FOREIGN CONTRACTOR TAX: CIRCULAR 20/2026/TT-BTC CHANGES THE WAY CIT TAXABLE REVENUE IS DETERMINED

Circular 20/2026/TT-BTC dated 12 March 2026 (“Circular 20”) changes how a foreign contractor’s CIT-taxable revenue is determined: taxable revenue now includes VAT. The change sits in a single sentence, yet it raises the tax on every payment to a foreign contractor. Under net-price contracts, the Vietnamese party bears the increase.

Under Circular 103/2014/TT-BTC, a foreign contractor’s CIT-taxable revenue excluded VAT. Circular 20 removes this exclusion: CIT-taxable revenue is the entire revenue received by the contractor, before deduction of any taxes payable. In other words, the contractor pays CIT on the VAT component as well. The foreign contractor VAT calculation is unchanged (Article 9 of Circular 69/2025/TT-BTC).

Please refer to the article below for further details:

WA Newsletter_26_Foreign Contractor Tax_Circular 20_2910 (EN).pdf

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W&A can help review your contract portfolio, determine foreign contractor tax under the new method, and propose tax clauses for new contracts.