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January 21, 2022

Vietnam initiates review of policies governing tax treaties

Executive summary

Vietnam recently published Decision 2072/QD-TTg1 of the Prime Minister (the Decision) on policies governing its tax treaty framework. The Decision approved the proposal to "Review the effectiveness of the agreements for the avoidance of double taxation with respect to Vietnam's tax environment and development direction" (the Proposal) issued by the Ministry of Finance (MoF).

The Decision provides MoF the authority and budget to work on improvement of the current framework for negotiation and execution of new tax treaties, renegotiation of the existing tax treaties and amendment of domestic tax administration policies in adherence with international standards.

This Alert provides an update on the key features of the Decision.

Detailed discussion

The Decision approved the Proposal focusing on Vietnam's policies with respect to its tax treaty network and aligning with international tax practices and developments. The objectives of the Proposal include: (i) improving the framework for negotiation and execution of tax treaties to align with the development of Vietnam's economy; (ii) adhering to international standards and Vietnam's commitments under international agreements; and (iii) enhancing the consistency and transparency of Vietnam's taxation.

The Proposal includes the following key tasks:


Timing of implementation 2

Develop new policies for negotiation of tax treaties with new tax treaty partners


Study the other countries' views and approach towards the application of the new clauses recommended to be included into tax treaties by the OECD,3 especially the clauses with respect to preventing tax treaty abuse, preventing the artificial avoidance of permanent establishment (PE) status, digital tax, and Mutual Agreement Procedures (MAP)

2021 - 2022

Develop a set of tax treaty negotiation principles considering the international practices and developments, and the economy of Vietnam

Build a new tax treaty template which is flexible for Vietnam to negotiate with different tax treaty partners in different situations and conditions

Renegotiate the existing tax treaties with current tax treaty partners


Review the existing tax treaties to identify clauses which are no longer appropriate, assess the possibility of the tax treaty partners accepting Vietnam's proposal for tax treaty renegotiations and accordingly renegotiate tax treaties

2021 - 2023

Develop a clause on digital tax


Develop a clause on digital tax based on the relevant Ministries' studies of the proposals of the OECD and the United Nations with respect to taxing income derived from digital businesses, the analyses of potential impacts on the economy of Vietnam, and the practices and developments with respect to digital tax in the countries and jurisdictions that undertake significant digital business with Vietnam

2021 – 2022

Proactively initiate negotiations of tax treaties with those countries and jurisdictions to mitigate potential tax leakage and disputes

Amend the domestic tax administration rules due to the changes to tax treaties


Study the internationally accepted standards with respect to tax administration, and propose amendments to the domestic tax administration rules

2021 – 2024

Implement the commitments in relation to tax treaties


Adopt the minimum standards of BEPS4 including preventing tax treaty abuse and improving the effectiveness of dispute resolution mechanisms

2021 – 2030

Sign and implement the Multilateral Instrument5 (MLI)


Execute and implement the Convention on Mutual Administrative Assistance in Tax Matters (MAAC) and the Multilateral Competent Authority Agreement (MCAA) to enhance the international cooperation in tax management, tax audit and exchange of information, especially the automatic exchange of information in accordance with Common Reporting Standards (CRS) and Country-by-Country Reporting (CbCR)

2021 – 2023


The tasks and timelines stipulated in the Decision constitute an important step towards revamping Vietnam's tax treaty policy framework and aligning it with the international tax standards and commitments. Considering that Vietnam has signed tax treaties with around 80 countries, multinational enterprises with operations in Vietnam should monitor upcoming developments with respect to Vietnam's tax treaty network, the related domestic tax administration rules and mechanisms for international tax dispute resolution and exchange of information.


For additional information with respect to this Alert, please contact the following:

EY Consulting Vietnam JSC

Ernst & Young LLP (United States), Vietnam Tax Desk, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago



1 The Decision was published on 10 December 2021.

2 Timelines stated under the Decision 2071/QD-TTg are understood to be in line with MoF's proposal submitted for approval in 2021.

3 Organization for Economic Cooperation and Development.

4 The OECD/G20 Base Erosion and Profit Shifting Project.

5 The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.

6 The revised timeline has yet to be prescribed.