Uni 07-11 - 2012 - Tax policy to foreign contractors Issue date: 14/11/2012 | 2:34:56 PM Official letter No. 3748/tct-cs October 26, 2012 of the General Department of Tax on tax policies for foreign contractors
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In case, enterprises sign contracts with foreign companies (foreign contractors) to purchase equipment including the value of the software and the right to use the software ( the contract states that the equipment value to the software value and the right to use the software are separated ), if the value of the software and the right to use the software is defined as the technological transfer in accordance with the Law on technological transfer, or assignment of intellectual property rights in accordance with the intellectual property law, they will not be subject to VAT and is defined as income from royalties with CIT ratio (%) to revenue of 10%.
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Enterprises are responsible for tax registration with the tax authorities to declare and pay tax on behalf of foreign contractors under the guidance in Clause 2, Article 18 of Circular No. 28/2011/TT-BTC dated 28 Dec 2011 of the Ministry of Finance.
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