A Vietnamese company that earns income abroad — software development for a foreign client, engineering services, licence fees, interest on a loan to a foreign affiliate — is taxed in Vietnam on that income as part of its worldwide profit. The client's country may also tax it, usually by withholding a percentage from each payment. Two tools reduce the double tax: a Vietnamese residence certificate, which lets the foreign client apply the treaty rate or exemption at source, and the foreign tax credit in Vietnam, which gives credit in the Vietnamese CIT return for foreign tax actually paid, within limits.
Both depend on paperwork prepared at the right time. A residence certificate that arrives after the client has withheld at the full domestic rate of its country forces a refund claim abroad, which is slow and sometimes impossible. A foreign tax credit claimed without the foreign withholding certificate is weak. This guide is written for the growing number of Vietnamese outsourcing, software, engineering and trading companies with foreign customers, and for foreign-invested groups whose Vietnamese subsidiary provides services to the rest of the group.
Two layers of relief
| Where | Tool | Effect |
|---|---|---|
| Client's country (source) | Treaty relief claimed with a Vietnamese residence certificate | Reduces or removes the tax withheld abroad |
| Vietnam (residence) | Foreign tax credit in the CIT return | Credits foreign tax paid against Vietnamese CIT on the same income, within limits |
The first layer is always better value, because it avoids the cash leaving in the first place. The second layer catches what remains — foreign tax that the treaty still allows the source country to levy, or tax withheld where no treaty exists.
The CIT side rests on Law 67/2025/QH15, applied from the 2025 tax year, which taxes a Vietnamese company on income earned abroad and provides for credit of foreign tax paid. Procedures for residence certificates and treaty matters follow the Law on Tax Administration (Law 38/2019/QH14); the forms were long set out in Circular 80/2021/TT-BTC, and the 2026 guidance — Decree 252/2026/NĐ-CP and Circular 89/2026/TT-BTC — should be checked for the current version.
Getting a Vietnamese residence certificate
A Vietnamese company requests a certificate of tax residence from its managing tax office, stating the treaty partner, the income and the period for which it is needed. Foreign clients and their tax authorities usually want a certificate in a specific form, sometimes on their own template, and sometimes legalised. Before applying:
- Ask the client which form its tax authority accepts, for which period, and by what date it must be received to apply the treaty at payment.
- Check whether the client's country requires its own claim form to be signed or stamped by the Vietnamese tax office in addition to the certificate.
- Confirm the managing tax office in the taxpayer information lookup; since 1 July 2025 the tax administration works in three tiers across 34 provinces and centrally run cities, and a request lodged with the wrong office is returned.
- Plan for renewal. Certificates are issued for a period, and long contracts need a new one each year.
Contracting so the treaty works at source
Most foreign withholding problems are created in the contract. Three clauses help:
- Tax clause. State whether the price is gross or net of foreign withholding tax. A Vietnamese supplier that agrees a gross price bears any foreign tax the client withholds; if the price is net, the client bears it.
- Cooperation clause. The client agrees to apply the treaty rate when the Vietnamese company provides a residence certificate and any required forms by a stated date, and to provide the withholding certificate or receipt for any tax it does withhold.
- Service description. Describe the services precisely. Some treaties treat technical or consulting fees differently from business profits, and a vague description invites the client to withhold at the higher rate.
A Vietnamese company should also check that its own activities abroad do not create a permanent establishment in the client's country — for example, a team working on the client's premises for long periods. A PE abroad changes both the foreign tax and the Vietnamese credit calculation.
Claiming the foreign tax credit in Vietnam
In the annual CIT finalisation, a Vietnamese company includes its foreign income in taxable income and claims credit for foreign tax paid on that income. In principle:
- The credit is for income tax actually paid abroad on income that is also taxed in Vietnam — not VAT, sales tax or fees withheld abroad.
- The credit is generally limited to the Vietnamese CIT payable on that foreign income; foreign tax above that limit is not refunded in Vietnam.
- The company needs evidence of payment: the foreign withholding certificate or tax receipt, the contract, the invoice and the bank receipt of the net amount.
- Where a treaty would have allowed a lower foreign rate and the company did not claim it, the credit may be questioned for the excess; claim relief at source first.
