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Going along with the development of science and technology and industrial revolution 4.0, the National Assembly and Government have promulgated by many policies to support the development of Information Technology (“IT”) industry in Vietnam in order to enhance the competitiveness of IT enterprises as well as the investment attraction strategy, in which the Corporate Income Tax (“CIT”) incentives policy stands out to further promote the development and application IT in Vietnam.

Being a dependent unit of a foreign company to conduct a number of limited commercial promotion supporting activities permitted by Vietnam laws, a Vietnam-based representative office without carrying out any profit-making activities seems to be quite simple to manage, save cost and simplify the compliance procedures during operation, i.e. no Value Added Tax (VAT), no Corporate Income Tax (CIT), no requirement to maintain the stipulated accounting books, no independent audit required by laws, etc.

After more than three years of implementing Decree No. 20/2017/ND-CP ("Decree 20") and other amending and guiding documents such as Decree No. 68/2020/ND-CP ("Decree 68") and Circular No. 41/2017/TT-BTC ("Circular 41"), on 5 November 2020, the Government has officially issued Decree No.132/2020/ND-CP ("Decree 132") to replace Decree 20 and Decree 68 prescribing tax administration for enterprises engaged in Transfer Pricing.

Valerie Teo and Nguyen Tan Tai, of Grant Thornton Vietnam, discuss the tax implications for foreign individuals who are assigned to work in Vietnam and the tax protection available under a double taxation agreement.