Income tax settlement for foreigners

Foreign residents who have completed their employment contract in Vietnam must make tax settlement with the tax authority before leaving the country.

Responding to Deloitte Vietnam Company Limited Branch (Ho Chi Minh City) regarding personal income tax (PIT) settlement of foreigners, Ho Chi Minh City Tax Department provides the following instructions:

Pursuant to Point 1.1, Clause 1, Section I, Part A; Clause 1, Section II, Part C; Clause 2.3.2, Section II, Part D, Circular No.84/2008/TT-BTCSeptember 30, 2008 of the Ministry of Finance guiding on Personal Income Tax:

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 date of arrival is counted as one day and the date of departure is also counted as one day. The date of arrival and date of departure are determined based on the certification of the immigration authority on the passport (or travel document) of that individual when arriving and leaving Vietnam. In case of entry and exit on the same day, it is counted as one day of residence.

Personal income tax on income from salaries and wages of non-resident individuals is determined by multiplying taxable income from salaries and wages by (x) the tax rate of 20%.

Individuals with income from salaries and wages must declare and settle taxes in the following cases:

- The amount of tax payable in the year is greater than the amount of tax deducted or provisionally paid in the year, or there is a tax liability that has not been deducted or provisionally paid in the year.

- There is a request for tax refund or tax offset to the next period.

In case a resident individual is a foreigner, upon termination of his/her employment contract in Vietnam, he/she must make a tax settlement with the tax authority before leaving the country. In other cases, tax settlement declaration is not required.

In the case of a Company with a foreign employee working for the Company in Vietnam from 2009 to the end of June 2012, in the tax year 2012 residing in Vietnam for less than 183 days, he is an individual not residing in Vietnam, so the personal income tax payable is determined according to the provisions in Clause 1, Section II, Part C of Circular 84/2008/TT-BTC mentioned above.

From July 1, 2012, the above individual ended his/her work contract and left Vietnam to return to his/her home country. Because he/she is an individual who does not reside in Vietnam during the tax year, he/she does not have to make a 2012 Personal Income Tax Finalization.

According to (Chinhphu.vn) - LT