Question 19: Troublesomeness in tax exemption cases

Necessary expenses incurred for non-residents (residing less than 183 days) to come to work as taxable objects, and have to pay tax in Vietnam. Although there is mechanisms for tax exemption under the tax treaty Vietnam – Japan, procedures with the Tax Department are very troublesome. Currently, in the case of income derived in Vietnam, we understand that not only the residents on the tax aspects (eg, a resident of 183 days or more), but also the non-resident on the tax aspects (eg from 182 residents or less, and all residents from 1 day or more) are obliged to pay individual income tax on. In the tax treaty Vietnam - Japan has built mechanism income tax exemption for short-term residents but the procedure is annoying and time consuming. Please consider withdrawing the very short term residents from the list of tax payer, and in the case of tax exemption, please also simplify the procedure.

Tax Department

Under the provisions of the Personal Income Tax Law, the foreigners residing in Vietnam for less than 183 days in a tax year are defined as individuals not residing in Vietnam must pay personal income tax of 20% tax rate on the income arising by working in Vietnam (regardless of place receiving income). This is the Personal Income Tax Law of Vietnam. Regarding the recommendation to exclude from tax objects, we will acknowledge and report to competent authorities.

In case income is subject to tax exemption under the tax avoidance agreement signed between Vietnam and Japan, when doing tax declaration tax payers only need to submit documents for tax exemption procedure specified in provision 13, Article 16 Circular No. 156/2013 / TT-BTC dated 6/11/2013 of the Ministry of Finance guiding the implementation of some articles of the Law on tax Administration, along with the first income tax declaration. The taxpayer do not have to pay the amount which is exempted under the Tax Agreement noticed in the tax declaration.