Official Letter 1435/CTDAN-TTHT Guiding Personal Income Tax

The Tax Department of Danang City has received the Transfer Note No. 145/PC-TCT dated February 7, 2025, from the General Tax Department, transferring the inquiry from Ms. Nguyễn Hải Yến regarding personal income tax (PIT) for foreign workers. Regarding this matter, the Tax Department of Danang City has the following comments:

Based on the provisions in:

• Circular No. 111/2013/TT-BTC dated August 15, 2013, from the Ministry of Finance, guiding the implementation of the PIT Law, the amended and supplemented PIT Law, and Decree No. 65/2013/NĐ-CP from the Government, detailing some provisions of the PIT Law and the amended and supplemented PIT Law:

  • Article 1 (as amended in Clause 1, Article 2 of Circular No. 119/2014/TT-BTC dated August 25, 2014) guides the taxpayers of PIT;
  • Point b, Clause 2, Article 2 (as amended in Clause 1, Article 11 of Circular No. 92/2015/TT-BTC dated June 15, 2015) guides about allowances, subsidies not included in taxable PIT from salaries and wages;
  • Point c, Clause 1, Article 9 guides the principles for family deduction;
  • Point e.2, Clause 2, Article 25 guides the principles for tax declaration and finalization for certain cases;

• Official Letter No. 883/TCT-DNNCN dated March 24, 2022, from the General Tax Department guiding PIT finalization;

• Clause 1, Article 6 of Circular No. 78/2014/TT-BTC dated June 18, 2014, from the Ministry of Finance (as amended in Clause 2, Article 6 of Circular No. 119/2014/TT-BTC dated August 25, 2014, and Article 4 of Circular No. 96/2015/TT-BTC dated June 22, 2015) guiding deductible expenses when determining taxable corporate income (CIT).

Based on the above regulations, the Tax Department provides the following opinions:

In case the employee is a Japanese citizen (a country that has signed an agreement with Vietnam to avoid double taxation and prevent tax evasion on income taxes) and is a resident individual in Vietnam, the PIT liability is calculated from the month the employee first arrives in Vietnam (June 2024) until the month the employment contract ends and the employee leaves Vietnam (calculated fully by month), according to the guidelines in Article 1 of Circular No. 111/2013/TT-BTC (as amended above). In 2024, if the employee stays in Vietnam for more than 183 days, the first PIT finalization year for the employee will be calculated from June 2024 to December 2024, and a family deduction for the employee will apply starting from the month of their arrival in Vietnam, according to the guidelines in Point c.1.2, Clause 1, Article 9 of Circular No. 111/2013/TT-BTC.

In case the Company pays a one-time relocation allowance for a foreign employee moving to Vietnam, this amount will not be included in the employee's taxable income according to the amount specified in the employment contract or collective labor agreement, as guided in Point b.9, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC (as amended above) and can be deducted as an expense when determining taxable corporate income if it meets the conditions specified in Clause 1, Article 6 of Circular No. 78/2014/TT-BTC dated June 18, 2014 (as amended above).

The Tax Department of Danang City hereby informs Ms. Nguyễn Hải Yến to be aware and comply with the above. If further clarification is needed, please contact the Tax Department (Taxpayer Support Department) at No. 190 Phan Đăng Lưu, Hải Châu District, Danang City for guidance or consult additional information about the tax policies on the Danang Tax Department's website at: https://danang.gdt.gov.vn.

See details herre.