Tax exemption for Vietnamese employees working at the United Nations

According to Decision No. 07/2016/QD-TTg effective from May 1, 2016, employees working at the representative offices of international organizations under the United Nations system in Vietnam will be exempt from personal income tax if the following conditions are met:

1. Have Vietnamese nationality.
2. Are employees of the representative offices of international organizations under the United Nations system in Vietnam, confirmed by the competent representatives of the international organizations' representative offices according to the list sent to the tax authorities.

The tax-exempt income is considered to be the income from salaries and wages paid by the representative offices of international organizations under the United Nations system in Vietnam. If the incomes received by the employees are from sources other than those paid by the United Nations organization, they are still required to fulfill their tax obligations as per the current regulations.

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When employees are determined to be eligible for tax exemption, they must proceed with the documentation and procedures as regulated in Circular 57/2009/TT-BTC. The representative offices of the United Nations organizations in Vietnam are responsible for submitting the list of Vietnamese employees recruited by the offices who are eligible for personal income tax exemption to the Tax Department of the province or city where the office is headquartered. In case of any personnel changes, the updated list must be submitted to the tax authorities no later than the last day of the month in which the changes occurred. Thus, Circular 57 only stipulates the tax exemption documentation through the responsibility of personnel declaration and listing by the United Nations representative offices in Vietnam without any other regulations or constraints.

In practice, when employees work at any agency or organization, the employment contract is a legally significant document that fully reflects the rights and obligations of the parties in the contract. Therefore, when considering personal income tax exemption, it is necessary to refer to the employment contract, meaning objectively evaluating whether the employee subject has signed a labor contract with a legitimate organization, and whether it complies with the legal regulations.

From August 15, the diplomatic note from the representative office of the international organization and the labor contract will be the basis to be included in the application for personal income tax exemption for employees working at the United Nations as per the provisions of Circular 97/2016/TT-BTC. Specifically, the tax exemption dossier will include:

- Diplomatic note from the representative office of the international organization under the United Nations system in Vietnam, along with the List of Vietnamese Employees exempt from personal income tax;- Copy of the Labor Contract.

In case of personnel changes due to new recruitment or termination of the contract, submit the updated List of Personnel Changes and Copy of the Labor Contract (for newly recruited Vietnamese employees).

Circular 97 regulates that if an international organization under the United Nations system based in Vietnam has a representative office established in Vietnam before the effective date of Circular 97 and has not submitted the personal income tax exemption dossier, then the personal income tax exemption dossier must be submitted following the guidelines in the Circular within 30 days from the effective date of this Circular.

In case the representative office of the international organization under the United Nations system in Vietnam recruits new employees or terminates labor contracts with Vietnamese employees, the tax exemption dossier for the changing Vietnamese employees must be submitted no later than the 20th day of the succeeding month in which the change occurred.

Moreover, Circular 97 provides detailed regulations regarding the location to submit the tax exemption dossier and the tax exemption procedures as follows:

- The representative offices of the international organizations under the United Nations system in Vietnam shall submit the tax exemption dossier to the Ministry of Foreign Affairs (State Protocol Department).- The Ministry of Foreign Affairs (State Protocol Department) is responsible for verifying, confirming, and sending the List of Vietnamese Employees eligible for personal income tax exemption or the List of Personnel Changes eligible for personal income tax exemption to the Tax Department of the province or centrally-run city where the representative office of the international organization under the United Nations system in Vietnam is located to complete the tax exemption procedures, within 05 working days from the date of receiving the complete tax exemption dossier.

Circular 97/2016/TT-BTC takes effect from August 15, 2016, and replaces Circular 57/2009/TT-BTC.

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