Liechtenstein and Vietnam Initiate Talks on Double Taxation Agreement to Boost Economic Ties

First Round of DTA Negotiations Held in Davos

Liechtenstein and Vietnam have officially begun negotiations for a comprehensive Double Taxation Agreement (DTA), marking a significant step towards enhancing their bilateral economic relationship. The initial round of discussions took place on January 22, 2025, on the sidelines of the 55th Annual Meeting of the World Economic Forum (WEF) in Davos, Switzerland.

High-Level Commitment to Stronger Ties

The negotiations were a key agenda item during a meeting between Prime Minister Pham Minh Chinh of Vietnam and Prime Minister Daniel Risch of Liechtenstein. Both leaders underscored the importance of their bilateral relations and expressed a mutual desire to deepen cooperation, particularly in the economic sphere. Prime Minister Risch specifically voiced his hope that talks for a double taxation avoidance agreement would advance, noting the considerable interest from Liechtenstein businesses in the Vietnamese market. Concurrently, Vietnam reiterated its ambition to finalize a Free Trade Agreement (FTA) with the European Free Trade Association (EFTA), an organization that includes Liechtenstein.

Unlocking Economic Potential Through Complementary Strengths

Despite the current economic cooperation between the two nations being described as modest, both Prime Ministers acknowledged its substantial growth potential, attributing this to their complementary economic strengths. A DTA is expected to remove tax barriers, thereby encouraging greater cross-border trade and investment. As of April 2016, Liechtenstein had already established two direct investment projects in Vietnam, totaling US$35.5 million in registered capital. These agreements are crucial for providing legal certainty regarding income taxation and preventing businesses and individuals from being taxed on the same income in both countries.

The Strategic Importance of Double Taxation Agreements

Double Taxation Agreements are international treaties designed to prevent the imposition of identical taxes in two different states on the same income or capital. By clarifying taxing rights and offering mechanisms for tax relief, DTAs significantly reduce the tax burden on international investors and businesses, making cross-border economic activities more attractive. Vietnam has actively pursued such agreements, having signed DTAs with approximately 80 countries and territories as of 2024. While Liechtenstein has several comprehensive DTTs in force with various nations, the agreement with Vietnam would be a new addition, further expanding its network of economic partnerships.