Applying Double Tax Avoidance
Agreements (“DTA”) is a measure
which helps companies to reduce
the tax expenses in transactions
with parties being residents of a
country who entered into a DTA with
Vietnam. However, understanding
and correctly applying the DTA
is the prerequisite condition to
help the tax payers mitigate the
risk of being subject to tax clawback
by the tax authorities. One
of the difficulties in applying for
tax relief and exemption under the
DTA is to determine whether the
foreign parties have a Permanent
Establishment (“PE”) during
the transaction or not. Upon the
assessment of the DTA notification
dossier, the tax authorities now
tend to have stricter views on the
PE. In this Alert, we would like to
analyze the tax authorities’ view on
the PE, especially