Scenario: a Vietnamese company pays USD 300,000/year in royalties to a Taiwanese partner (factory-management software license). Accounting says “Vietnam and Taiwan have no treaty” — true or false, and if true, what does the file look like?
Important correction: the treaty HAS existed since 1998
Contrary to popular belief, Vietnam and Taiwan do have a double tax treaty: signed 6 April 1998, in force since 6 May 1998 (searchable in Taiwan’s laws database, law.moj.gov.tw). The treaty uses old terminology (profit tax, profit remittance tax — dating from the profit-tax era) but Article 2(3) extends it to subsequently enacted similar taxes — covering Vietnam’s current CIT. Article 10 (dividends) caps at the commonly published 10%; Articles 11/12 (interest/royalties) cap at commonly published levels — verify against the treaty text before applying specific numbers.
Dossier checklist: the Taiwanese residence certificate
Under Circular 80/2021/TT-BTC, the Taiwanese side prepares: (1) a Certificate of Residence from the Taiwanese tax authority for the income year; (2) the license agreement evidencing the royalty; (3) the claim letter — which should cite the treaty’s number and effective date (6 April 1998) to prevent officers from assuming “no treaty exists”; (4) beneficial-ownership evidence. The file goes to the Vietnamese payer. For royalties: Vietnamese domestic FCT is 10% — compare against the treaty cap (published level) to decide whether filing is worthwhile.
The trap: tax officers unaware the treaty exists
This pair’s signature risk: because the treaty was signed between two economic-cultural offices (not a conventional “intergovernmental treaty”), some tax officers may fail to locate it and deny application. Prevention: in the claim letter state the treaty’s full name + signing date + effective date + lookup source (law.moj.gov.tw); attach a treaty copy. Do not let a legally correct file die for administrative reasons.
Bottom line for decision-makers
For Vietnam → Taiwan flows: step 0 is establishing the treaty exists (1998, still in force) — do not forfeit benefits to the “no treaty” rumor; step 1 is the Circular 80/2021 checklist with a Taiwanese COR from the year’s start; step 2 is comparing treaty caps vs domestic FCT per income type. The rule: treaty benefits are only lost when you do not know they exist.
Frequently Asked Questions
Do Vietnam and Taiwan have a tax treaty?
Yes. Signed 6 April 1998, in force since 6 May 1998 (law.moj.gov.tw). Article 2(3) extends it to subsequently enacted similar taxes, covering Vietnam’s current CIT.
What are the Vietnam–Taiwan treaty caps?
Article 10 (dividends) commonly published at 10%; Articles 11/12 (interest/royalties) at commonly published levels — verify against the treaty text before applying specific numbers.
What does the dossier contain?
Taiwanese tax authority Certificate of Residence; the agreement; a claim letter (citing the treaty’s number + effective date); beneficial-ownership evidence — via the Vietnamese payer (Circular 80/2021/TT-BTC).
What is this pair’s signature risk?
Tax officers may not know the treaty exists (signed between two economic-cultural offices) — prevent by stating its full name/dates/lookup source in the claim letter.
This article has been quality-reviewed by the FLAW AI Legal Council
