Vietnam–IndiaDouble Tax Agreement
Supports the growing India-Vietnam business relationship with clear withholding tax limits and employment income protection for Indian expats.
Important notice. Treaty rates shown are standard rates from published treaty texts. Reduced rates may apply subject to beneficial ownership requirements and other conditions specified in each treaty article. Tax treaty application is technically complex and fact-specific. Consult a qualified tax advisor for your specific situation before relying on these rates.
Withholding Tax Rates at a Glance
Dividends WHT
10%on dividend payments
Interest WHT
10%on interest payments
Royalties WHT
10%on royalty payments
Treaty Signed
1994
In Force Since
1995
Status
Active
Model
OECD-based
What This Means for Expats
Residency Tie-Breaker Rules
Tiebreaker is permanent home, then vital interests, habitual abode, then nationality.
Practical Context
India-Vietnam economic ties have grown substantially, and the DTA facilitates this. Indian IT companies operating in Vietnam and Indian professionals on secondment benefit from the treaty. Indian expats in Vietnam should note that India taxes its residents on worldwide income, so the treaty's credit or exemption provisions are important for avoiding double taxation.
Key Treaty Provisions Explained
Dividends
10% capWhen a Vietnamese company pays dividends to a India shareholder, Vietnam withholds 10% under this treaty — compared to Vietnam's standard domestic rate which may be higher. This applies to portfolio investors. Substantial shareholders may qualify for even lower rates in some treaties.
Interest
10% capInterest paid by a Vietnamese borrower to a India lender is subject to a maximum 10% withholding tax under this treaty. This is relevant for intercompany loans between India parent companies and Vietnamese subsidiaries, as well as bonds and other debt instruments.
Royalties
10% capRoyalties paid from Vietnam to India for use of IP (patents, trademarks, software, know-how) are capped at 10% withholding tax. This rate applies to all qualifying royalty payments under the treaty.
Frequently Asked Questions
Does Vietnam have a tax treaty with India?
Yes. Vietnam and India have a Double Taxation Agreement (DTA) that has been in force since 1995. The treaty prevents the same income from being taxed in both countries and sets withholding tax caps on dividends, interest, and royalties.
What is the withholding tax rate on dividends under the Vietnam–India DTA?
Under the Vietnam–India DTA, the withholding tax on dividends is capped at 10%. Without a treaty, Vietnam's standard domestic WHT rate on dividends paid to foreign entities is generally higher. Always confirm the applicable rate with a tax adviser, as lower rates may apply if specific shareholding thresholds are met.
How does the India–Vietnam DTA affect my salary as an expat?
Under Article 15 of the Vietnam–India DTA, employment income is generally taxable in Vietnam if you are working in Vietnam. The treaty's tiebreaker rules determine your residency: Tiebreaker is permanent home, then vital interests, habitual abode, then nationality. If you are a Vietnamese tax resident, your worldwide income may be subject to Vietnam PIT, with a credit or exemption for taxes paid in India.
What is a Permanent Establishment (PE) under the Vietnam–India treaty?
A Permanent Establishment is a fixed place of business through which a India company carries on business in Vietnam. If a PE exists, Vietnam can tax the profits attributable to it. Common PE triggers include offices, branches, factories, construction sites lasting more than 6 months, and dependent agents. India companies operating in Vietnam should assess PE risk carefully.
Get Tax Advice for Vietnam
Whether you need help with Vietnam PIT filing, applying treaty benefits, or cross-border tax planning, our team is here to help.