How Does Circular 95 Change Tax Treaty Claims and APAs in Vietnam?

Circular 95/2026/TT-BTC, in force since 1 July 2026, brings Vietnam’s rules on tax treaties, the mutual agreement procedure, and advance pricing agreements into one instrument. It tightens the beneficial ownership test and the treaty claim deadline, extends permanent establishment rules to digital platforms, and gives taxpayers a longer window to negotiate an advance pricing agreement.

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On 1 July 2026, the Ministry of Finance (MOF) issued Circular No. 95/2026/TT-BTC (hereinafter, Circular 95) on how Vietnam applies its double taxation agreements (DTAs), the mutual agreement procedure (MAP), and advance pricing agreements (APAs). It took effect the same day, alongside the Law on Tax Administration No. 108/2025/QH15.

Circular 95 matters wherever money crosses the border:

• Reduced withholding rates on dividends, interest, and royalties;
• Foreign suppliers without a Vietnamese entity;
• Share sales; and
• Intra-group pricing.

This article explains what changed and what foreign-invested enterprises (FIEs) should review now.

How does Circular 95 change tax treaty claims in Vietnam?

Circular 95 keeps the three-year limit for claiming treaty relief but fixes its starting point: the date the applicant files a complete dossier under Circular 89/2026/TT-BTC.

The tax authority will refuse a claim for tax that arose more than three years before that date, a claim where the main purpose of an arrangement is to obtain treaty benefits, and a claim by an applicant that is not the beneficial owner of the income.

Circular 95 also states that treaties must not create opportunities for non-taxation in both countries. This wording comes from the Multilateral Instrument (MLI) of the Organisation for Economic Co-operation and Development (OECD). However, Vietnam reportedly listed only 75 of its more than 80 treaties as covered by the MLI, so whether the new purpose applies to the rest is unclear.

Can an incomplete dossier cost a company its treaty relief?

Yes. Any time spent supplying missing documents counts against the three-year limit, so a first filing treated as incomplete can push part or all of a claim out of time. Companies should file treaty claims early and in full, with beneficial ownership evidence attached.

Who counts as a beneficial owner under Circular 95?

Under Circular 95, a beneficial owner is the individual, company, or organisation that owns and controls the income, the assets, or the right that generates the income. The tax authority judges this on substance over form, looking at all the facts rather than the documents alone.

Circular 95 lists seven situations in which an applicant is not a beneficial owner. Any one of them is enough for the treaty claim to be refused, as summarised in the table below.

When Is an Applicant Not a Beneficial Owner Under Circular 95?
Indicator	What the tax authority looks for
Onward payment	The applicant passes more than 50 percent of the income to a third-country resident within 12 months of receiving it
No real business	Little or no business activity beyond owning the asset or the income-generating right
Thin substance	Assets, scale of business, or headcount out of proportion to the income
No control or risk	Little or no control over, or risk on, the income, asset, or right
Back-to-back terms	A loan, licence, or service contract with a Vietnamese party that mirrors one in which the applicant is the borrower, licensee, or recipient
Low-tax residence	Residence where there is no income tax, or a rate below 10 percent, that is not an investment incentive recognised in the treaty
Agent or conduit	The applicant is an agent or intermediary company, unless it claims on behalf of the beneficial owner

Where the beneficial owner is a resident of the treaty partner, the Vietnamese tax rate on dividends, interest, royalties, and technical service fees cannot exceed the treaty rate. Holding companies, regional treasury entities, and IP-owning entities that receive Vietnamese income should therefore be tested against each indicator.

What does Circular 95 change for permanent establishments in Vietnam?

Circular 95 treats an e-commerce or digital platform through which a foreign enterprise supplies goods or services in Vietnam as a permanent establishment (PE). This matters because a foreign enterprise’s business profits are taxable in Vietnam under a treaty only if they are attributable to a PE there.

Circular 95 sets out when other activities create a PE:

• Representative offices: A commercial representative office is a PE if it negotiates or signs commercial contracts.
• Services: Services supplied through employees or others on a project for more than 183 days in any 12-month period create a PE.
• Subsidiaries: A Vietnamese subsidiary becomes a PE of its foreign parent if it habitually signs contracts that bind the parent, regularly delivers goods for it, or lets it use its facilities on non-market terms.

Does a service project shorter than 183 days avoid a PE?

No. Under Circular 95, services supplied for 183 days or fewer in a 12-month period still create a PE if they meet the three standard conditions: a place of business, of a fixed nature, through which the business is carried on. Foreign suppliers should not rely on the day count alone.