Check the current CIT guidance for the exact conditions, the calculation and the documents required. The finalisation is due by the last day of the third month after the financial year end under the Law on Tax Administration — 31 March for a calendar-year company — so collecting withholding certificates from foreign clients should start well before year end. If your team reads Vietnamese, NganhThue.com explains how to read a treaty's elimination of double taxation article when tax has been paid abroad.
VAT and invoicing on exported services
Treaties do not cover VAT, so the VAT side follows Law 48/2024/QH15 alone. Vietnam has three VAT rates — 0%, 5% and 10% — and the 0% rate applies to exported goods and services that meet the conditions in the law and its guidance, including requirements on the contract, the foreign customer and payment through a bank. A service that does not meet the export conditions — for instance because it is consumed in Vietnam — takes the ordinary rate instead.
Exported services are still invoiced with a Vietnamese e-invoice, now under Decree 254/2026/NĐ-CP on e-invoices and documents and Circular 91/2026/TT-BTC from 1 July 2026. Keep the export contract, the e-invoice and the bank credit together; they support both the 0% rate and the foreign tax credit.
Vietnamese service centres inside foreign groups
Many foreign-invested companies in Vietnam now work mainly for their own group: software development centres, engineering hubs, accounting and back-office service centres. Their income comes from group companies abroad, which may withhold tax in their own countries on the fees. The same two layers apply — residence certificate at source, foreign tax credit in Vietnam — with two additions. First, the fees are related-party transactions, so the pricing must be arm's length and documented under the related-party rules; Decree 255/2026/NĐ-CP now governs tax administration for enterprises with related-party transactions from 1 July 2026. Second, several group companies in different countries may each withhold under different treaties, so the tracking of certificates and withholding receipts has to be done per paying company, not per group.
A worked example
Hypothetical example. Suppose a Da Nang software company signs a development contract with a client in a treaty country. The client's domestic law requires withholding on payments for services to foreign suppliers, but the treaty treats the fees as business profits taxable only in Vietnam if the supplier has no permanent establishment there. The company requests a Vietnamese residence certificate before the first invoice and sends it with the client's claim form. The client pays in full with no withholding. The company invoices at 0% VAT as an export of services, meets the bank payment condition, and keeps the certificate, contract, invoices and bank credits in one file.
Change one fact: the certificate arrives three months late. The client has withheld on the first three invoices. The company can ask the client to seek a refund in its country, or claim a foreign tax credit in Vietnam for the tax actually withheld, supported by the withholding certificates — but the credit may be questioned because treaty relief was available and not used on time. The cheaper fix was the earlier certificate.
Where to check
The taxpayer information lookup confirms your managing tax office and registration status, which foreign clients sometimes ask to see. Your company's e-tax account shows the CIT finalisation and any correspondence on residence certificates. Treaty texts are published by the Ministry of Finance and the tax authority; read the article on elimination of double taxation and the article for your income type in the treaty with each client's country.
Frequently asked questions
How does a Vietnamese company get a tax residence certificate?
By requesting it from its managing tax office, stating the treaty partner, the income and the period. Check the form the foreign client requires and the current procedure under the tax administration guidance.
Can we credit foreign VAT or sales tax against Vietnamese CIT?
No. The foreign tax credit covers income tax paid abroad on income also taxed in Vietnam. VAT, sales taxes and fees withheld abroad are not creditable against CIT.
Is the foreign tax credit unlimited?
No. It is generally limited to the Vietnamese CIT payable on the same foreign income. Foreign tax above that limit is not refunded in Vietnam.
Our client withheld tax although a treaty applies. What now?
Ask the client to apply the treaty going forward with your residence certificate, consider a refund claim in the client's country, and keep the withholding certificates for a foreign tax credit claim in Vietnam.
Do exported software services qualify for 0% VAT?
They may, if they meet the export conditions in Law 48/2024/QH15 and its guidance, including contract and bank payment requirements. Services consumed in Vietnam do not qualify.
Do we still need to issue a Vietnamese e-invoice to a foreign client?
Yes. Exported services are invoiced with a Vietnamese e-invoice. Keep it with the contract and bank credit to support both the VAT rate and the foreign tax credit.
