How royalties and franchise fees paid abroad are taxed in Vietnam

Corporate income tax: 10%

The foreign contractor tax on royalties includes a corporate income tax element of 10% under domestic law. The Vietnamese payer usually withholds it before remitting.Source: PwC Worldwide Tax Summaries (23 Sept 2026)

VAT: exempt or 5%

Transfers of intellectual property rights, transfers of technology and software are VAT-exempt. Other royalties may attract VAT, listed by PwC at 5%.Source: PwC Worldwide Tax Summaries (23 Sept 2026)

A franchise fee usually bundles a trademark licence with training, systems and support. How the agreement describes and splits those elements can change the VAT result, so get the characterisation agreed with a tax adviser before signing.

Why tax treaties rarely help

PwC notes that in most cases the limits set by Vietnam's double tax agreements are higher than the domestic withholding rates, so the domestic rate applies. In other words, a treaty usually does not reduce the 10% on royalties.Source: PwC Worldwide Tax Summaries (23 Sept 2026)

Worked example

A franchisee owes a foreign franchisor a royalty of US$10,000 for a month. If the agreement is drafted as a net-of-tax payment, the franchisee must gross up; if gross, the franchisor receives US$9,000 after 10% corporate income tax, before any VAT. The arithmetic is illustrative only and assumes the 10% rate applies.Source: PwC Worldwide Tax Summaries (23 Sept 2026)