Scenario: your company is launching a new product and hires a UK research firm to survey Vietnamese consumers — partly remote (questionnaire design, analysis in London), partly on-site (expert interviews in Vietnam). Fee USD 36,000 (net). How is contractor tax computed for a “half-remote” service?
Step 1 — Characterize: ordinary service, but delivery location drives PE
Market research is an ordinary service (2026 framework: CIT Law 67/2025, Decree 320/2025, Circular 20/2026): 5% VAT + 5% CIT. The nuance: work performed in Vietnam (face-to-face interviews) versus remotely (London analysis) bears the same contractor rates — but differs on treaty CIT-exemption prospects: experts visiting Vietnam aggregate days, and breaching 183 days/12 months can create a service PE.
Step 2 — The numbers on USD 36,000 (net)
- VAT withheld: 36,000 × 5% = USD 1,800.
- CIT taxable revenue: 36,000 + 1,800 = USD 37,800.
- CIT withheld: 37,800 × 5% = USD 1,890.
- Total withholding: USD 3,690 — the UK firm nets USD 32,310.
Step 3 — Treaty relief and filing on behalf
Tax treaty: the UK has a treaty with Vietnam (1994). If the entire service were remote (no experts in Vietnam), survey fees could be CIT-exempt under Article 7 (Form 01/HTQT) — 5% VAT still applies. For the hybrid model, track expert schedules to assess PE.
Filing on the UK partner’s behalf: the Vietnamese enterprise retains the contractor tax within the amount payable, prepares Form 01/NTNN under Circular 80/2021, and pays on behalf before remitting the balance to the UK. Contracts signed from 12/3/2026 should note: the hybrid method is no longer available.
Frequently asked questions
1. How much contractor tax on foreign market research?
5% VAT + 5% CIT (on VAT-inclusive revenue) — on USD 36,000 net, total withholding USD 3,690.
2. Do remote and on-site portions differ?
Same contractor rates — but different treaty prospects: only clean-PE remote work easily qualifies for CIT exemption.
3. Do short expert visits create a PE?
Aggregate days over 12 months — over 183 days on the same project can create a service PE.
4. Can a treaty exempt it?
CIT may be exempt under Article 7 without a PE (fully remote is the favorable case) — 5% VAT still applies.
5. What must the Vietnamese company do on payment?
The Vietnamese side covers all three steps for the UK firm — withholding, declaring on Form 01/NTNN, and paying the tax.
This article has been quality-reviewed by the FLAW AI Legal Council
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