Vietnam – Approval On “Bilateral Agreement And Documentation To Implement The Foreign Account Tax Compliance Act Between Vietnam And The United States”.

 

21 August, 2016

 

On 30th June 2016, the Government has issued Resolution No. 57/NQ-CP on the approval of “Bilateral agreement and enclosed documents in order to implement Law on Tax Compliance for US’s foreign accounts between the Socialist Republic of Vietnam and the United States of America” (“Agreement”).

 

The Agreement has been issued to stipulate the implementation of Law on Tax Compliance for organizations and individuals from the US having accounts opened at financial institutions outside of the US. The Law aims to prevent tax evasion as prescribed in the regulations and Laws of The United States of America. Accordingly, the Law on Tax Compliance requires all financial institutions outside the US to provide information on financial accounts held by their clients such as US organizations and individuals to the Tax Department in the USA.

 

In any case where the financial institutions fail to comply with providing such information, the US Government can impose a 30% withholding tax on (i) income from stocks having origin in the US, (ii) interest from bank deposits opened in a US or foreign branch of an American bank and (iii) total revenue from stocks traded in the USA.

 

We will keep you updated of the content of Agreement as well as the required documents for implementation of the Law on Tax Compliance once those contents have been promulgated.