A Vietnamese FDI enterprise supplying services back to its parent — technical support, software development, market analysis, supply chain management — is a common operating model, but the VAT rate on this revenue is not automatically 0%. The line between 0% and 10% under Article 9 of VAT Law No. 48/2024/QH15 turns on a single question: is the service’s output consumed outside Vietnam, or does it serve the subsidiary’s own activities inside Vietnam?
Legal basis
- Clause 1, Article 9 of VAT Law No. 48/2024/QH15: the 0% rate for exported services — services supplied directly to organisations and individuals abroad and consumed outside Vietnam.
- Clause 3, Article 9 of VAT Law No. 48/2024/QH15: the 10% rate applies to remaining goods and services — including services supplied by a Vietnamese enterprise whose place of consumption is Vietnam, even where the payer is the foreign parent.
- Decree No. 181/2025/ND-CP guiding VAT Law No. 48/2024: the 0% conditions comprise a service supply contract, bank payment documents, and the catalogue of services supplied to foreign parties but consumed in Vietnam that are excluded from 0%.
- Decree No. 255/2026/ND-CP on tax administration for enterprises with related-party transactions, replacing Decree No. 132/2020/ND-CP and applicable from the 2026 corporate income tax period: intra-group service fees must pass the actual-benefit analysis and related-party documentation obligations.
- Decree No. 123/2020/ND-CP on invoices and documents, as amended by Decree No. 70/2025/ND-CP: electronic VAT invoices also apply to services supplied to foreign organisations, with buyer particulars for an organisation abroad holding no Vietnamese tax code.
The deciding question: where is the service consumed?
Tax inspection practice divides intra-group services into two clear streams. The first stream earns 0%: services whose output leaves Vietnam and serves only activities outside Vietnam — programming software modules for the group’s global platform, analysing foreign customer data, designing products for non-Vietnamese markets, technical support for end users abroad. The second stream bears 10%: services the parent pays for but whose output serves the Vietnamese subsidiary itself — managing the Vietnam plant, training the Vietnamese sales force, legal and tax advice for the subsidiary’s own Vietnamese transactions, support in negotiations with Vietnamese authorities. This group is treated as consumed in Vietnam because the enjoyed benefit sits in Vietnam; invoicing 0% for it is the most frequently back-assessed error in audits of FDI enterprises with intra-group service revenue.
The hard case is the mixed service: one regional support contract serving both the parent and Vietnamese operations. The safe treatment is to split the contract or its annexes by service output, applying 0% to the part consumed outside Vietnam and 10% to the part consumed inside Vietnam, with the allocation basis recorded in the file. Sweeping all mixed revenue into 0% with no allocation basis is a position that cannot be defended on audit.
Invoicing the parent: technical points that commonly go wrong
The FDI enterprise must still issue an electronic VAT invoice for services supplied to the parent, stating the rate per the classification above and buyer particulars for a foreign organisation — name, overseas address and foreign tax code if any. The invoicing time is when the service supply completes or when money is collected in advance, whichever comes first under invoice rules. Invoices issued in foreign currency must be converted into Vietnamese dong at the prescribed exchange rate for declaration, and 0% revenue must still be declared in full on the VAT return rather than left blank because ‘no tax arises’ — omitting 0% revenue declarations is an error that makes input refund files suspect from the screening round.
The proof dossier for consumption outside Vietnam: four layers
For revenue rated 0%, the proof dossier comprises: the framework service contract plus annexes and periodic orders showing concrete outputs; delivery evidence such as handover reports, the parent’s acceptance emails and task-system records; bank payment documents matching each period’s revenue; and a written explanation of the service’s nature, identifying where the output is used and for which activity outside Vietnam. The fourth layer is the one most often skipped, yet it is decisive in explanation sessions, because the contract and bank documents prove a transaction exists — they do not prove where consumption occurred.
