Withholding Tax on Vietnam–Mexico Transactions Without a Double Tax Treaty

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Short answer: As of the writing date (18 October 2026), Vietnam and Mexico have not signed a double tax treaty (DTA) — Mexico is not among the 81 countries and territories with which Vietnam has a DTA (PwC Vietnam, July 2026 tax newsletter), nor does Mexico’s own treaty list include Vietnam (PwC Tax Summaries — Mexico). Consequently, every payment from Vietnam to a Mexican counterparty (interest, royalties, services, capital transfers) is withheld at source under Vietnam’s full domestic rates, with no treaty caps available. This article covers the current domestic rates, the new foreign-contractor framework in force from 12 March 2026, procedures under Circular 95/2026/TT-BTC, and the state of bilateral negotiations.

1. The correct premise: no treaty yet, negotiations ongoing

• Vietnam has DTAs with 81 countries and territories (PwC Vietnam, newsletter on Circulars 89/2026 and 95/2026, July 2026). Mexico is not on that list.
• The reverse check: Mexico’s treaty list published in PwC Tax Summaries (Mexico — Individual — Foreign tax relief and tax treaties) spans roughly 60 jurisdictions from Argentina to Uruguay, with no Vietnam entry.
• Negotiations are underway: in February 2017, a Vietnamese Ministry of Finance delegation (led by Deputy Minister Do Hoang Anh Tuan, visiting Mexico 12–14 February 2017) agreed to advance negotiations on a customs cooperation agreement and a double taxation avoidance agreement (VNA, 15 February 2017). No official announcement of a signing has followed.
• Legal consequence: with no treaty in force, no “treaty rate caps” (Articles 10/11/12 in OECD-model terms) may be invoked for income paid to Mexican recipients. All calculations must rest on domestic law.

2. Source withholding under Vietnam’s domestic law

When a Vietnamese enterprise pays a Mexican organization with no permanent establishment in Vietnam, the Vietnamese payer must withhold, declare and remit tax at deemed rates on Vietnam-source turnover (the new foreign-contractor framework — see section 3):

• Loan interest: 5% CIT withholding; VAT-exempt (rate table under Decree 320/2025/ND-CP, as cited on thuvienphapluat.vn).
• Royalties: 10% CIT withholding; VAT-exempt.
• Services: 5% CIT withholding; 5% VAT.
• Capital transfers: 2% CIT withholding on the transfer value; VAT-exempt (from 15 December 2025, capital transfers by foreign sellers are generally subject to 2% CIT on sale proceeds — PwC Tax Summaries, Vietnam — Corporate — Income determination).
• Dividends paid to foreign corporate investors: Vietnam currently levies no source withholding on dividends where profits have already borne tax at the distributing company (PwC Tax Summaries, Vietnam — Corporate — Income determination: “Dividends received from investments in other companies in Vietnam are not subject to CIT if they have been subject to CIT at the investee companies”).

Key caveat: double tax treaties only cover taxes on income (CIT, PIT) — they never reduce or exempt VAT. This will remain true once a bilateral treaty is eventually signed.

3. The new foreign-contractor tax framework from 12 March 2026

The CIT rules for foreign contractors in Circular 103/2014/TT-BTC (Articles 1, 2, 7, 10, 13 except point 6.11 of clause 1 of Article 13, and Article 16) were repealed effective 12 March 2026. The current framework comprises:

• Law on Corporate Income Tax 67/2025/QH15 — the new CIT law, applicable from the 2026 tax year.
• Decree 320/2025/ND-CP — implementing guidance, setting the deemed rates on turnover for foreign enterprises (services 5%, royalties 10%, interest 5%, capital transfers 2%, securities transfers 0.1%).
• Circular 20/2026/TT-BTC — implementing guidance.

Contracts signed before 12 March 2026 under the old hybrid method may continue it until the contract ends. Every new contract with a Mexican counterparty from that point must use the new 67/2025 + 320/2025 + 20/2026 framework — the old Circular 103/2014 rates no longer apply.

