Official Dispatch No. 5874/TCT-DNNCN 2024 on Personal Income Tax Policy

MINISTRY OF FINANCE GENERAL DEPARTMENT OF TAXATION ____________ No: 5874/TCT-DNNCN Re: Personal Income Tax Policy

SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ____________________ Hanoi, December 12, 2024

 

 

To: EBARA Vietnam Pump Co., Ltd

 

In response to Official Dispatch No. 2410-219/CV/EVPC-TCT dated October 31, 2024, from EBARA Vietnam Pump Co., Ltd. regarding difficulties in declaring and finalizing personal income tax (PIT) in determining taxable income timing for individuals who are citizens of countries or territories that have signed a Double Taxation Avoidance Agreement with Vietnam, the General Department of Taxation provides the following response:

- Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013, issued by the Ministry of Finance, guiding the implementation of the Personal Income Tax Law, as amended and supplemented by Decree No. 65/2013/ND-CP of the Government, stipulates the following:

“Article 1. Taxpayers

Taxpayers include both resident and non-resident individuals as defined in Article 2 of the Personal Income Tax Law and Article 2 of Decree No. 65/2013/ND-CP dated June 27, 2013, of the Government. These individuals are subject to taxable income as specified in Article 3 of the Personal Income Tax Law and Article 3 of Decree No. 65/2013/ND-CP.

The scope of taxable income determination is as follows:

For resident individuals, taxable income includes all income arising within and outside the territory of Vietnam, regardless of the place of payment;

For individuals who are citizens of a country or territory that has signed a Double Taxation Avoidance Agreement with Vietnam and who are also considered resident individuals in Vietnam, personal income tax obligations are calculated from the month they arrive in Vietnam for the first time until the month they terminate their employment contract and leave Vietnam (calculated in full months). These individuals are not required to obtain consular certification to qualify for the tax exemption under the Double Taxation Avoidance Agreement.

For non-resident individuals, taxable income includes only income generated in Vietnam, regardless of where the income is paid or received”.

Based on the above regulations and the data provided by EBARA Vietnam Pump Co., Ltd., in principle, if a taxpayer is a foreign worker from a country or territory that has signed a Double Taxation Avoidance Agreement with Vietnam and first arrived in Vietnam in February 2022, and qualifies as a resident individual in Vietnam, they must include their global income from February 2022 to December 2022 in their PIT finalization for 2022. Additionally, they are entitled to a dependent deduction for themselves for the period from February 2022 to December 2022 (calculated in full months) and are responsible for finalizing their tax obligations with the tax authority.

The General Department of Taxation provides this response for the taxpayer’s information and compliance.

Recipients: - As above; - Deputy General Director Mai Son (for reporting); - Hai Duong Tax Department; - Departments of Policy, Legislation, and International Cooperation; - GDT Website; - Archives: VT, DNNCN.

FOR THE GENERAL DIRECTOR ON BEHALF OF THE DIRECTOR OF THE DEPARTMENT OF TAX ADMINISTRATION FOR SMALL AND MEDIUM ENTERPRISES, BUSINESS HOUSEHOLDS, AND INDIVIDUALS DEPUTY DIRECTOR             Nguyễn Quý Trung

View details here.