Double Taxation Treaties (DTTs) are agreements made between countries that divide up rights to tax. DTTs decide how much countries can tax multinational companies and other cross-border activities. DTTs also aim to prevent a company or individual being taxed twice when they are based in one country but earning income in another. While DTTs can help to provide certainty, they can also restrict the rights of lower-income countries to tax multinational companies, resulting in losses of revenue which could otherwise be used for vital public services. In some cases, DTTs can also result in double non-taxation, where companies engage in ‘treaty shopping’ to route their funds through favourable treaty countries.
This policy brief looks at the implications of Vietnam’s DTTs and makes recommendations to minimize impacts of DTTs on Vietnam’s ability to derive the greatest benefit for its citizens from its increasing flows of foreign investment. It draws on research conducted for ActionAid in 2016.