From June 6, corporate income tax will be levied at a rate of 10% on interests received by foreign businesses without Vietnamese legal person status and foreigners doing business in Vietnam with the enterprise status from bonds, except tax-free government bonds, and deposit certificates, in addition to other incomes specified in Finance Ministry Circular No. 134/2008/TT-BTC of December 31, 2008.
This move under Circular No. 64/2010/TT-BTC of April 22, which amends Circular No. 134, will result in a tax level 50 times higher than the currently effective rate of 0.1% of the bond face value plus interest for the reason that the principal and interest from bonds is ordinarily two times higher than the principal.
This tax or personal income tax and value-added tax, which are collectively referred to as foreign contractor tax by Vietnam-based foreign entities, are also imposed on foreign organizations and individuals not physically present in Vietnam but having business incomes sourced from the country.
Transfer of bonds and deposit certificates is now treated like transfer of securities and subject to a tax rate of 0.1% of the total transfer value.