How does Circular 95 treat capital transfers in Vietnam?

Circular 95 confirms that Vietnam can tax gains on both direct and indirect transfers of capital in a Vietnamese company whose value comes mainly from immovable property, where the relevant treaty gives Vietnam that right. Immovable property now expressly includes land use rights, land lease rights, and off-plan real estate.

The property share is the simple average of the property-to-total-assets ratio at three dates: the start and end of the tax year before the transfer, based on audited accounts, and the transfer date. Where the treaty does not define “mainly”, the threshold is more than 50 percent.

How does the mutual agreement procedure work under Circular 95?

Under Circular 95, a taxpayer taxed contrary to a treaty can ask the competent authority of its country of residence to open MAP within three years of the first tax notice that led to the disputed treatment. Some treaties set two years instead.

MAP runs alongside domestic complaints and administrative litigation. However, the Vietnamese competent authority will not take up a case that a court is hearing or has decided. It will also refuse a request that is late, where the assessed tax is unpaid, where an audit is under way without an official report, or where MAP is being used to avoid tax.

Does a MAP request suspend payment of the disputed tax?

No. The taxpayer must pay the assessed tax before and during MAP, unless a competent state authority suspends the decision. If the final agreement shows that too much tax, late-payment interest, or penalties were paid, the tax authority adjusts the liability and handles the overpayment under tax administration law.

The taxpayer is asked whether it objects to the draft agreement, but it must accept or reject the draft as a whole. An agreed outcome applies only to the facts and tax periods involved.

What changes for advance pricing agreements under Circular 95?

Circular 95 lets taxpayers request APA coverage for up to five tax years, while a signed APA remains effective for up to three tax years and can be renewed for up to three more. The longer request window leaves a full three years of coverage even when negotiations run long.

The APA chapter largely carries forward the earlier rules, with several practical changes. The main terms are set out in the below table.

Advance Pricing Agreements Under Circular 95: Key Terms
Term	Rule under Circular 95
Who handles it	The Tax Department leads bilateral and multilateral APAs, reporting complex cases to the MOF before formal negotiation; it assigns unilateral APAs to units within the tax authority
Before filing	An optional pre-filing consultation on scope, method, documents, and data
Request period	Up to five consecutive tax years from the filing year or the next year, not exceeding the years the taxpayer has declared corporate income tax (CIT) in Vietnam
Effective period	Up to three tax years from the signing year or the next year
Renewal	Up to three years; apply at least six months before expiry
Annual reporting	An APA compliance report by the CIT return deadline, plus prompt notice of changes to critical assumptions
Benchmarking data	Commercial databases accepted, in line with the Law on Tax Administration and Decree 255
Confidentiality	APA information cannot be used directly as grounds for a tax audit or assessment

Can an APA under Circular 95 cover past tax years?

No. Both the request period and the effective period run forward, so Vietnam still offers no rollback.

What happens to APA applications filed before 1 July 2026?

Unsigned APA applications filed before 1 July 2026, whose requested period has not ended, continue under the Law on Tax Administration No. 108/2025/QH15 and Circular 95.

What should FIEs do now under Circular 95?

FIEs should review every cross-border payment, structure, and related-party transaction that relies on a tax treaty. The checklist below sets out the main steps.

Action Checklist for Foreign-Invested Enterprises
Action	What to check
1. Test beneficial ownership	Check recipients of dividends, interest, royalties, and service fees against the seven indicators, starting with holding, treasury, and IP entities.
2. File treaty claims in full	Prepare complete Circular 89 dossiers, with residence certificates and substance evidence, well inside the three-year limit.
3. Reassess PE exposure	Review digital platform sales, representative office activities, service projects, and contract-signing roles held by local subsidiaries.
4. Check planned share sales	Recalculate the immovable property ratio on the three-date method before any direct or indirect transfer.
5. Track MAP deadlines	Note the three-year (or two-year) deadline from the first tax notice, and pay the assessed tax to keep MAP open.
6. Screen APA candidates	Identify material, recurring, and stable related-party transactions, and consider a pre-filing meeting.

For most FIEs, the biggest change is the shift from paperwork to substance. A residence certificate and a contract are no longer enough on their own, so groups that build that evidence now will be better placed both to claim treaty benefits and to defend them.

Also Read: Vietnam Consolidates Transfer Pricing Rules under Decree 255/2026