May 16 – When it comes to international trade, the tax systems of different countries often put global investors in an unfavorable position to pay redundant taxes on their income – that is, double taxes. For example, a company may be subject to taxes in its country of residence, as well as in countries where it obtains income through foreign investment for the supply of goods and services. In the event of a direct contradiction between national tax legislation and the tax provisions of a DBAA, priority is given to the DBA ABA. However, national tax laws take precedence where the relevant tax obligations contained in the DBAA do not exist in Vietnam or where the tax rates in the agreement are higher than national rates. For example, if a signatory country is allowed to collect a type of tax that Vietnam does not recognize, Vietnamese tax laws apply. DTAs apply to individuals and companies established in Vietnam, citizens of the country with which Vietnam has signed a DBAA, or both. The material in this article comes from the October 2011 edition of Vietnam Briefing Magazine, entitled “Vietnam`s International Taxation Agreements”, available as a PDF download from the Asia Briefing Bookstore. In this issue, we insert Vietnamese free trade agreements and the importance of avoiding double taxation for Vietnamese investments. Residents of countries that have signed DBAas with Vietnam are subject to the corresponding taxes in their country of origin. A person is considered a resident if he or she owns accommodation, stays in the country for a certain period of time or if he or she meets other relevant criteria. Payments made by a company operating mainly in the same sector and resident in Vietnam are considered to be paid up to 10% of the gross amount of the payment. Dezan Shira & Associates is a specialized foreign direct investment practice that offers multinationals investing in emerging Asians, business creation, business consulting, tax and compliance consulting, accounting, payroll, due diligence and financial control.
Since its inception in 1992, the company has become one of Asia`s most diverse full-service consulting firms, with operational offices in China, Hong Kong, India, Singapore and Vietnam, as well as liaison offices in Italy and the United States.