– Pursuant to Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance as follows:
+ Clause 1, Article 1 stipulates the definition of residents:
“Article 1. Taxpayers
…
1. A resident is a person that meets one of the conditions below:
a) He/she has been present in Vietnam for at least 183 days in a calendar year or for 12 consecutive months from the first day of his/her presence in Vietnam (the date of arrival and date of departure are considered 01 day). The date of arrival and date of departure depends on the certification of the immigration agency on the passport (or laissez-passers) when that person enters and leaves Vietnam. If the person enters and leaves Vietnam within one day, it will be considered a day of residence.
A person in Vietnam defined in this Point is the presence of that person in Vietnam’s territory;”
+ Clause 1, Article 6 stipulates the tax period for residents:
“Article 6. Tax period
1. For residents
a) Annual tax statement: applicable to incomes from business and incomes from wages, remunerations.
The tax period is the calendar year if the person is present in Vietnam for 183 days or more in the calendar year.
If the person has been present in Vietnam for fewer than 183 days in a calendar year, but has been in Vietnam for 183 days for 12 consecutive months from the date of arrival, the first tax period is the 12 consecutive months from the date of arrival. In the second year, the tax period is the calendar year.
+ Clause 2, Article 21 regulates tax declaration for residents that earn incomes from wages and business:
“2. Tax statements made by residents that earn incomes from wages and business
…
e) Rules for settling tax in some cases:
e.1) The resident that earns an income overseas and has pay personal income tax on that income overseas shall have the tax paid overseas deducted. The amount of tax deducted shall not exceed the tax payable on the income earned overseas according to Vietnam’s tax table. The ratio is based on the ratio of income earned overseas to the total taxable income.
e.2) The person earns incomes form wages and has been present in Vietnam in the first calendar year for fewer than 183 days, but has been present in Vietnam for 183 days or more within12 consecutive months from the date of arrival.
– In the first tax year: make and submit the tax settlement form by the 90th day from the end of the 12 consecutive months.
– From the first tax year: make and submit the tax settlement form by the 90th day from the end of the calendar year. The remaining tax payable in the second tax year is calculated as follows:
| Remaining tax payable in the second tax year | = | Tax payable in the second tax year | – | Deductible duplicated tax |
Where:
| Tax payable in the second tax year | = | Assessable income in the second tax year | x | Personal income tax rate according to the progressive tax table |
| Deductible duplicated tax | = | Tax payable in the first tax year | x | Number of months in which tax is duplicated |
| 12 |
Example 17: Mr. S is a foreign who first comes to Vietnam and works under a labor contract from June 01, 2014 to May 31, 2016. In 2014, Mr. S has been present in Vietnam for 80 days and earned 134 million VND in wages. In 2015, Mr. S is present in Vietnam for 110 days during the period from January 01, 2015 until the end of May 31, 2015, and earns 106 million VND in wages. From June 01, 2015 to December 31, 2015, Mr. S has been in Vietnam for 105 days and earned 122 million VND in wages. Mr. S does not apply for deductions for dependants and does not pay insurance premiums or make charitable donations.
The personal income tax payable by Mr. S is calculated as follows:
+ In 2014, Mr. S is a non-resident, but for the period of 12 consecutive months from June 01, 2014 to the end of May 31, 2015, Mr. S has been present in Vietnam for totally 190 days (80 days + 110 days). Thus Mr. S is a resident in Vietnam.
+ In the first tax year from June 01, 2014 to May 31, 2015):
– Total taxable income in the first tax year:
134 million VND + 106 million VND = 240 million VND
– Personal deduction: 9 million VND x 12 = 108 million VND
– Assessable income: 240 million VND – 108 million VND = 132 million VND
– Personal income tax payable in the first tax year: 60 million VND x 5% + (120 million VND – 60 million VND) x 10% + (132 million VND – 120 million VND) x 15% = 10.8 million VND
+ In the second tax year (from January 01, 2015 to the end of December 31, 2015), Mr. S has been present in Vietnam for 215 days (110 days + 105 days) and is considered a resident in Vietnam.
– Taxable income earned in 2015 :
106 million VND + 122 million VND = 228 million VND
– Personal deduction: 9 million VND x 12 = 108 million VND
– Assessable income in 2015 :
228 million VND – 108 million VND = 120 million VND
– Personal income tax payable in the 2015:
(60 million VND × 5%) + (120 million VND – 60 million VND) × 10% = 9 million VND
+ When settling tax in 2015, tax is duplicated in 5 months (from January 2015 to May 2015)
– Deductible duplicated tax:
(10.8 million VND/12 months) x 5 months = 4.5 million VND.
– Personal income tax payable in the 2015:
9 million VND – 4.5 million VND = 4.5 million VND”
Based on the above regulations, the reference principles are as follows:
In case a foreigner has come to Vietnam for example since May 26, 2022 and is actually present in Vietnam for more than 183 days in 2022, that foreigner is a resident in Vietnam.
According to the provisions of Clause 1, Article 6, Circular No. 111/2013/TT-BTC, in case the foreigner is a resident and earns incomes from wages, the tax period will be calculated according to calendar year (the first tax settlement period of the foreigner is from the first day of arrival in Vietnam to December 31 of the first year).