Transfer-pricing risk runs in parallel with rate risk
Service revenue with the parent is simultaneously a related-party transaction. The fee must pass the benefit test: whether the parent actually receives an economic benefit from the service, whether the service duplicates shareholder activities the parent must bear itself, and whether the fee level is arm’s length under benchmarking analysis. A service concluded to be a shareholder activity has its corresponding cost disallowed in full at the receiving side, while on the Vietnamese enterprise’s side the declared revenue is re-examined for consumption character. The related-party file under Decree No. 255/2026/ND-CP should therefore be built in sync with the VAT rate proof dossier, sharing one service description — two different descriptions of the same service across the two files is the easiest weakness to exploit on audit.
The housing-law bridge: a condotel is not housing
Some FDI enterprises and foreign individuals are simultaneously interested in condotels and officetels as an asset-holding channel in Vietnam. It must be stated upfront: these are works on time-limited commercial and service land, not housing under the Housing Law — the questions below clarify this asset class’s legal frame and ownership limits.
Conclusion and recommendations
For services supplied to the parent, an FDI enterprise should take three steps before the next declaration period: reclassify the entire intra-group service catalogue by place of consumption and split out the 10% revenue stream if any; standardise the four-layer proof dossier for the 0% portion; and synchronise service descriptions between the VAT file and the related-party file. The cost of these three steps is far below one conclusion back-assessing 10% on several years of service revenue plus penalties and late-payment interest.
Frequently asked questions
At what points would amending the Housing Law create a clearer legal frame for condotels and officetels?
The first clarification is one of address: condotels and officetels are not housing, so their legal frame sits mainly in the 2024 Land Law and Real Estate Business Law No. 29/2023, as construction works on commercial and service land, rather than in the Housing Law. Decree No. 10/2023/ND-CP amending Decree No. 43/2014/ND-CP opened the way to certifying buyers of non-housing construction works in projects, defining ownership of the work as attached to time-limited commercial and service land-use rights. The amendments the Ministry of Construction is consulting on in the draft amended Housing Law focus on foreign home ownership and condominium operation management; they create no new ‘tourism housing’ institution for condotels. Expecting that draft to convert condotels into housing is therefore an expectation addressed to the wrong document — and at the time of writing the draft has not been adopted.
How do the ‘tourism’ or ‘commercial-service’ factors decide a condotel’s 50-year ownership regime?
A condotel’s 50-year regime comes not from the tourism or commerce label but from the project’s land-use term: commercial and service land under the 2024 Land Law is allocated or leased for no more than 50 years, or 70 years in special cases. A condotel buyer is certified as owning the construction work within the project’s remaining land-use term; when the land term expires, ownership of the work is handled according to the State’s decision on extension or recovery of the land. This is the essential difference from an apartment on long-term residential land — an apartment buyer owns the unit on a stable, long-term basis, while a condotel buyer owns for a term tied to the land. Any condotel advertisement promising ‘long-term ownership’ contradicts the commercial and service land mechanism and is a legal risk signal to avoid.
How are the rights of condotel buyers who purchased before a clear frame existed confirmed?
Earlier condotel buyers fall into two groups. The first group has been issued an ownership certificate for the construction work under Decree No. 10/2023/ND-CP or transitional rules: their rights are fully respected for the term stated on the certificate, including transfer, inheritance and mortgage like a time-limited asset attached to land. The second group has only signed a sale contract or agreement with the developer without certification: their rights are contractual rights only, and certification depends on whether the project satisfies current land, construction and fire-safety conditions; if the project cannot qualify for certification, buyers can only demand the developer perform its contractual commitments or pay compensation, and cannot ask the State to recognise ownership. This is why a project’s legal file must be checked before money is paid, even for projects that have operated for years.
In which legal documents must a new condotel project state land-use purpose and ownership term clearly?
Three documents must carry consistent information. The land allocation or lease decision and the project’s land-use-right certificate must record the commercial and service land-use purpose together with the specific land-use term — the root of every derivative right. The construction permit and design file must show the work as a tourist accommodation facility or an office combined with accommodation, not as housing. The sale contract with customers must state the work ownership term as equal to the remaining land-use term, the commitment to certify the buyer’s ownership of the work, and the mechanism for handling expiry of the land term. Inconsistency among the three documents — for example commercial-service land while the contract promises a ‘long-term owned apartment’ — is the most common source of disputes in operating condotel projects.
This article has been quality-reviewed by the FLAW AI Legal Council
