News Share

The Tax Hub

Daily Tax Newsletter

Macao-Vietnam

Responsive image

Tax Treaty between Macau and Vietnam has Entered into Force

On 13 March 2019, Macau published Chief Executive Notice No. 11/2019 in the Official Gazette announcing that the income tax treaty with Vietnam entered into force on 3 October 2018. The treaty, signed 16 April 2018, is the first of its kind between the two jurisdictions.

Taxes Covered

The treaty covers Macau complementary tax, professional tax, and property tax, and covers Vietnamese personal income tax and business income tax.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services within a Contracting Party through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 183 days within any 12-month period.

Limited Force of Attraction Provision

Article 7 (Business Profits) includes a limited force of attraction provision whereby taxing rights are granted to a Contracting Party on profits attributable to the sale of goods or merchandise or other business activities carried on in that Contracting Party by a resident of the other Party if the same or similar goods or merchandise or business activities are also sold or carried out by a PE maintained by that resident in the first-mentioned Contracting Party. Relief from taxation is provided where an enterprise is able to demonstrate that the sales or business activities were carried out for reasons other than obtaining treaty benefits.

Withholding Tax Rates

  • Dividends - 10%
  • Interest - 10%
  • Royalties – 10%

Capital Gains

The following capital gains derived by a resident of one Contracting Party may be taxed by the other Party:

  • Gains from the alienation of immovable property situated in the other Party;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other Party;
  • Gains from the alienation of shares of the capital stock of a company, or of an interest in a partnership, trust or estate, the property of which consists directly or indirectly principally (greater than 50%) of immovable property situated in the other Party; and
  • Gains from the alienation of shares, other than the above, of not less than 15% of the entire shareholding of a company that is a resident of the other Party.

Gains from the alienation of other property by a resident of a Contracting Party may only be taxed by that Party.

Double Taxation Relief

Macau generally applies the exemption method for the elimination of double taxation, while Vietnam applies the credit method. However, Macau applies the credit method in respect of income that may be taxed in Vietnam in accordance with Articles 10 (Dividends), 11 (Interest), and 12 (Royalties).

A provision is also included for a tax sparing credit for tax that would have been payable in a Contracting Party for any year but for an exemption or reduction of tax granted by the application of the provisions of the law of that Contracting Party designed to extend tax incentives to promote foreign investment for development purpose. The provision applies for a period of ten years beginning the date the treaty is effective.

A provision is also included that a credit for dividends will include the tax on the profits out of which the dividends are paid if the company receiving the dividends directly or indirectly controls at least 10% of the shares of the paying company.

Effective Date

The treaty applies from 1 January 2019.

Powerful Tax Tools

NEW

FX Rates

Global FX Rates including Tax Year Average FX Rates and Spot Rates for all Reporting Currencies.

NEW

Corporate Tax Rates

Corporate tax rates, surtaxes, and effective tax rates for the current year, as well as historical rates and approved future rates.

NEW

Country Analysis

Detailed tax guidance for companies doing business in over 100 countries, including summaries and snapshots of key tax facts and issues.

NEW

Cross Border Tax Calculator

Calculate total tax costs and benefits of a cross border transaction including withholding tax, participation exemption and foreign tax credit rules.

NEW

Cross Border Tax Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment streams.

NEW

OECD BEPS Project

Complete overview of the OECD BEPS Project, including daily BEPS news, country adoption of BEPS measures, and an overview of the 15 BEPS Actions.

NEW

Tax Calendar

Customizable calendar tool that tracks corporate income tax, value added tax and transfer pricing obligations by country or entity.

NEW

Tax Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

NEW

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

NEW

Worldwide Tax Planner

Calculates the worldwide tax cost of what-if scenarios based on legal entity structure, taxable income, and cross border transactions.

NEW

Certified Rates Report

Customizable Certified Rates Report providing updated corporate and withholding tax rates at the end of each month for over 100 countries.

NEW

Withholding Tax Minimizer

Enables quick calculation of tax costs and benefits of cross border transactions considering all possible transaction combinations and optimal routes.

NEW

VAT Rates

Provides value added tax (VAT) rates, goods and services tax (GST) rates and other indirect tax rates for over 100 countries.

NEW

NOL Calculator

Country specific calculator to determine how net operating losses can be utilized in carryback and carryforward years.

NEW

Transfer Pricing Calculator

Calculates TP ratios under various TP methods and calculates the difference between target ratios and actual ratios.

NEW

Individual Income Tax Rates

Individual tax rates for over 100 countries.

Play of the Day

Compare Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

We’re here to help

We’re here to answer any questions you have about the Orbitax products and services.

Send us a message

Who’s behind Orbitax?

We’re committed to providing high value, low cost tax research and management solutions.

Learn More