Circular No. 95/2026/TT-BTC: New Guidance Framework on Double Taxation Agreements, MAP and APA - Effective from 1 July 2026

On 1 July 2026, the Ministry of Finance issued Circular No. 95/2026/TT-BTC (comprising five Chapters and 84 Articles), which took effect on the date of signing and concurrently replaced Circular No. 205/2013/TT-BTC on Double Taxation Agreements and Circular No. 45/2021/TT-BTC on the APA mechanism. The Circular consolidates all guidance on tax treaties, the Mutual Agreement Procedure (MAP), Advance Pricing Agreements (APAs), the exchange of information and assistance in tax collection, pursuant to Clause 3, Article 30 and Clause 2, Article 31 of the Law on Tax Administration No. 108/2025/QH15 and Article 47 and Point a, Clause 2, Article 58 of Decree No. 252/2026/ND-CP. Enterprises with foreign elements - particularly those with related-party transactions, foreign contractors and individuals who are residents of two jurisdictions - should promptly review the changes below. On 10 July 2026, the Tax Department issued Official Letter No. 4736/CT-CS outlining the key changes introduced by the Circular.

1. Tax Treaties: Stricter Conditions for Treaty Benefits and an Expanded Definition of Permanent Establishment

Electronic submission of MAP and APA applications. Under Article 7 of Circular No. 95/2026/TT-BTC, MAP and APA applications, explanatory submissions, supplementary documents and notices of processing results must be submitted electronically. Paper submissions are permitted only where the files are large, require specialised technical formats or cannot be accommodated by the electronic system.

Scope of application and dual-resident individuals. Article 8 of Circular No. 95/2026/TT-BTC expands the scope of application to residents of Vietnam, residents of a Contracting State, or persons who are simultaneously residents of both. Whether an individual is a resident of Vietnam is determined under Article 4 of Decree No. 253/2026/ND-CP guiding the Law on Personal Income Tax. The Circular also introduces guidance for cases in which an individual is simultaneously a resident of two countries during the same tax period but the countries apply different tax years.

Denial of treaty benefits based on entitlement principles. Clause 1, Article 10 of Circular No. 95/2026/TT-BTC provides that the date of a request for treaty application is the date on which a complete dossier is submitted in accordance with Circular No. 89/2026/TT-BTC. Clause 3, Article 10 further states that a treaty is not intended to create opportunities for "non-taxation in both Contracting States" and lists the circumstances under Points a to g, Clause 3, Article 10 in which an applicant is not regarded as the beneficial owner.

E-commerce and digital platforms as permanent establishments. The most significant change for foreign enterprises conducting digital business is set out in Point a, Clause 2, Article 14 of Circular No. 95/2026/TT-BTC. An e-commerce platform or digital platform through which a foreign enterprise supplies all or part of its goods or services in Vietnam is regarded as a permanent establishment in Vietnam where the three prescribed permanent establishment conditions are satisfied. This treatment is consistent with the 2025 Law on Corporate Income Tax.

Immovable property, royalties and other income. Article 11 broadens the definition of immovable property in line with the Land Law and the Law on Real Estate Business. The definition includes the value of land use rights, leasehold rights under land lease agreements and off-plan real estate. Article 24 updates the terminology from "patents and inventions" to "inventions" and from "trade marks" to "marks" in accordance with the current Law on Intellectual Property, without changing the substance of the term "royalties". Article 49 clarifies that other income also includes income from inheritances and gifts.

Tax rate caps for passive income. Articles 19, 22, 25 and 28 of Circular No. 95/2026/TT-BTC establish a consistent principle: where the beneficial owner of dividends, interest, royalties or technical service fees is a resident of a Contracting State, the tax rate applied in Vietnam must not exceed the maximum rate prescribed by the relevant tax treaty.

Direct and indirect capital transfers. Clause 4, Article 30 of Circular No. 95/2026/TT-BTC introduces three important provisions: (i) tax liabilities must be determined for income from both direct and indirect capital transfers; (ii) the ratio of the value of immovable property to total assets is calculated as the simple average at three points in time - the transfer date and the beginning and end of the tax year immediately preceding the year of transfer; and (iii) the calculation is based on the audited statements of financial position at the beginning and end of the immediately preceding year and the statement of financial position prepared by the enterprise as at the transfer date.

Renaming of the "tax sparing credit" method. Article 52 of Circular No. 95/2026/TT-BTC renames the method as the "Method of crediting tax exemptions and reductions granted in the Contracting State" to avoid confusion with the fixed-tax regime applicable to business households and individuals under domestic tax administration regulations.

Dispute resolution, exchange of information and assistance in tax collection. Clause 1, Article 54 allows a resident of a Contracting State to request the competent authority of the jurisdiction in which that person resides to initiate MAP proceedings where the person considers that the Vietnamese tax authority has determined a tax liability inconsistently with the relevant treaty. This does not preclude the right to lodge an administrative complaint or institute administrative proceedings under Vietnamese law. The circumstances in which a request will not be considered, including cases already being or having been adjudicated by a court and requests submitted after the applicable time limit, are prescribed in Clause 3, Article 54. Article 55 (newly added) sets out the principles and mechanisms for exchanging tax information, including automatic exchange, in accordance with the standards of the Global Forum on Transparency and Exchange of Information for Tax Purposes. Article 56 (newly added) provides for assistance in tax collection between the Vietnamese tax authority and a Contracting State, primarily through taxpayer notification and follow-up. It excludes disputed tax debts and cases in which providing assistance would be contrary to Vietnamese law.

