In case the Company uses foreign advertising services such as Facebook, Google and YouTube, these businesses are not headquartered in Vietnam, the Company is obliged to declare and pay contractor tax on behalf of the Company for foreign parties.

As reflected by Kisland Technology & Services Company (in Hanoi), the company uses foreign advertising services such as Facebook, Google, and Youtube. These businesses are not based in Vietnam. Therefore, the Company does not have invoices to balance inputs and outputs even though the Company has real expenses.

Through the receiving and responding system to businesses’ recommendations, the Company would like to ask the competent authority to request Facebook and Google to set up branches in Vietnam and issue invoices directly to businesses in Vietnam.

Also in the opinion of Kisland Technology & Services Company, multinational companies without headquarters in Vietnam do not have to pay corporate income tax (CIT), while domestic companies use their services and pay them still have to fulfill their obligations. Therefore, the Company proposes to have a fair tax collection policy for multinational companies.

Also in the opinion of Kisland Technology & Services Company, multinational companies without headquarters in Vietnam do not have to pay corporate income tax (CIT), while domestic companies use their services and pay them, still have to fulfill their obligations. Therefore, the Company proposes to have a fair tax collection policy for multinational companies.

Regarding this issue, The General Department of Taxation - Ministry of Finance has the following comments:

In Article 1, Chapter I of Circular No. 103/2014/TT-BTC dated August 6, 2014 of the Ministry of Finance guiding the implementation of tax obligations applicable to foreign organizations and individuals doing business in Vietnam or having income in Vietnam regulate the subjects to apply as follows:

“The guidance in this Circular applies to the following subjects (except for the case specified in Article 2, Chapter 1):

1.   Foreign business organizations that have a permanent establishment in Vietnam or do not have a permanent establishment in Vietnam; foreign individuals doing business in Vietnam or not being resident in Vietnam (hereinafter referred to as foreign contractors and foreign sub-contractors) doing business in Vietnam or earning income arising in Vietnam on the basis of a contract, agreement, or commitment between a foreign contractor and a Vietnamese organization or individual or between a foreign contractor and a foreign sub-contractor to perform a part of the work of a foreign contractor”.

2. In Article 4, Chapter II of Circular No. 103/2014/TT-BTC mentioned above, taxpayers:

“2. Organizations established and operated under Vietnam’s law or registers its operation under

Vietnam law; business entities that purchase services, services attached to goods, or pay income in

Vietnam under main contracts or subcontracts; purchase goods in the form of domestic import or

under Incoterms; distribute goods or provide services on behalf of foreign entities in Vietnam

(hereinafter referred to as Vietnamese entities) include:

- Business organizations established under Company law, the Law on Investment, and the Law on cooperatives

3. Taxpayers under the guidance in Clause 2, Article 4 of Chapter I are responsible for withholding value-added tax (VAT) and corporate income tax as guided in Section 3 Chapter II before making payments to foreign contractors, Foreign sub-contractors”.

In Article 8, Section 2, Chapter II of Circular No. 103/2014/TT-BTC above, the guidance on foreign contractor tax stipulates the subjects and conditions for applying tax payment according to the declaration method:

“A foreign contractor or foreign sub-contractor shall pay tax in accordance with instructions in section 2 Chapter II if the requirements below are satisfied:

1. The contractor/subcontractor has a permanent establishment in Vietnam or the contractor/subcontractor is a resident of Vietnam;

2. The period of business operation in Vietnam under the main contract or subcontract is 183 days or

longer from the effective date of the contract.

3. The contractor/subcontractor applies Vietnam’s accounting practice, has applied for tax registration

and issued with a taxpayer ID number (TIN) by a tax authority.”

In Article 11, Section 3, Chapter II of Circular No. 103/2014/TT-BTC stipulating the subjects and conditions for applying tax by the direct method:

“If the foreign contractor or foreign sub-contractor fails to meet any of the requirements mentioned in

Article 8 Section 2 Chapter II, the Vietnamese party shall pay tax on their behalf in accordance with

instructions in Article 12 and Article 13 Section 3 of Chapter II”.

Article 15 Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance (amended and supplemented according to the provisions of Clause 10, Article 1 of Circular No. 26/2015/TT-BTC dated December 31, 2013) February 27, 2015 of the Ministry of Finance regulates on conditions for deduction of input VAT:

 “1. Legitimate VAT invoices for purchases or receipts for payment of VAT on imported goods, or receipts for payment of VAT on behalf of foreign organizations that do not have Vietnamese legal status and the organizations and individuals, and the foreigners that do business or earn income in Vietnam.”.

Pursuant to the above provisions, in case the Company uses foreign advertising services such as Facebook, Google and Youtube. If these enterprises are not headquartered in Vietnam, the Company is obliged to declare and pay contractor tax on behalf of the foreign party according to the guidance in Article 12, Article 13, Section 3, Chapter II of Circular No. 103/2014/ TT-BTC mentioned above. The company uses VAT payment vouchers on behalf of foreign parties to deduct input VAT according to regulations.

Regarding tax policy for multinational companies, in Article 5 of Circular No. 103/2014/TT-BTC stipulating applicable taxes: