Point dd, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of Ministry of Finance on the implementation of the Law on personal income tax, the Law on the amendments to the Law on personal income tax, and the Government’s Decree No. 65/2013/ND-CP elaborating a number of articles of the Law on personal income tax and the Law on the amendments to the Law on personal income tax provides guidelines for taxable incomes:
“dd) Other benefits in cash or not in cash apart from wages paid to the taxpayer by the employer in any shape or form”
Point dd.4.3, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance guiding the amount of flat expenditure not included in taxable income in some cases:
“dd.4.3) For the employees in international organizations and representative offices of foreign organizations: the flat expenditure shall comply with regulations of such international organizations and representative offices of foreign organizations”.
Clause 1, Article 18 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance above guiding:
“The rate of personal income tax on incomes from wages earned by a non-resident equals the taxable income from wages multiplied by (x) 20% tax”.
Pursuant to the above guidelines, in the case of a labor contract signed between a foreign individual and a foreign contractor, there are provisions on expenses for hotels, airfares, phone calls, meals, transportation, etc. that the Vietnamese company pays for and the amount of expenditure is consistent with the guideline at Point dd4, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance mentioned above, this expenditure is not included in personal income taxable income. The flat expenditure in excess of the prescribed limit of the foreign contractor must be included in the personal income taxable income.
In case the expenses for hotel, airfare, telephone, meals, transportation, etc. are not specified in the labor contract signed between the foreigner and the foreign contractor and paid by the Vietnamese company, this expenditure is the personal income taxable income of non-resident individuals. Vietnamese companies are responsible for withholding personal income tax of non-resident individuals according to the guidelines in Clause 1, Article 18 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance mentioned above.