Forgotten withholding: the tax authority recovers directly from the Vietnamese payer, plus daily interest
The duty to withhold contractor tax rests on the Vietnamese party paying the income. When an enterprise pays a foreign supplier in full without withholding, the tax authority does not need to chase the supplier abroad: the unpaid tax is recovered directly from the Vietnamese party as the withholding and remitting obligor under the Law on Tax Administration 108/2025/QH15, together with late-payment interest of 0.03% per day from the filing deadline of that payment until full payment. Because the payment has already left in full, the enterprise usually pays out of pocket and can only recover from the supplier if the contract’s tax-allocation clause allows set-off against later payments.
The recovery limitation period under the tax administration framework means the risk does not lapse when the financial year closes: a missed service fee can surface in a tax inspection several years later, by which time the accumulated days of late payment have grown into a material amount relative to the principal tax.
The payments most commonly missed, and how self-review earns penalty relief
Inspection practice shows the most commonly missed payments are software royalties and platform subscription fees, online advertising fees paid to foreign platforms, cloud service fees, commissions to foreign agents, training fees and periodic maintenance fees, interest paid to foreign lenders and international freight — their common feature is that business departments pay them directly through the bank without passing the tax review applied to large contracts.
The good news is that the law rewards voluntary correction: under Article 9 of Decree 125/2020/ND-CP as amended by Decree 310/2025/ND-CP effective from 16 January 2026, an enterprise that files supplementarily and pays the full shortfall before the tax authority announces an inspection decision is not administratively fined for the incorrect filing, paying only the tax and late-payment interest; voluntary remediation is also a mitigating circumstance under Article 9 of the Law on Handling of Administrative Violations 15/2012/QH13 in cases where a fine still applies. By contrast, correcting only after an inspection decision has been announced leaves the incorrect-filing fine of 20% of the under-declared tax under Article 16 of Decree 125/2020/ND-CP, and fraudulent evasion is fined one to three times the evaded tax under Article 17.
Frequently asked questions
If you pay a foreign supplier but forget the contractor tax, how is it back-assessed?
The tax authority recovers directly from the Vietnamese party — the withholding and remitting obligor — for the full unpaid contractor tax on those payments plus late-payment interest of 0.03% per day from the missed deadline under the Law on Tax Administration 108/2025/QH15; recovery from the supplier is possible only if the contract so allows.
Which payments are most commonly missed?
The most commonly missed are software royalties and subscriptions, online advertising fees, cloud service fees, agency commissions, training fees, periodic maintenance fees, foreign loan interest and international freight — payments often made straight through the bank without tax review.
If you self-review and file supplementarily, can penalties be reduced?
Yes. Self-reviewing, filing supplementarily and paying the full shortfall before the tax authority announces an inspection decision avoids the administrative fine for incorrect filing under Article 9 of Decree 125/2020/ND-CP as amended by Decree 310/2025/ND-CP; only late-payment interest is due, and voluntary remediation is a mitigating circumstance under Article 9 of the Law on Handling of Administrative Violations 15/2012/QH13.
This article has been quality-reviewed by the FLAW AI Legal Council
