What are procedures for certifying tax residents in Vietnam?

What are procedures for certifying tax residents in Vietnam?

According to Subsection 2 Part 2 of the administrative procedures issued together with Decision 2780/QD-BTC in 2023, the procedures for certifying tax residents in Vietnam are as follows:

- Step 1: Organizations or individuals requesting confirmation that they are a tax resident of Vietnam according to the provisions of the Tax Agreement shall prepare the application dossier and send it to the Tax Department where the taxpayer is registered.

- Step 2: The tax authority receives the document:

+ If the dossier is submitted directly at the tax authority or via postal service: the tax authority will receive and process the dossier and return the results as prescribed.

+ If the dossier is submitted to the tax authority through an electronic transaction, the receipt, inspection, acceptance, and processing of the dossier will be done through the electronic data processing system of the tax authority.

Method of implementation:

+ Submit directly at the tax office headquarters;

+ Send via postal service;

+ Aend electronically through the tax authority's electronic transaction portal.

What are procedures for certifying tax residents in Vietnam? (Image from the Internet)

How to determine residential status for personal income tax purposes in Vietnam?

According to Article 1 of Circular 111/2013/TT-BTC (amended by Article 2 of Circular 119/2014/TT-BTC):

Taxpayer

The taxpayer is a resident and non-resident individual as stipulated in Article 2 of the Law on Personal Income Tax, Article 2 of Decree No. 65/2013/ND-CP dated June 27, 2013, of the Government of Vietnam detailing some articles of the Law on Personal Income Tax and the Law amending and supplementing some articles of the Law on Personal Income Tax (hereinafter referred to as Decree No. 65/2013/ND-CP), having taxable income as defined in Article 3 of the Law on Personal Income Tax and Article 3 of Decree No. 65/2013/ND-CP.

The scope of determining taxable income of the taxpayer is as follows:

For resident individuals, taxable income is the income arising both 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 an agreement with Vietnam on double tax avoidance and prevention of tax evasion for income taxes and are resident individuals in Vietnam, personal income tax obligations are calculated from the month of arrival in Vietnam if the individual is present in Vietnam for the first time until the end of the labor contract and departure from Vietnam (calculated on a full month basis) without having to perform the consular confirmation procedures to be exempt from double taxation under the agreement between the two countries.

For non-resident individuals, taxable income is the income arising in Vietnam, regardless of the place of payment and receipt of income.

...

Thus, according to the regulations, the following individuals must pay personal income tax as resident and non-resident individuals. A resident individual must satisfy one of the following conditions:

(1) Present in Vietnam for 183 days or more in a calendar year or for 12 consecutive months from the first day of arrival in Vietnam, where the arrival and departure days are counted as 01 day each.

(2) Has a regular place of living in Vietnam under either of the following cases:

+ Having a regular place of living according to the provisions of the law on residence;

+ Having a rented house in Vietnam under the law on housing, with rental contracts lasting 183 days or more in the tax year;

If an individual has a regular place of living in Vietnam according to the above provisions but is physically present in Vietnam for less than 183 days in the tax year and cannot prove residency in any other country, that individual is considered a resident in Vietnam.

The proof of residency in another country is based on the Residency Certificate. If the individual belongs to a country or territory that has signed a tax agreement with Vietnam and does not issue a Residency Certificate, the individual can provide a copy of the Passport to prove the residency period.

What is the tax period for personal income tax for resident individuals in Vietnam?

Pursuant to Article 7 of the Law on Personal Income Tax 2007 (amended by Clause 3 Article 1 of the Amended Law on Personal Income Tax 2012), the tax period for resident individuals is regulated as follows:

(1) The annual tax period applies to income from business; income from salaries, and wages;

(2) The tax period per occurrence of income applies to income from capital investment; income from capital transfer, except income from securities transfer; income from real estate transfer; income from winnings; income from royalties; income from franchise; income from inheritance; income from gifts;

(3) The tax period per occurrence of transfer or annually for income from securities transfer.