and 2022)
Detailed information on value added tax Circular No. 219/2013/TT-BTC of December 31, 2013
Information on foreign contractor tax Circular No. 103/2014/TT-BTC dated August 6, 2014