Foreign Workers Without Income Arising in Vietnam: Are They Subject to Personal Income Tax?

Based on the provisions of Article 2 of Circular 119/2014/TT-BTC, the scope for determining taxable income of taxpayers is divided according to residents and non-residents. Specifically:

- For resident individuals, taxable income is income that originates within and outside the territory of Vietnam, regardless of where the income is paid;

- For individuals who are citizens of countries or territories that have signed an Agreement with Vietnam to avoid double taxation and prevent tax evasion concerning taxes on income, and are residents in Vietnam, the personal income tax liability is calculated from the month they arrive in Vietnam (in case the individual is present in Vietnam for the first time) to the month the labor contract ends and they depart from Vietnam (calculated in full months). They are not required to complete consular certification procedures to benefit from avoiding double taxation under the agreement between the two countries.

- For non-resident individuals, taxable income is income originating in Vietnam, regardless of where the income is paid and received.

Additionally, under the provisions of Clause 1, Article 1 of Circular 111/2013/TT-BTC, individuals who are present in Vietnam for 183 days or more within a calendar year or within 12 consecutive months from the first day of their presence in Vietnam, where the arrival and departure days are counted as one (01) day; individuals who have a permanent residence according to the regulations of the law on residence are considered residents.

Comparing with your case, if your company's foreign employee is determined to be a resident individual under the above provisions, they are obligated to pay personal income tax, regardless of whether the income originates in Vietnam or abroad.

Sincerely!