2. MAP: Codification of Internal Rules into a Ministerial Circular

Chapter III codifies the MAP Regulations issued under Decision No. 2049/QD-TCT dated 31 December 2021 of the General Department of Taxation and updates them in line with the OECD Manual on Effective Mutual Agreement Procedures (MEMAP):

• Rejection of MAP requests (Article 58 of Circular No. 95/2026/TT-BTC): a request may be rejected if it falls outside the competent authority's jurisdiction; is submitted after the deadline; the taxpayer has not fulfilled the relevant obligations; a tax inspection is ongoing but no official inspection record has been issued; there are indications that MAP is being used to avoid tax; or the tax liability has already been determined in accordance with the relevant treaty.
• Four-step procedure (Article 59): receipt of the request -> review and analysis -> exchange of views, negotiation and written confirmation of the outcome -> completion and implementation.
• Receipt of applications (Article 60): Clause 1 carries forward all provisions of Point d, Clause 4, Article 62 of Circular No. 80/2021/TT-BTC; Clause 2 additionally provides for the receipt of MAP requests from the tax authority of a Contracting State.
• Unilateral resolution (Article 62, carried forward from Article 14 of the MAP Regulations): the Tax Department may resolve a case unilaterally without negotiating with the Contracting State and must subsequently notify both parties of the outcome.
• "All-or-nothing" principle (Article 63): a taxpayer may not accept only part of a proposed mutual agreement. In complex cases, the two competent authorities may divide the proposed agreement into separate components. Similarly, Article 64 does not permit the partial withdrawal of a MAP request.
• Treatment of overpayments (Clause 3, Article 65): where implementation of a MAP agreement results in tax, late-payment interest or penalties paid exceeding the amount payable, the tax authority must adjust the liability and process the overpayment in accordance with tax administration law. Clause 4, Article 65 assigns the Tax Department responsibility for monitoring and supervising implementation.

3. APA: More Flexible Filing and Enhanced Oversight

Chapter IV carries forward the framework under Decree No. 126/2020/ND-CP and Circular No. 45/2021/TT-BTC, with the following principal changes:

• Forms and authority (Articles 68 and 69 of Circular No. 95/2026/TT-BTC): bilateral and multilateral APAs are clarified as agreements between tax authorities concluded on the basis of a tax treaty. Under Clause 1, Article 69, the Tax Department leads the entire process. For complex applications involving multiple jurisdictions, the matter must be reported to the Ministry of Finance before formal negotiations begin. Clause 2, Article 69 delegates the handling of unilateral APAs to units within the tax authority.
• Optional consultation meeting (Article 70): a taxpayer may hold preliminary discussions with the tax authority before formally filing an application, but such consultation is not mandatory.
• Application dossier using Form No. 01/APA-DN (Article 71): the requirement concerning the number of dossier sets is removed to accommodate electronic filing. Form No. 01/APA-DN is also used consistently for renewal applications under Article 78 as part of the procedural simplification introduced by Decree No. 373/2025/ND-CP.
• Expanded grounds for discontinuing processing (Article 75): the grounds apply throughout the entire processing period, rather than only during negotiations. Processing may also be discontinued where the taxpayer provides inaccurate, incomplete or untruthful information and is unable to provide a satisfactory explanation.
• Annual compliance obligations (Article 77): taxpayers must notify changes affecting critical assumptions and submit annual APA compliance reports within the prescribed deadlines and containing the minimum required information.
• Renewal for a maximum of three years (Article 78); the requirement that an APA amendment arise "due to objective reasons" and the category of "other cases" are removed (Article 79); the grounds for cancelling an APA are expanded to include failure to comply with reporting obligations where this affects supervision (Article 80); and an APA may be revoked where deliberately false information or fraud affects its conclusion or implementation (Article 81).
• Confidentiality of information (Article 82): information and data obtained during MAP and APA processing may not be used directly for tax audits or tax assessments of the taxpayer.
• Requested application period of up to five years (Clause 2, Article 83): a taxpayer may request an APA for a continuous period of up to five tax years beginning in the year the application is filed or the immediately following year. This period is longer than the APA's maximum three-year effective term so that, where negotiations are prolonged, the signed APA may still have a full three-year period of practical application.

4. Effective Date and Transitional Provisions

Under Article 84 of Circular No. 95/2026/TT-BTC, the Circular took effect on 1 July 2026 and replaced Circular No. 205/2013/TT-BTC and Circular No. 45/2021/TT-BTC. APA applications submitted before the effective date that have not yet been concluded, and for which the requested application period has not ended, will continue to be processed under the Law on Tax Administration No. 108/2025/QH15 and this Circular.

💡 Immediate Actions for Enterprises

1. Foreign enterprises conducting business through digital platforms in Vietnam: reassess the risk of creating a permanent establishment under Point a, Clause 2, Article 14. This change may give rise to corporate income tax obligations in Vietnam.
2. M&A transactions involving immovable property: review the method for calculating the ratio of immovable property value under Clause 4, Article 30 - based on the average at three points in time and covering indirect transfers - before determining taxing rights under the relevant treaty.
3. Tax treaty exemption and reduction dossiers: verify the "beneficial owner" condition against the exclusions in Points a to g, Clause 3, Article 10, and prepare to submit the dossier electronically under Article 7.
4. Enterprises with an existing or planned APA application: update Form No. 01/APA-DN, establish an annual compliance reporting process under Article 77 and consider requesting a five-year application period under Clause 2, Article 83. Pending applications will be transitioned in accordance with Article 84.
5. Disputes concerning tax treaty application: note that MAP and administrative complaints or litigation are parallel avenues under Article 54. However, the Vietnamese competent authority will not process matters that are being or have already been adjudicated by a court.

>>> Download Circular 95/2026/TT-BTC

>>> Download Official Letter 4736/CT-CS

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