Korea Shipping Association "Welcomes the Enforcement of Korea-Vietnam Double Taxation Avoidance Agreement"

[Asia Economy Reporter Dongwoo Lee] The Korea Shipping Association announced on the 8th that it welcomes the entry into force of the Second Protocol to the Korea-Vietnam Double Taxation Avoidance Agreement, effective from the 20th of last month.

Previously, Korea and Vietnam signed a Double Taxation Avoidance Agreement in 1994, which stipulated a 100% tax exemption on shipping income of companies from the other country. However, Korean shipping companies were not recognized for local incidental expenses incurred in Vietnam as shipping income and were taxed accordingly.

The Shipping Association repeatedly requested the Ministry of Strategy and Finance and the Ministry of Oceans and Fisheries to resolve this issue. The association's proposals were reflected in the amended protocol to the Double Taxation Avoidance Agreement with Vietnam, signed during the Korea-ASEAN Special Summit in November 2019.

The amended protocol was ratified by the National Assembly in December last year and came into effect on the 20th of last month. Accordingly, Korean shipping companies will receive tax reductions on income generated from the use, management, or leasing of containers used for transporting goods and merchandise in Vietnam, as well as trailers and related maintenance, from January 1, 2022.

Kim Young-moo, the full-time vice chairman of the Korea Shipping Association, said, “Through this amended protocol, the annual tax burden of approximately 15 million dollars on Korean shipping companies calling at Vietnamese ports will be alleviated.”

This content was produced with the assistance of AI translation services.