To: The\r\nRepresentative Office of Joyo Bank, Ltd. in Hanoi City
\r\n(Address: Suite 504, Sun Red River Building, 23 Phan Chu Trinh Street, Phan Chu\r\nTrinh Ward, Hoan Kiem District, Hanoi City - TIN: 0108178045)

In response to the Official Dispatch No. 01 dated\r\nAugust 05, 2019 of the Representative Office of Joyo Bank Ltd. in Hanoi City\r\nregarding tax policies, Hanoi City Department of Taxation hereby gives\r\nguidelines as follows:   

- Pursuant to Circular No. 151/2014/TT-BTC dated\r\nOctober 10, 2014 of the Ministry of Finance of Vietnam providing guidelines for\r\nimplementation of the Government's Decree No. 91/2014/ND-CP dated October 01,\r\n2014 providing amendments to Decrees on taxation;

+ Article 8 amending Point a Clause 8 Article 4 of\r\nthe Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of\r\nFinance of Vietnam providing guidelines for implementation of the Law on\r\nvalue-added tax and the Government’s Decree No. 209/2013/ND-CP dated December\r\n18, 2013 elaborating and providing guidelines for implementation of some\r\nArticles of the Law on value-added tax (hereinafter referred to as “Circular\r\nNo. 219/2013/TT-BTC” stipulates items not subject to VAT as follows:

“a) Credit extension services, including:

- Lending;”

- Pursuant to the Circular No. 103/2014/TT-BTC\r\ndated August 06, 2014 of the Ministry of Finance of Vietnam providing guidance\r\non tax liabilities incurred by foreign organizations and individuals doing\r\nbusiness or earning income in Vietnam:

+ Clause 1 Article 4 defines taxpayers as\r\nfollows: 

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Foreign contractors and foreign subcontractors\r\nthat have permanent establishments in Vietnam or are residents of Vietnam shall\r\nbe determined in accordance with the Law on Corporate Income Tax, the Law on\r\nPersonal Income Tax, and their guiding documents.

If permanent establishments and residents are defined\r\notherwise by a Double Taxation Agreement to which Vietnam is a signatory, such\r\nAgreement shall apply.”

+ Clause 3 Article 7 stipulates incomes subject to\r\ncorporate income tax (CIT) as follows: 

“3. Incomes earned in Vietnam by foreign\r\ncontractors and foreign subcontractors are any incomes they receive under main\r\ncontracts or subcontracts (except for the case described in Article 2 Chapter\r\nI), regardless of their business locations. Taxable incomes of foreign\r\ncontractors and foreign subcontractors in some cases:

…

- Income from loan interests means income of a\r\ncreditor from loans, whether or not such loans are secured, whether or not the\r\ncreditor receives profits of the borrower; income from deposit interests\r\n(except for deposit interests of foreigners and interests derived from deposit\r\naccounts meant to sustain operation in Vietnam of diplomatic missions,\r\nrepresentative offices of international organizations and non-governmental\r\norganizations in Vietnam), including associated bonuses (if any); income from\r\ninterests on late payment under contracts; income from bond interests and bond\r\ndiscounts (except for tax-free bonds), treasury bills; income from interests on\r\ncertificates of deposit.  

Loan interests include the fees payable by the\r\nVietnamese party under the contract.”

+ Article 8 stipulates entities declaring and\r\npaying VAT using credit-invoice method, paying CIT as follows:

“A foreign contractor or foreign subcontractor\r\nshall pay tax in accordance with instructions in Section 2 Chapter II if the\r\nrequirements below are satisfied:

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2. The period of business operation in Vietnam\r\nunder the main contract or subcontract is 183 days or longer from the effective\r\ndate of the contract;

3. The contractor/subcontractor applies\r\nVietnam’s accounting regimes, has applied for tax registration and has been\r\nissued with a taxpayer ID number (TIN) by a tax authority.”

+ Article 11 Section 3 of Chapter II stipulates\r\nentities paying VAT and CIT according to fixed rates of revenues as follows:

“If the foreign contractor or foreign\r\nsubcontractor fails to meet any of the requirements mentioned in Article 8\r\nSection 2 Chapter II, the Vietnamese party shall pay tax on their behalf in\r\naccordance with instructions in Article 12 and Article 13 Section 3 of Chapter\r\nII.”

+ Article 13 Section 3 of Chapter II provides for\r\nthe CIT as follows:

“The basis for CIT calculation is the revenue\r\nsubject to CIT and CIT rate (%).

CIT payable =\r\nRevenue subject to CIT x CIT rate

1. Revenue subject to CIT

a) Revenue subject to CIT

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...2. CIT rate (%)

a) CIT rates (%) applied to business sectors:

Loan interests: 5%”

+ Article 14 Section 4 of Chapter II stipulates\r\nentities and requirements for applying credit-invoice method, paying CIT\r\naccording to fixed rates of revenues as follows:

“Foreign contractors and foreign subcontractors\r\nthat meet the requirements in Clause 1 and Clause 2 Article 8 Section 2 Chapter\r\nII, and the organizations that apply accounting regimes in accordance with\r\nregulations of law on accounting and guidelines of the Ministry of Finance of\r\nVietnam shall register with tax authorities to pay VAT using credit-invoice\r\nmethod and pay CIT according to fixed rates of taxable revenues.”

+ Article 16 provides for CIT as follows:

“Article 13 Section 3 of Chapter II shall apply”

- Pursuant to Article 20 of the Circular No.\r\n156/2013/TT-BTC dated November 06, 2013 of the Ministry of Finance of Vietnam\r\nproviding guidelines for some Articles of the Law on Tax Administration, the\r\nLaw on amendments to the Law on Tax Administration and the Government's Decree\r\nNo. 83/2013/ND-CP dated July 22, 2013 providing provisions on declaration of\r\nVAT and CIT by foreign contractors and foreign subcontractors;

Pursuant to the abovementioned regulations, the\r\nincome earned by the Representative Office of Joyo Bank Ltd. in Hanoi City\r\n(foreign contractor) from interests on deposit accounts in Vietnam shall be\r\nsubject to CIT as prescribed in Clause 3 Article 7 of the Circular No.\r\n103/2014/TT-BTC. The foreign contractor is required to declare and pay foreign\r\ncontractor withholding tax according to Article 20 of the Circular No.\r\n156/2013/TT-BTC.

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The Representative Office of Joyo Bank Ltd. in\r\nHanoi City is requested to comply with guidelines herein./.

PP.\r\n DIRECTOR 
\r\n DEPUTY DIRECTOR 
\r\n
\r\n
\r\n
\r\n
\r\n Nguyen Tien Truong