Industry

Accounting for SaaS in Vietnam: subscription revenue, royalties, and FCT

Specialist accounting and tax for SaaS companies in Vietnam: subscription revenue recognition, royalty structuring, FCT on offshore IP, and investor-grade reporting.

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Overview

SaaS companies operating in Vietnam face a specific set of tax and accounting issues: subscription revenue recognition under VAS, FCT on royalty payments to offshore IP holders, transfer pricing for cloud-infrastructure cost-sharing, and investor-grade reporting that reconciles to the parent group's calendar. Our SaaS team has worked with global SaaS leaders entering the Vietnam market.

Who needs this service

  • Global SaaS companies with Vietnam-sourced subscription revenue
  • SaaS companies structuring the Vietnam entity as a limited-risk distributor
  • SaaS companies with Vietnamese customers and offshore IP holding

Legal requirements

Subscription revenue recognition

Subscription revenue is recognised over the service period, with deferred revenue recorded for the unearned portion.

FCT on royalty

Royalties paid to an offshore IP holder are subject to FCT (typically 5% VAT + 10% PIT, with treaty relief available).

Transfer pricing for cloud costs

Cost-sharing agreements for cloud infrastructure must be arm's length, with contemporaneous documentation.

Pricing

Indicative fees

ItemFee
SaaS monthly compliancefrom USD 1,500 / month
TP documentation for royalty and cost-sharefrom USD 8,000

Fees are indicative and depend on transaction volume, complexity, and reporting requirements. Request a tailored proposal.

Timeline

Typical engagement timeline

Phase 1 · Week 1–2

Structuring

Entity structure, royalty rate, cost-share model, IP holding.

Phase 2 · Month 1

Setup

Chart of accounts, deferred revenue, TP documentation.

Phase 3 · From month 2

Steady state

Monthly close, FCT filings, royalty remittance, group reconciliation.

Watch out

Common mistakes we help you avoid

  • 01Treating the Vietnam entity as a full-risk distributor (and losing the limited-risk structure)
  • 02Not documenting the royalty rate with a contemporaneous benchmarking study
  • 03Recognising annual subscription revenue upfront rather than over the service period
  • 04Missing the FCT withholding on the royalty payment
Why us

What you get

Industry expertise

We work with global SaaS companies and understand the limited-risk-distributor model, the royalty structure, and the FCT exposure.

Investor-grade reporting

MRR, ARR, churn, CAC, LTV — the SaaS metrics your investor wants to see, reconciled to VAS.

Group-ready

Reporting that reconciles to the parent group's calendar and chart of accounts.

FAQ

Frequently asked questions

What is the typical setup for a SaaS company in Vietnam?
Most SaaS companies set up a 100%-foreign-owned LLC with a sales and marketing presence. The Vietnamese entity is typically a limited-risk distributor: it books Vietnam-sourced subscription revenue and pays a royalty to the offshore IP holder under FCT.
How is SaaS revenue taxed in Vietnam?
Subscription revenue from Vietnamese customers is Vietnam-source income and is subject to 20% CIT. If the SaaS is sold by an offshore entity to Vietnamese customers, the deemed FCT (5% VAT + 5% PIT) applies. We help structure the operation to optimise the total tax cost.
What expenses are deductible for a SaaS company?
Marketing, sales staff, cloud infrastructure (where the customer is in Vietnam), office rent, and a portion of regional overhead allocated to Vietnam are deductible. Cost-sharing agreements must be arm's length and documented.
How are R&D credits treated in Vietnam?
Vietnam does not have an R&D tax credit like the US R&D credit. However, certain R&D activities in encouraged sectors may qualify for CIT incentives (10% rate, tax holiday). The eligibility must be confirmed at IRC application.
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