Circular 96/2016/TT-BTC guiding the dossiers and procedures for personal income tax (PIT) exemption for foreign experts directly implementing activities of the program, project of foreign non-governmental aid in Vietnam.
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Regulations on Personal Income Tax exemption for foreign experts under Decision 06/2016/QD-TTg apply to foreign experts selected to directly implement activities of programs and projects funded by foreign non-governmental aid. These regulations are based on the consensus between foreign non-governmental organizations and the project managing agencies in Vietnam, as stipulated in the program and project documentation approved according to the legal provisions on the management and use of foreign non-governmental aid.
According to Decision 06, foreign experts eligible for personal income tax exemption must (1) have foreign nationality; (2) have a contract signed with the foreign non-governmental organization or with the project managing agency or with the sponsor of foreign non-governmental aid in Vietnam to directly implement program and project activities as per the approved program and project documents and the attached Terms of Reference (TOR) for the foreign expert; (2’) in case of a contract between the expert and the non-governmental organization, it additionally requires confirmation by the sponsor of foreign non-governmental aid in Vietnam that the expert is directly implementing program and project activities; (3) the exempted income is identified as the income directly incurred from participating in the execution of the foreign non-governmental aid programs and projects.
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Even though personal income tax exemption for foreign experts was mentioned in Circular 55/2007/TT-BTC, the procedures and documents required for exemption were not clearly specified. Therefore, the Minister of Finance issued Circular 96/2016/TT-BTC to provide detailed guidance on the documentation and procedures for tax exemption for the aforementioned subject.
The tax exemption dossier in Circular 55 consisted of (1) an Official Dispatch requesting the tax exemption from the non-governmental organization; (2) Confirmation from the managing agency on the foreign non-governmental aid program or project; and (3) related documents on the income exempted for the foreign expert. Circular 96 specifies the tax exemption dossier in more detail, including:
- Confirmation of the foreign expert and a request for personal income tax exemption from the managing agency (if the expert signs a contract with the managing agency) or from the sponsor of the foreign non-governmental aid (if the expert signs a contract with the foreign non-governmental organization or the sponsor) for the income derived from directly implementing the foreign non-governmental aid program or project in Vietnam;- Other related documents such as:- A copy of the Decision approving the foreign non-governmental aid program or project in Vietnam;- A copy of the program and project document approved by the competent authorities of Vietnam;- A copy of the contract signed between the foreign expert and the foreign non-governmental organization or the managing agency or the sponsor of the foreign non-governmental aid.
Circular 96 also stipulates the deadline for submitting the tax exemption dossier, which is no later than the 30th day from the date the foreign expert's contract becomes effective. The managing agency or the sponsor of the foreign non-governmental aid must submit the tax exemption dossier to the tax authority.
The place for submitting the tax exemption dossier is detailed in two cases:
- In case the foreign expert signs a contract with the managing agency, the place for submitting the dossier is the Tax Department of the province or centrally governed city where the managing agency is headquartered.- In case the foreign expert signs a contract with the foreign non-governmental organization or the sponsor of the foreign non-governmental aid, the place for submitting the dossier is the Tax Department of the province or centrally governed city where the sponsor is headquartered.
Within 15 working days from the date of receiving the complete dossier, the tax authority will issue a certification of personal income tax exemption for the income from implementing the foreign non-governmental aid program or project or notify the ineligibility for the tax exemption.
Circular 96/2016/TT-BTC takes effect from August 15, 2016 and replaces Circular 55/2007/TT-BTC.
