Vietnam new personal income tax law - deloitte
Richard Buchanan, Tax Partner, Deloitte-Vietnam European Chamber of Commerce in Vietnam 9 October 2008 Vietnam: New Personal Income Tax Law Copyright © 2008 Deloitte Vietnam Company Limited. All rights reserved. 1 Agenda • Vietnam New Personal Income Tax (“PIT”) Law • Tax Compliance • Sample Remuneration Calculation • Tax Planning & Action Copyright © 2008 Deloitte Vietnam Company Limited. All rights reserved. 2 New PIT Law • Passed as the Law • Full force and effect – January 1, 2009 • New Decree No. 100 – 8 September 2008 • Circular ??? Copyright © 2008 Deloitte Vietnam Company Limited. All rights reserved. 3 Why New PIT Law? • Harmonization of Vietnamese Nationals and Expatriates except health and social security • Tax non-employment income • Captures more taxpayers • Make PIT tax rates more regionally competitive Copyright © 2008 Deloitte Vietnam Company Limited. All rights reserved. 4 Tax Return Filing • Shifts filing obligations from employer to individual taxpayers • All Vietnamese Nationals (above threshold) who currently collectively filed under their employer must separately file their 2009 returns by 30 March 2010 • Employers must make monthly tax withholdings from employee salary Copyright © 2008 Deloitte Vietnam Company Limited. All rights reserved. 5 Tax Compliance Forcing Issues • All net of tax labor contracts must be converted to gross • Failure to do so in 2008, no tax deduction to employer for employee’s tax liability Copyright © 2008 Deloitte Vietnam Company Limited. All rights reserved. 6 Tax Code (ID) Requirements • All employees must obtain Tax Code (ID) by 31 December 2008. Non-compliance administrative penalty (VND100,00 to VND2 M) plus potential tax avoidance penalty • Register dependents (earning less than USD360 p.a.) on annual basis 30 January (extended for 2009 to 30 June 2009) Copyright © 2008 Deloitte Vietnam Company Limited. All rights reserved. 7 Who Does it Applies to? • Non-tax resident: • Generally < 183 days • Tax resident: • ≥ 183 days or • Have a regular residential location or domestic lease residence of 90 days or more • Subject to any applicable DTA Copyright © 2008 Deloitte Vietnam Company Limited. All rights reserved. 8 What Income is Reportable? • Non-tax Residents • Vietnamese sourced income • Tax Residents • Vietnamese nationals: worldwide income • Foreigners: worldwide income (previously, worldwide employment income only) • No attribution laws Copyright © 2008 Deloitte Vietnam Company Limited. All rights reserved. 9 Newly Taxable In 2009? • Non-employment income • Investment income • Gains on shares and bonds • Gains on LUR dealings • Inheritance, gift and winnings • Employment income • Remuneration and all employer provided benefits except certain health and social security benefits