VALUE-ADDED TAX (VAT) ON LABOR SUBLEASING ACTIVITIES
On March 24, 2026, the Tax Department issued Official Letter No. 170/CT-CS to address enterprises’ concerns regarding labor subleasing activities licensed by competent authorities.
Based on the provisions of the Labor Code No. 45/2019/QH14, Decree No. 145/2020/NĐ-CP, and Circular No. 219/2013/TT-BTC (as amended), the VAT policy for labor subleasing is guided as follows:
- Before July 1, 2025, In cases where enterprises sign labor contracts directly with employees and then sublease them to other organizations or individuals, where:
- Employees work and receive salaries/benefits according to the sublessee’s regulations;
- The sublessee pays salaries, bonuses, allowances, insurance, and trade union fees to the labor subleasing enterprise.
👉 These transactions are essentially considered “collection and payment on behalf.” Therefore, the labor subleasing enterprise is not required to declare or pay VAT on these collected and paid amounts.
- Cases subject to VAT declaration and payment which enterprises must declare and pay VAT at the highest applicable rate for service provision if:
- They do not fully meet the conditions for labor subleasing activities as prescribed;
- They cannot separate revenue by service type (including collected and paid amounts) to apply the appropriate tax rate.
👉 Accordingly, enterprises need to carefully assess the nature of transactions to correctly determine VAT obligations, avoiding confusion between “collection/payment on behalf” and service provision, thereby minimizing potential tax risks.
