Permanent establishment in the digital economy and remote work: when does a foreign company owe tax in Vietnam?

The short answer

A permanent establishment (PE) is the "anchor" that allows Vietnam to tax the income of a foreign company. A foreign company with a PE in Vietnam must declare and pay CIT on the income attributable to it. A foreign company without a PE but with income arising in Vietnam may still be taxed on a percentage of revenue, for example through foreign contractor tax or the regime for overseas providers selling via digital platforms.

The three situations most likely to create a PE inadvertently are:

• remote workers in Vietnam working for a foreign company over long periods from a stable workspace;

• sales representatives in Vietnam who regularly negotiate and sign contracts on behalf of the foreign company;

• experts providing services in Vietnam beyond the time threshold in the applicable tax treaty.

Double tax treaties usually narrow the scope of a PE compared with domestic law. Assessments must therefore combine Vietnamese law and the applicable treaty.

Why will PE be a hot topic for years to come?

Remote work, globally distributed teams and business through digital platforms have become the new normal. The traditional concept of a PE, however, was built for an era that required "physical presence".

This gap makes it hard for both businesses and tax authorities to determine obligations. It is also an area where the OECD and many countries, including Vietnam, continue to adjust policy. The 2025 Law on Tax Administration and the 2025 CIT Law have clarified the tax obligations of foreign organisations doing business through digital platforms without a PE.

Types of PE under Vietnamese law and tax treaties

Type of PE	Description	Practical notes
Fixed place of business	An office, branch, factory, warehouse or place of business regularly used by the foreign company	An employee's home office may be considered if the company requires it or depends on it
Construction and installation site	Construction or installation projects and related supervision	Treaties usually set a time threshold (e.g. 6 months)
Services	Services, including consulting, performed in Vietnam by employees or engaged personnel	Domestic law is broad. Treaties usually limit it with a day-count threshold within 12 months
Dependent agent	A person who habitually negotiates and concludes contracts in the name of the foreign company	No office is needed: one person with authority to sign is enough to create risk

Consequences of having a PE

• CIT on the profits attributable to the PE. If these cannot be determined, the tax authority may assess them.

• VAT on goods and services supplied through the PE.

• Registration, filing and bookkeeping obligations as a Vietnamese taxpayer.

• Multi-year reassessment risk, with late-payment interest and penalties, because nothing was declared from the outset.

• Consequences for individuals: personnel working in Vietnam may become tax residents liable for PIT on worldwide income, and work permit and social insurance obligations may arise.

Three typical scenarios

1. A remote employee. A foreign engineer works for a Singaporean company, lives in Da Nang and works from home. The work involves only internal product development, with no dealings with Vietnamese customers. PE risk is generally low, provided the home office is not used by the company as a place of business. The individual's PIT and employment risks, however, remain.

2. A head of sales in Vietnam. A foreign software company has a sales director living in Ho Chi Minh City who finds customers, negotiates and signs contracts with Vietnamese businesses. The risk of a dependent agent PE is very high, even without any office.

3. A project implementation team. Foreign experts travel to Vietnam several times a year to implement systems for customers. The business needs to track total days against the services PE threshold in the applicable treaty.

Safer presence models

Model	Suitable when	Notes
Set up a Vietnamese subsidiary	There are sales activities, customers and a stable team	Transactions between the subsidiary and the parent must be at arm's length
Representative office	Only market research, promotion and liaison	It may not conduct profit-making business. Signing commercial contracts may create a PE
Limit authority and signing processes	Local staff only provide support; contracts are negotiated and signed by head office	Must reflect reality, not just paperwork
Track days and keep records	Short-term service projects	Keep travel logs and the scope of work for each contract

FAQs

Does a foreign employee working remotely in Vietnam create a PE for the company?

Not automatically. The risk depends on whether the workplace is regularly used by the company as a place of business, and whether the employee negotiates and concludes contracts on the company's behalf. It should be assessed under both Vietnamese law and the applicable treaty.

Can a company have a PE without an office in Vietnam?

Yes. A person who habitually concludes contracts in the name of the foreign company may create a dependent agent PE, even without an office.

Must a foreign digital platform without a PE pay tax in Vietnam?

Yes. Overseas providers doing business via e-commerce or digital platforms with income arising in Vietnam must register, file and pay tax on a percentage-of-revenue basis, or the Vietnamese party withholds and pays on their behalf, as provided by law.

Can a tax treaty help avoid a PE?

Treaties usually narrow the scope of a PE (for example, time thresholds for services or construction). The business must meet the conditions and follow the treaty application procedure.

Legal basis

• CIT Law No. 67/2025/QH15 and Decree No. 320/2025/ND-CP (foreign enterprises as taxpayers; permanent establishments).

• Law on Tax Administration No. 108/2025/QH15 and Decree No. 252/2026/ND-CP.

• Circular No. 95/2026/TT-BTC on implementing tax treaties.

• Vietnam's double tax treaties; OECD Model Tax Convention and Commentary (for reference).

How W&A can help

PE risk is often discovered late, after obligations have built up over several years. W&A supports foreign companies and international personnel with:

• PE risk assessments for each operating model in Vietnam: remote work, sales and service projects.

• Designing a suitable presence model: subsidiary, representative office or intra-group service arrangements.

• Treaty application and documentation showing that no PE arises.

• Advice on PIT, work permits and social insurance for foreign personnel working in Vietnam.

• Dealing with existing PE obligations: registration, filing, amendments and engagement with the tax authority.