Vietnam-US treaty: new in 2024
The Vietnam-US tax convention was signed in 2015 and entered into force in 2024 after both legislatures completed ratification. This is a meaningful improvement for Vietnamese LLC owners who previously faced the default 30% US withholding on US-source FDAP income.
Because the treaty is new, some US payers may still default to 30% withholding until they update their tables. Submit W-8BEN-E with the new treaty rate claim and request rate review with each payer.
- Article 7 (Business Profits): Vietnamese-resident operating profits taxable only in Vietnam without US PE.
- Article 10 (Dividends): 5% for 25%+ ownership. 15% standard.
- Article 11 (Interest): 10% on portfolio interest.
- Article 12 (Royalties): 5% on copyright/cultural. 10% on industrial.
- Article 24 (Relief from Double Taxation): Vietnamese FTC mechanism.
Withholding rates by income type for Vietnamese residents
| Income type | Default US rate | Vietnam treaty rate |
|---|---|---|
| US-source dividends (25%+ ownership) | 30% | 5% |
| US-source dividends (standard) | 30% | 15% |
| US-source portfolio interest | 30% | 10% |
| US-source royalties (copyright) | 30% | 5% |
| US-source royalties (industrial) | 30% | 10% |
| Business profits without US PE | Generally not taxed | Generally not taxed |
How GDT treats US LLCs
Vietnam's General Department of Taxation (GDT) generally treats US single-member LLCs as transparent for Vietnamese tax purposes. LLC operating income flows through to your annual Vietnamese tax return and is taxed at applicable Vietnamese rates.
The treaty's FTC mechanism credits any US tax actually paid against your Vietnamese tax on the same income.
How to file W-8BEN-E from Vietnam
- Line 1: LLC legal name
- Line 4: Chapter 3 status: Disregarded Entity
- Line 5: Country of residence: Vietnam
- Line 6: Permanent residence address in Vietnam
- Line 8: US TIN (EIN)
- Line 9: Foreign TIN (your Vietnamese MST)
- Part III: claim treaty benefits citing the applicable article. If US payer rejects (old rates), escalate and reference the 2024 entry-into-force.
Common mistakes by Vietnamese founders
- US payers defaulting to old 30% because treaty is new (request rate update)
- Not filing W-8BEN-E with US payers
- Missing Form 5472 + 1120 ($25K penalty)
- Not declaring LLC income on Vietnamese tax return
- Missing Vietnamese FCT or VAT on cross-border services