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Common Mistakes When Calculating Personal Income Tax (Part 3)



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Common Mistakes When Calculating Personal Income Tax (Part 1)

Common Mistakes When Calculating Personal Income Tax (Part 2)

 

 

Foreigners working in Vietnam are resident individuals but do not declare Global Income

Foreigners working in Vietnamese enterprises that meet residency conditions must fulfill PIT settlement for all income generated, regardless of the place of payment or the place of receipt (also called Global Income).

Thus, in case a foreigner only has income at a Vietnamese enterprise, he may authorize the PIT settlement to such enterprise. At the same time, the enterprise shall ask him to commit that he has no income other than from that enterprise before authorization. This helps employees understand their tax compliance obligations (because individuals may mistakenly believe that they do not need to declare PIT for the income received from the parent company), and ensures that the enterprise has been authorized (Download the bilingual commitment form here).

In case a foreigner working in an enterprise in Vietnam but still receives salary from the parent company, he/she shall prepare tax settlement on his/her own since the above-mentioned conditions required for authorization are not met. The Vietnamese enterprises still declare the income paid to employees but do not check the column of settlement authorization when preparing company’s PIT settlement declaration. Employees will declare their income generated globally (fill out a separate form). At that time, such individual must have documents proving or confirming the amount paid by the overseas income-payers, enclosed with the income confirmation form No. 20/TXN-TNCN (Download bilingual form here).

 

Foreign experts who come to Vietnam to work without receiving salaries in Vietnam, but do not follow the fully procedures to enjoy the PIT exemption

Currently, foreign experts who come to work in Vietnam could be exempted from PIT if:

  • He or she carries out ODA programs and projects in Vietnam; non-governmental aid programs and projects in Vietnam that meet the conditions under Article 2, Decision No. 06/2016/QĐ-TTg;
  • He or she is sent by the parent company or contractors to work in Vietnam but the Vietnamese party does not pay wages.

When foreign experts are sent to Vietnam to work, although they do not receive wages in Vietnam, it is the income generated in Vietnam during the working days. Therefore, such employees still have to declare and calculate PIT on the income generated in Vietnam (Article 1, Circular No. 111/2013/TT-BTC determining taxpayers).

However, experts from countries that have signed an agreement to avoid double taxation, if they meet the conditions under the agreement (which in common are: The paying organizations is from abroad, individuals implementing foreign missions are non-resident) are eligible for PIT exemption.

Currently, Vietnam has signed the agreement to avoid double taxation with more than 75 countries and territories, such as Japan, Korea, China, France, the United Kingdom, Southeast Asia…

Both of the above-mentioned tax-exempt cases must register their tax exemption dossiers with the tax authorities within a certain time limit. In case employees and enterprises do not comply with the order of documents specified in Circular No. 156/2013/TT-BTC and Circular No. 96/2016/TT-BTC, they still face risks of paying the tax authorities the amount of PIT in arrears.

ASTC provides PIT declaration for foreign experts at the rate of USD 1,000/person. Such task shall be completed after 15 working days from the time we fully received your documents. Please kindly contact our hotline (+84) 98 456 1897 or via our email address info@astc.vn for further information and consults.




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ASTC: Financial Accounting Services

HN: 0879 11 55 66 - HCM: 0787 228 229