Under the current Personal Income Tax (“PIT”) regulations, a Vietnamese company has the obligation to inform its foreign contractors of the Vietnam PIT reporting and payment requirements. In addition to this, a Vietnamese company is also required to submit a notification to the tax authorities providing information on its foreign contractor’s employees sent to Vietnam to provide service. We highlight below the information required by the tax authorities for this notification reporting.
Generally, a non-resident company doing business and/or having income in Vietnam is considered as foreign contractor. Under the current PIT regulations, Vietnamese companies are required to submit a notification to the provisional tax authorities providing information on their foreign contractor’s employees that are sent to provide service in Vietnam at least 7 working days before their first day of working in Vietnam. The following information is to be submitted as part of the notification reporting:
As a result of this requirement by the tax authorities, the Vietnam company will likely request such information from its foreign contractor to fulfil its reporting obligations. In other words, the information of the foreign contractor’s employees who are assigned to work in Vietnam to provide service would be fully disclosed to the Vietnam tax authorities.
Foreign individuals working in Vietnam are subject to Vietnam PIT and are required to declare and pay PIT based on their tax residency status, this is regardless of whether their income is paid in Vietnam or overseas. But there are differences in the tax declaration method depending on whether the individuals are receiving their remuneration from an overseas or a local Vietnam entity.
The Vietnamese tax authorities have become more stringent and are closely monitoring the foreign contractor’s employees in enforcing PIT requirements. In practice, we are aware that the Vietnam tax authorities proactively contact foreign contractors/individuals via information provided by the Vietnamese party to collect taxes on such individuals.
Vialto Partners would be pleased to assist you in meeting your employees tax compliance in Vietnam and are happy to meet up/arrange a call with you to discuss how best we can assist you and your employees to stay compliant in Vietnam.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Brittany Chong
Partner
Further information on Vialto Partners can be found here: www.vialtopartners.com
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