Tax Obligations for Income from Pensions: How Are They Determined?

Currently, according to the provisions of the Agreement on the Avoidance of Double Taxation and the Prevention of Tax Evasion with respect to Income and Wealth Taxes between Vietnam and various countries and territories, income from pensions is defined as pensions received by residents of a country that has signed the Agreement with Vietnam from their previous employment in Vietnam; and vice versa.

Illustration (source: internet)

Income from pensions as regulated herein does not include pensions paid by the Government of Vietnam, local government authorities of Vietnam, and the country that has signed the Agreement with Vietnam, as this income is considered income from activities serving the Government of Vietnam (as stipulated in Section 14: Income from activities serving the Government of Vietnam, Chapter II, Circular 205/2013/TT-BTC).

Depending on the specific Agreement, pension income will be taxed:

- Only in the country where the pension recipient is a resident; or- Only in the country where the pension is paid; or- Both in the country of residence of the pension recipient and in the country where the pension arises if the payer is a resident or is a permanent establishment in that country.

The tax regulations concerning pension income as mentioned above are stated in the Pension Provisions (usually Article 18) of the Agreement on the Avoidance of Double Taxation and the Prevention of Tax Evasion with respect to Income and Wealth Taxes between Vietnam and various countries and territories.

View the full text of the regulation at Circular 205/2013/TT-BTC, effective from February 6, 2014.

Thu Ba

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