Tax finalization service for foreigners in Ho Chi Minh

Ho Chi Minh City is one of the cities with the largest number of foreign enterprises and investors coming to invest and do business in our country. Therefore, foreign individuals who are managers or foreign employees when working in Vietnam must have the obligation to pay personal income tax to the Vietnamese State as if they were paying personal income tax in their own country. However, how will the procedures for tax finalization service for foreigners in Ho Chi Minh be carried out?

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 Decree No 65/2013/ND-CP, amended and supplemented from time to time.

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

Personal income tax is often defined as follows: “Personal income tax is a tax directly imposed on taxpayers’ income from salaries and other sources, except for tax-exempt incomes and reduction based on family circumstances”.

Personal income tax is one of the basic taxes that all countries and territories around the world apply. The tax rates applied in each country will have certain differences, but the mechanism, content, and method of calculating income tax are all recognized and applied similarly by all countries. This creates a common awareness for all citizens of all countries that regardless of the income generated in any country in the world, they are obliged to carry out personal income tax procedures.

In Vietnam, pursuant to Article 2 of the Law on Personal Income Tax 2007, personal income taxpayers include individuals residing in Vietnam with income within or outside the territory of Vietnam and individuals not residing in Vietnam but with income in Vietnam.

Under 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.

Subjects must carry out personal income tax finalization procedures

Under Point d, Clause 6, Article 8 of Decree 126/2020/ND-CP detailing several articles of the Law on Tax Administration 2019, the subjects required to carry out personal income tax finalization procedures are as follows:

• Individuals and organizations paying taxable personal income from salaries and wages;
• Individuals with income from salaries and wages authorize tax finalization to organizations and individuals paying income;
• Individuals with income from salaries and wages directly finalize taxes with tax authorities.

Thus, under this regulation, there is no distinction between individuals and organizations with Vietnamese nationality. Therefore, all individuals and organizations with other nationalities (foreign individuals and organizations) are also naturally obliged to pay personal income tax to the Vietnamese State according to this regulation and satisfy other conditions as prescribed by law.

Conditions and tax payment thresholds for foreign employees working in Vietnam

Under 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 under the above regulations will be non-resident individuals.

Tax calculation method

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.

Personal income tax payable = Tax rate  X  taxable incomes

Mức thuế suất cụ thể như sau:

Personal income tax finalization procedures for foreigners in Ho Chi Minh City

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

The agency that receives personal income tax dossiers for foreigners in Ho Chi Minh City is:

• Ho Chi Minh City Tax Department.
• Address: 63 Vu Tong Phan, An Phu Ward, Thu Duc City, Ho Chi Minh City.

Deadline for submitting tax declaration

The deadline for submitting annual tax declarations is mentioned in Article 44 of the Law on Tax Administration 2019 as follows:

• If an individual authorizes an organization or individual to pay income, the deadline for personal income tax finalization is no later than March 31;
• If individuals directly finalize personal income tax with the tax authority, the deadline for tax finalization is April 30 at the latest;

It should be noted that April 30 is an annual holiday, so foreign individuals need to pay personal income tax before April 30 to ensure their maximum legal rights and obligations.

Tax finalization service for foreigners in Ho Chi Minh by Viet An Tax Consultancy

• Providing full package tax finalization services for foreigners in Ho Chi Minh City;
• Legal advice to clients on all legal regulations and the process of finalizing Personal Income for foreigners in Ho Chi Minh City;
• Legal advice for specific cases of clients, authorized representation for clients to carry out procedures for finalizing personal income tax with tax authorities;
• Drafting personal income tax finalization documents for foreign customers;
• Represent clients in working with tax authorities, other agencies, and organizations (if any).

Above are the tax finalization services for foreigners in Ho Chi Minh of Viet An Law. If you need advice on legal issues related to tax finalization procedures, please contact Viet An Law for the best support.