What is the PIT period for non-residents in Vietnam?

What is the PIT period for non-residents in Vietnam?

Under Article 7 of the PIT Law 2007 (amended by Clause 3, Article 1 of the Law on Amendments to PIT Law 2012):

Tax period

1. For residents, tax period is specified as follows:

a/ Annual tax period, which is applicable to incomes from business, salaries and wages.

b/ Tax period upon each time of income generation, which is applicable to incomes from capital investment; incomes from capital transfer, except for incomes from securities transfer; incomes from real estate transfer; incomes from prizes; incomes from copyright; incomes from commercial franchising; incomes from inheritances; and gifts.

c. Tax period upon each transfer or annual tax period, which is applicable to Incomes from transfer of securities.

2. For non-residents, the tax period counted upon each time of income generation is applicable to all their taxable incomes.

Thus, for non-residents, the tax period counted upon each time of income generation is applicable to all their taxable incomes.

What is the PIT period for non-residents in Vietnam? (Image from the Internet)

Who are non-residents required to pay PIT in Vietnam?

Under Article 1 of Circular 111/2013/TT-BTC amended by Article 2 of Circular 119/2014/TT-BTC:

Taxpayers

Taxpayers being residents and non-residents mentioned in Article 2 of the Law on Personal income tax, Article 2 of the Government's Decree No. 65/2013/NĐ-CP dated June 27, 2013 on guidelines for the Law on Personal income tax and the Law on amendments to the Law on Personal income tax (hereinafter referred to as Decree No. 65/2013/NĐ-CP) who earn taxable income as prescribed in Article 3 of the Law on Personal income tax and Article 3 of Decree No. 65/2013/NĐ-CP.

Taxable income is determined as follows:

Taxable income earned by a resident is the income earned within and beyond Vietnam’s territory regardless of the place where income is paid;

Any individual who is a citizen of a country or territory that has entered into an agreement on double taxation and prevention of tax avoidance with Vietnam, and also a resident in Vietnam shall calculate personal income tax from the month that individual arrives at Vietnam (if the individual goes to Vietnam for the first time) to the month in which the labor contract expires and the individual leaves Vietnam without following procedures for consular certification to avoid double taxation according to the double taxation agreement between the two countries.

Taxable income of a non-resident is income earned in Vietnam, regardless of the place where income is paid and received

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According to the above stipulations, the following entities are required to pay PIT: residents and non-residents.

Non-residents are those who do not meet one of the following conditions:

(1) Being present in Vietnam for 183 days or more in a calendar year or within 12 consecutive months from the first date of presence in Vietnam, of which arrival and departure dates are counted as 01 day.

(2) Having a regular place of residence in Vietnam under one of the following cases:

- Having a regular place of residence as stipulated by the law on residence;

- Having a rented house for living in Vietnam as stipulated by the law on housing, with rental contracts of 183 days or more within the tax year;

If an individual has a regular place of residence in Vietnam as stipulated but actually stays in Vietnam for less than 183 days in the tax year and cannot prove they are a resident of another country, that individual is considered a resident in Vietnam.

Proof of being a resident of another country is based on a Certificate of Residence. For individuals from a country or territory that has signed a tax treaty with Vietnam but does not issue a Certificate of Residence, the individual provides a photocopy of their passport to prove the period of residence.

What does income from salaries and remunerations subject to PIT in Vietnam include?

According to Clause 2, Article 3 of the Personal Income Tax Law 2007 (amended and supplemented by Clause 1, Article 1 of the Law on Amendment to Personal Income Tax Law 2012), taxable income from salaries and remunerations of employees includes:

- salaries, remunerations and amounts of similar nature;

- Allowances, subsidies, except for amounts:

+ Those paid under legal provisions on preferential treatment of persons with meritorious services;

+ defense or security allowances; hazard or danger allowances for persons working in branches, occupations or jobs at places where exist hazardous or dangerous elements;

+ allowances for attraction of laborers to work in certain branches or in certain regions specified by law;

+ allowances for sudden difficulties, allowances for laborers having labor accident or suffering from occupational disease, lump-sum maternity or child adoption allowances; allowances for working capacity loss, lump-sum retirement allowances, monthly survivorship allowances and other allowances as prescribed by law on social insurance;  

+ severance and job-loss allowances specified in the Labor Code;

+ subsidies of social relief nature and other allowances, subsidies without nature of salaries, remunerations as prescribed by the Government.