Question 21: Proof of tax payment

For income tax which has been collected (duplication) in Japan during the period of paying PIT tax, if having all required documents (proof of individual tax, income tax declaration, receipts of income tax payment) according to Vietnam’s laws authorities may declare deduction but Japan do not issue a few types of documents and therefore deduction cannot be declared. In the situation that the date of residence in Vietnam for the first year of working is from 183 days and above, the income in Japan during the period from 1st of January to the time before working will be taxed 2 times in both Japan and Vietnam. There are regulations which deduct foreign tax to avoid taxing 2 times but Hochiminh City Tax Department requires enterprises to provide documents which certify the tax payment for Japan Tax Department. But the Japan Tax Department cannot issue the certificate of personal income tax payment which is collected by enterprises from the Japan residents. According to the declaration and tax payment system in Japan, if people is working for Japan enterprises, enterprises will collect income tax from employees, after that enterprises will pay to the Tax Department, this is called tax collection from origin system. Therefore, enterprises will know the exact income tax amount which is collected from employees, and the company will issue the original receipt to prove the income tax payment for employees. Please consider this situation, and recognize the original receipt issued by enterprises or other documents to be the proof of tax payment instead of the proof of tax payment issued by Japan Tax Department to be eligible for foreign tax deduction; in additional, the implementation of foreign tax deduction should be deployed to fit with the reality.

Answer from Tax Department

Under the provisions of Article 16 of Circular No. 156/2013 / TT-BTC dated 06/11/2013 of the Ministry of Finance guiding the implementation of some articles of the Tax management Law, the taxpayers are deducted the tax amount paid oversea on the income earned from oversea from the personal income tax in Vietnam when implementing tax settlement including the income earned oversea, documents for tax deduction are:

Copies of documents proved the tax amount paid oversea. Individual commits to be responsible for the accuracy of the information on these documents.

In case foreign Tax Department does not issue the certificate of tax payment according to their Laws, the taxpayers may submit the copies of tax deduction certificate (stating clearly which tax payment document) issued by the income payment agencies or copies of certificate issued by the bank in respect to the tax amount that is paid oversea and certified by taxpayers.