An Indonesian mining-services company has just won a contract to serve a project in Quang Ninh. The Vietnamese payer is about to withhold 10% contractor tax on the contract value, but the Indonesian finance director objects: “We are covered by the Indonesia–Vietnam double taxation agreement — we should get relief.” The answer: treaty benefits do not apply automatically. The company must establish that it qualifies for treaty benefits and file a relief claim under the current framework before the Vietnamese tax authority will grant relief.
Does the treaty exist: the first verification step
Before any filing, confirm the treaty is in force. The Indonesia–Vietnam avoidance of double taxation agreement has been effective in Vietnam since 10 February 1999 (per the annex to Circular 133/2004/TT-BTC) and remains in force, never terminated. On the Indonesian side, the Directorate General of Taxes (DJP) lists 71 tax treaties in force, including Vietnam. Only when both conditions hold does the company have a legal basis to claim relief.
The Vietnamese procedure under the new framework from 1 July 2026
From 1 July 2026, guidance on tax treaties is consolidated in Circular 95/2026/TT-BTC of the Ministry of Finance — which replaces Circular 205/2013/TT-BTC (together with Circular 45/2021/TT-BTC on APAs), is built on the Law on Tax Administration 108/2025/QH15, and covers all three areas: treaty application, the mutual agreement procedure (MAP) and advance pricing agreements (APA). The new framework drops the old “treaty-coverage notification” stage on Form 01/NTDNN under Circular 205/2013; instead, the company follows two steps:
Step 1 — Confirm eligibility and treaty-benefit entitlement. Circular 95/2026 specifies who may apply a tax treaty (Article 8) and lays down the treaty-benefit principle: the tax authority may refuse to apply the treaty where the income recipient is not the beneficial owner, or where an arrangement is entered into mainly to obtain treaty benefits (Article 10). From the outset, the Indonesian company must therefore prepare evidence of its business substance and beneficial-owner status — the core difference from the purely formal notification of the old regime, and the point dossiers are most often challenged on.
Step 2 — File the treaty relief dossier when the income arises. The dossier comprises: the treaty application (relief claim); a Certificate of Residence issued by the Indonesian tax authority confirming the company’s Indonesian tax residence for the tax year in which the income arises; a copy of the service contract; payment vouchers and documents evidencing the transaction’s nature and the claimant’s beneficial-owner status. Filing procedure, forms and channels follow current tax administration law — the Law on Tax Administration 108/2025/QH15 and Circular 89/2026/TT-BTC (per Clause 3, Article 84 of Circular 95/2026). The receiving authority is the tax office directly supervising the Vietnamese payer (usually the tax office where the Vietnamese enterprise files). If relief is refused or double taxation still results, the mutual agreement procedure (MAP) — now also guided by Circular 95/2026 — is the escalation channel.
The reverse direction: Vietnam-source claims on Indonesian income
If cash flows the other way — say a Vietnamese company receives dividends from an Indonesian subsidiary — Indonesia runs its own procedure. The DJP requires the income recipient to present a tax residence certificate on the DJP’s Form DGT, endorsed by the Vietnamese tax authority, before the Indonesian payer may withhold at the reduced treaty rate. Vietnamese companies should obtain this form ahead of the payment cycle, as the DJP does not accept self-styled residence certificates.
Four mistakes that get dossiers returned
- Still following the repealed Circular 205/2013 process (Form 01/NTDNN notification) instead of the Circular 95/2026 framework effective 1 July 2026.
- A residence certificate for the wrong tax year, or not issued by the Indonesian tax authority.
- Contracts and payment vouchers that do not match on amounts, timing or beneficiary.
- Filing with the wrong tax office — not the one supervising the payer — causing rerouting and missed deadlines.
Frequently asked questions
Q: Does an Indonesian company automatically get contractor-tax relief in Vietnam under the treaty?
A: No. Since 1 July 2026 it must establish eligibility and treaty-benefit entitlement under Circular 95/2026/TT-BTC and file a relief dossier under the current tax administration procedure (Law on Tax Administration 108/2025 and Circular 89/2026/TT-BTC); relief applies only once the tax authority approves.
Q: Who issues the Certificate of Residence?
A: The tax authority of the residence state — the Indonesian company applies to the DJP; a Vietnamese company claiming on Indonesian income applies to the Vietnamese tax authority for the Form DGT.
Q: Where is the relief dossier filed?
A: With the tax office directly supervising the Vietnamese payer — the office where the Vietnamese enterprise declares and pays tax.
Q: Is the Indonesia–Vietnam treaty still in force?
A: Yes. Effective in Vietnam since 10 February 1999 and never terminated; Indonesia likewise lists Vietnam among the DJP’s 71 treaties in force.
FLAT Law Firm assists Indonesian and Vietnamese businesses with two-way treaty procedures: confirming treaty-benefit entitlement, compiling relief dossiers under Circular 95/2026, obtaining residence certificates and liaising with tax authorities. Contact us before the payment cycle so no deadline is missed.
This article has been quality-reviewed by the FLAW AI Legal Council