Tax finalization service for foreigners in Hanoi Vietnam

Hanoi is the capital of Vietnam, therefore, Hanoi attracts a large number of multinational corporations and international organizations to choose to invest and conduct business activities. In addition to participating in business activities, these enterprises themselves often send experts from the parent company to work as managers at their organizations. Therefore, managers or foreign employees of the above companies will generate income in Vietnam, thereby having to fulfill the obligation to pay personal income tax to the Vietnamese Government. In the following article, Viet An Law – Tax Consultancy will provide information to individuals and businesses related to tax finalization service for foreigners in Hanoi.

Legal basis

• Law on Tax Administration 2019;
• Law on Personal Income Tax 2007, amended and supplemented in 2012, 2014;
• Decree 125/2020/ND-CP regulating administrative penalties for tax or invoice-related violations, amended and supplemented by Decree 102/2021/ND-CP;
• Circular 80/2021/TT-BTC elaboration of some articles of the Law on Tax Administration and Decree No 126/2020/ND-CP;
• Circular 111/2013/TT-BTC on the implementation of the Law on Personal Income Tax, and the Decree No 65/2013/ND-CP, amended and supplemented from time to time;
• Official dispatch 636/TCT-DNNCN on guidance on personal income tax settlement.

What is personal income tax? What is a personal income tax statement?

Personal income tax is a tax that each individual must pay to the state when they receive income. In Vietnam, according to Article 2 of the Law on Personal Income Tax 2007, the subjects of personal income tax include the income of individuals residing in Vietnam with income within or outside the territory of Vietnam and individuals not residing in Vietnam but with income in Vietnam.

Pursuant to Clause 10, Article 3 of the Law on Tax Administration 2019, it is stated that: “Tax statement means the calculation of tax accrued in a tax year or over the period from the beginning of a tax year to the termination of taxable activities, or over the period during which taxable activities occur as prescribed by law.” Thus, it can be simply understood that tax finalization in general is the process of calculating and declaring the amount of tax that an individual or enterprise must pay to the tax authority based on income, business transactions or assets in a specific accounting period.

Tax payment conditions for foreign employees working in Vietnam

Pursuant to Circular 111/2013/TT-BTC and Circular 119/2014/TT-BTC, the conditions for foreign employees working or generating income in Vietnam to fulfill their tax obligations to the Vietnamese State are:

Resident individuals generating income in and outside Vietnam:

• A resident individual is an individual who has a permanent residence in Vietnam or has resided in Vietnam for 183 days or more in a tax year.
• Foreigners working and living in Vietnam with a house lease contract or other documents proving permanent residence in Vietnam or a residence period of 183 days or more in a tax year are considered resident individuals.

Non-resident individuals generating income in Vietnam:

• Foreign individuals who do not meet the conditions for individuals residing in Vietnam according to the above regulations will be non-resident individuals.

Tax payment threshold for foreign employees in Vietnam

The method of calculating personal income tax for foreign individuals in Vietnam with a labor contract of 3 months or more is similar to the method of calculating tax for Vietnamese citizens, which is to calculate tax according to progressive rates.

Calculation formula:

Personal income tax payable = Tax rate  X  taxable incomes

Specific tax rates are as follows:

• Assessable income under 60 million (calculated annually) or under 5 million (calculated monthly): 5%;
• Assessable income from 60 million – 120 million (calculated annually) or from 5 million – 10 million (calculated monthly): 10%;
• Assessable income from 120 million – 216 million (calculated annually) or from 10 – to 18 million (calculated monthly): 15%;
• Assessable income from 216 million – 384 million (calculated annually) or from 18 million – 32 million (calculated monthly): 20%;
• Assessable income from 384 million – 624 million (calculated annually) or from 32 million – 52 million (calculated monthly): 25%;
• Assessable income from 624 million – 960 million (calculated annually) or from 52 million – 80 million (calculated monthly): 30%;
• Assessable income over 960 million (calculated annually) or over 80 million (calculated monthly): 35%.

Personal income tax finalization procedures for foreigners in Hanoi City

Currently, personal income tax finalization procedures for foreigners can be carried out in 02 ways: (1) Foreigners directly carry out the procedures and (2) Authorize organizations and individuals to pay income.

• The agency that receives personal income tax dossiers for foreigners in Hanoi City is: Hanoi City Tax Department, address: 187 Giang Vo – Cat Linh Ward – Dong Da District – Hanoi City.
• If an individual has income from 2 or more places and is subject to self-tax finalization, submit the application to the agency directly managing the final income payment.
• In case a foreigner does business in many different places: the dossier must be submitted at the place that first issued the tax code.
• Tax declaration documents are guided in Circular 80/2021/TT-BTC.
• The deadline for submitting annual tax declarations mentioned in Article 44 of the Law on Tax Administration 2019 is guided in Official Dispatch 636/TCT-DNNCN on instructions for personal income tax finalization as follows: for foreign individuals who self-implement tax finalization and pay tax, the deadline is April 30th at the latest and for foreign individuals who authorize organizations or individuals to pay income, the deadline for personal income tax finalization is March 31st at the latest.

Penalty for late payment of personal income tax

In case a foreign individual pays personal income tax late, they will be subject to administrative penalties pursuant to Article 13 of Decree 125/2020/ND-CP amended and supplemented by Decree 102/2021/ND-CP, specifically as follows:

Tax finalization service for foreigners in Hanoi by Viet An Tax Agent

• Legal advice to clients on all legal regulations and personal income tax finalization process for foreigners in Hanoi;
• Legal advice for specific cases of clients, authorized representation for clients to carry out procedures for finalizing personal income tax with the Hanoi Tax Department;
• Drafting personal income tax finalization documents for foreign customers;
• Representing clients in working with other agencies and organizations (if any).

Above are tax finalization service for foreigners in Hanoi from Viet An Law. If you need advice on legal issues related to tax finalization procedures, please contact Viet An Law for the best support.