4. Procedure: Circular 95/2026/TT-BTC and Circular 89/2026/TT-BTC

Circular 95/2026/TT-BTC (effective 1 July 2026, replacing Circular 205/2013/TT-BTC and Circular 45/2021/TT-BTC) guides the implementation of double tax treaties, the mutual agreement procedure (MAP) and advance pricing agreements (APAs). Note Article 84 (Implementation provisions):

• Clauses 1–2: the Circular takes effect 1 July 2026 and replaces Circulars 205/2013 and 45/2021.
• Clause 3: procedures for applying tax treaties are implemented under the Law on Tax Administration 108/2025/QH15 and Circular 89/2026/TT-BTC — i.e., treaty exemption/reduction/refund procedures now sit in Circular 89, not in the Circular 205 replacement.

Circular 89/2026/TT-BTC (effective 1 July 2026) details provisions of the Law on Tax Administration. Two practical points for Vietnamese businesses dealing with Mexican counterparties:

• Dossiers for tax refunds under a tax treaty (Clause 2, Article 56): the written request for refund of overpaid tax using form 02/HT (Appendix III) plus a certified copy of the authorization letter (where authorized). Practical meaning for the future: once a Vietnam–Mexico treaty is signed and in force, tax withheld under domestic law above the treaty cap may be claimed back through this procedure.
• The Vietnamese party may file the refund dossier on behalf of the foreign contractor under authorization, including receiving the refund into the Vietnamese party’s account (Official Letter 5746/CT-CS of the Tax Department introducing the new points of Circular 89/2026).

5. Checklist for Vietnamese businesses transacting with Mexican counterparties

1. Confirm the premise before any calculation: check Vietnam’s current DTA list — Mexico has no treaty; no “treaty caps” apply.
2. Classify the income correctly: interest (5%), royalties (10%), services (5%), capital transfers (2%), dividends (no source withholding) — apply Decree 320/2025 rates, not the repealed Circular 103/2014 rates.
3. Review contracts signed before 12 March 2026: they may keep the old hybrid method until expiry; new contracts use the 67/2025 + 320/2025 + 20/2026 framework.
4. Withhold, declare and remit in full before paying the Mexican counterparty; keep withholding vouchers for finalization and any future refund claims.
5. Track bilateral DTA negotiations: once a treaty is signed and in force, review all recurring payment streams (royalties, interest) and prepare exemption/reduction/refund dossiers under Circular 89/2026 (form 02/HT).
6. Do not invoke Mexico’s domestic rates in Vietnamese tax filings — Vietnamese obligations are computed under Vietnamese law only; Mexican tax is a matter for the counterparty and Mexico’s tax authority.

Frequently asked questions

Have Vietnam and Mexico signed a double tax treaty?
No. Vietnam has DTAs with 81 countries/territories (PwC Vietnam, July 2026) — Mexico is not among them, and Mexico’s own treaty list has no Vietnam entry. The two sides are at the negotiation stage (a Vietnamese Ministry of Finance delegation visited Mexico in February 2017 to advance talks).

How much is withheld on royalty payments to a Mexican company?
10% CIT withholding on the taxable turnover, VAT-exempt — per the rates in Decree 320/2025/ND-CP (new framework from 12 March 2026). No treaty cap applies because no treaty exists.

Is interest paid to a Mexican bank exempt from tax?
There is no special exemption for interest paid to Mexican counterparties absent a treaty. The 5% CIT withholding under the current foreign-contractor framework applies. (Note: from 1 January 2026, Law 141/2025/QH15 adds an exemption for interest on loans to the Vietnamese State/Government — not for ordinary commercial lending.)

Which document governs treaty-application procedures today?
Circular 95/2026/TT-BTC (effective 1 July 2026, replacing Circular 205/2013) guides treaty implementation; but exemption/reduction/refund procedures under a treaty follow the Law on Tax Administration 108/2025/QH15 and Circular 89/2026/TT-BTC (Clause 3, Article 84 of Circular 95/2026). Treaty-based refund dossiers use form 02/HT (Clause 2, Article 56 of Circular 89/2026).

When can a business recover tax withheld for a Mexican counterparty?
Once a Vietnam–Mexico double tax treaty is signed and in force, tax paid under domestic law above the treaty cap may be claimed back under Circular 89/2026 procedures (form 02/HT); the Vietnamese party may file on the foreign contractor’s behalf under authorization.

This article has been quality-reviewed by the FLAW AI Legal Council