The Double Taxation Relief (Taxes on Income) (Vietnam) Order 1994

Article 22 Elimination of double taxation

(1) Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle hereof):

(a) Vietnamese tax payable under the laws of Vietnam and in accordance with this Agreement, whether directly or by deduction, on profits, income or chargeable gains from sources within Vietnam (excluding in the case of a dividend, tax payable in Vietnam in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Vietnamese tax is computed;

(b) in the case of a dividend paid by a company which is a resident of Vietnam to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit shall take into account (in addition to any Vietnamese tax for which credit may be allowed under the provisions of sub paragraph (a) of this paragraph) the Vietnamese tax payable by the company in respect of the profits out of which such dividend is paid.

(2) Subject to the provisions of the law of Vietnam from time to time in force which relate to the allowance of a credit against Vietnamese tax of tax paid in a country outside Vietnam (which shall not affect the general principle of this Article), tax paid under the law of the United Kingdom and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of Vietnam from sources in the United Kingdom shall be allowed as a credit against Vietnamese tax payable in respect of that income.The credit shall not, however, exceed the Vietnamese tax as computed by reference to the same income before the credit is given.

(3) For the purposes of paragraphs (1) and (2) of this Article, profits, income and capital gains owned by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Agreement shall be deemed to arise from sources in that other Contracting State.

(4) Subject to paragraphs (5) and (6) of this Article, for the purpose of paragraph (1) of this Article, the term “Vietnamese tax payable” shall be deemed to include any amount which would have been payable as Vietnamese tax for any year but for an exemption or reduction of tax granted for that year or any part thereof under any of the following provisions of Vietnamese law:

(a) Articles 26, 27, 28, 32 or 33 of the Law on Foreign Investment in Vietnam 1987 and connected regulations as amended, so far as they were in force on, and have not been modified since, the date of signature of this Agreement, or have been modified only in minor respects so as not to affect their general character: and provided always that the competent authority of Vietnam has certified that any such exemption from or reduction of Vietnamese tax given under these Articles has been granted in order to promote industrial, commercial, scientific, educational or other development in Vietnam and the competent authority of the United Kingdom has accepted that such exemption or reduction has been granted for such purpose; or

(b) any other provision to promote economic development in Vietnam, which may subsequently be introduced, granting exemption from or reduction of Vietnamese tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character: and subject always to certification and acceptance having taken place as provided for in sub paragraph (a) of this paragraph.

(5) Relief from United Kingdom tax by virtue of paragraph (4) of this Article shall be given for a period of ten years only, beginning with the date on which this Agreement entered into force.

(6) The period referred to in paragraph (5) of this Article may be extended by agreement between the Contracting States.