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New Circular on Personal Income Tax (“PIT”)
The Ministry of Finance (“MoF”) issued Circular 111/2013/TT-BTC (“Circular 111”) on 15 August 2013 to guide the imple-
mentation of the new PIT Law and Decree 65/2013/ND-CP (“Decree 65”).
Circular 111 restates many of the provisions contained in Decree 65. Please refer to our NewsBrief dated 2 July 2013 in
relation to Decree 65. We summarise the key points contained in Circular 111:
Tax residency
Evidence of tax residency of another country is normally by way of a tax residency certificate (“TRC”) issued by the foreign
tax authority. Where a TRC cannot be obtained from a country which has signed a tax treaty with Vietnam, alternative
document, such as a passport, can be used.
Grossing up of benefits-in-kind (“BIK”)
BIK, including housing accommodation, provided by the employer are required to be grossed up to include the
tax element if the Vietnam taxes on the BIK are borne by the employer.
Life and other non-compulsory insurance/voluntary retirement pensions schemes
Employer accumulated contributions to life insurance/non-compulsory insurance/voluntary retirement pension schemes
are taxable at the time of payout/distribution. The insurance company, pension fund management company are required
to withhold 10% tax on the accumulated contributions.
Employee’s contribution to voluntary pension scheme
Employee can claim deduction of up to VND1 million/month to the voluntary pension scheme set up in accordance with
the guidance of the MoF
Dependent relief
Qualifying dependents will be granted a tax code for dependent relief purposes
Airfares provided to employees working on a rotation basis
Airfares and related expenses paid for by the employer in relation to employees travelling to/from Vietnam on a short
term rotational basis will be a non-taxable benefit. This apply to employees working on a number of industries such as
petroleum or mining,
Income from transfer of securities
Shares of both public and non-public joint stock companies (“JSCs”) are considered securities. Consequently, any sale of
these shares will be taxed at the rate of 0.1% of the sales proceeds or 20% on the net gain. Prior to 1 July 2013, the sales of
shares of a non-public JSC were taxed at 20% of the gain.
Payment to individuals other than employees
The threshold on payment, to residents who do not sign labour contract or sign labour contract with a term of less than 3
months, subject to the 10% tax withholding, is VND2 million., irrespective of whether the individual has a tax code.
Tax filing and administration
The Vietnamese party has the obligation to inform its foreign contractors of the Vietnam PIT reporting and payment
requirements. Additionally, there is a requirement for the Vietnamese party to provide information on foreign contractor’s
assignees working in Vietnam to the tax authorities at least 7 days before the individuals start working in Vietnam.
Although Circular 111 will be effective from 1 October 2013, it will be applied in relation to PIT matters arising from 1 July