The Serbia – Vietnam Income Tax Treaty (2013) entered into force on 18 October 2013,. The treaty generally applies from 1 January 2014.
Under the treaty the definition of a permanent establishment generally follows the provisions of the UN Model and includes the furnishing of services in the other contracting state by employees or other staff contracted for the purposes, where the services continue for at least six months.
Withholding tax on dividends is limited to a maximum of 15%, or to 10% where the company receiving the dividend is the beneficial owner of 25% of the shares in the paying company. Withholding tax on interest and royalties flowing between companies in the two countries is limited to 10%.
The treaty provides for a tax sparing credit under which the tax credit allowed for tax paid in the other contracting state is deemed to include any tax that would have been payable but has been exempted or reduced under incentive provisions in that state. The treaty also provides for a mutual agreement procedure and the exchange of tax information.
