Determination of PIT amount for foreigners entering Vietnam to work

The General Department of Taxation has just issued Official Letter No. 3880/TCT-DNNCN to the Tax Department of Tra Vinh province, guiding the determination of PIT amount for foreigners entering Vietnam to work.

According to the General Department of Taxation, in Clause 1, Article 1 of Circular No. 111/2013/TT-BTC dated August 15, 2013, of the Ministry of Finance, a resident individual is a person who meets one of the following conditions: being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months from the first day of presence in Vietnam, in which the arrival and departure dates are counted as one day.

The arrival and departure dates are based on the certification of the immigration authorities on the individual’s passport upon arrival and departure from Vietnam. In case of entry and exit on the same day, it will be counted as one day of residence. The individual present in Vietnam under the guidance is the presence of such individuals in the territory of Vietnam.

Regarding the tax period for resident individuals, in Article 6 of Circular No. 111/2013/TT-BTC dated August 15, 2013, of the Ministry of Finance, it is clear that the tax period by year applies to income from the business and income from wages and salaries. In a calendar year, an individual is present in Vietnam for 183 days or more. The tax period is calculated according to the calendar year.

In addition to the above contents, the General Department of Taxation also provides detailed guidance on tax deduction documents specified in Article 25 of Circular No. 111/2013/TT-BTC.

Accordingly, for foreigners working in Vietnam, organizations and individuals pay income based on the taxpayer’s working time in Vietnam stated in the contract or written assignment to work in Vietnam to temporarily deduct tax according to the partially progressive or full tax schedule.

To make tax finalization, residents have incomes from business, salary, or wages if the number of days present in Vietnam in the first calendar year is less than 183 days, or the number of days calculated in 12 consecutive months from the first day of presence in Vietnam is 183 days or more. The first tax year shall declare and submit tax finalization dossiers no later than the 90th day from the date of calculation for 12 consecutive months.

From the second tax year, declare and submit tax finalization documents no later than the 90th day from the end of the calendar year. The remaining tax payable in the second tax year is determined as follows: The remaining tax payable in the second tax year = The payable tax amount of the double tax year – The double-deductible tax amount.

The General Department of Taxation suggested that Tra Vinh Tax Department, based on the above provisions and the dossier’s actual situation, guide enterprises to comply with the requirements of law.

(Source: tapchitaichinh)