Vietnam Tax Alert 2016/Issue 9 | KPMG | VN

Vietnam Tax Alert 2016/Issue 9

Vietnam Tax Alert 2016/Issue 9

The Ministry of Finance opines that where a foreign party allows a Vietnamese party to use their goods’ trademark for selling purpose, such activity shall be considered as the transfer of right to use trademark, etc.

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According to recent guidance under Official Letter No. 10453/BTC-CST dated 27 July 2016 (“Official Letter 10453”), after consulting with the Ministry of Science and Technology, the Ministry of Finance opines that where a foreign party allows a Vietnamese party to use their goods’ trademark for selling purpose, such activity shall be considered as the transfer of right to use trademark, but distinguishes itself from the transfer of intellectual property in accordance with the Law on Intellectual Property. As a result, in addition to the CIT portion of 10%, the income from the transfer of right to use trademark should be subject to VAT at 10% (applicable for cases declaring VAT under credit method), or 5% (applicable for cases declaring VAT under deemed method). Therefore, the FCT on income from the transfer of right to use trademark shall consist of both CIT and VAT portions.

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