Personal income tax regulations for non-resident chief representatives

Regulations for taxpayers:  

Under Point b, Item 1, Article 6, Chapter II of the Government’s Decree 147/2004/NĐ-CP, dated on July 23, 2004, regular taxable income shall be the total income sourced in Việt Nam and overseas.

Point b, Item 1, Article 2 of the Government’s Decree 100/2008/NĐ-CP, dated on September 8, 2008 stipulates that, for non-resident individuals, their taxable incomes are earnings in Việt Nam, regardless of where the incomes are paid. 

Hence, prior to December 31, 2008, chief representatives not residing but earning incomes in Việt Nam have to pay income tax on high-income earners. Since January 1, 2009 on, they have to pay income tax for their wages and salaries earned in Việt Nam.

Personal income tax exemption

According to Circular 133/2004/TT-BTC, dated on December 31, 2004, there are three conditions for non-residents who settle in other countries which already inked Double Tax Avoidance Agreements with Việt Nam to enjoy income tax exemption as follows:

(1) Presenting in Việt Nam for less than 183 days within 12 consecutive months of the fiscal year;

(2) Their employers do not reside in Việt Nam regardless the salaries are paid by employers or representatives of employers; and

(3) The salaries are not paid by Việt Nam-based agencies.

Under these regulations, since January 1, 2009 on, foreigners, who are citizens of countries which sealed Double Tax Avoidance Agreements with Việt Nam, hold the post of chief representatives in Việt Nam but not permanently reside here, can enjoy personal income tax exemption for their salaries and wages earned in Việt Nam./.