How do foreign workers settle personal income tax in Vietnam?

Principles for tax declaration and personal income tax finalization for some cases specified in Point e, Clause 2, Article 26, Circular No. 111/2013/TT-BTC are as follows:

1. Principles of declaration and settlement

“Tax declaration and tax finalization

e) Principles for tax declaration and tax finalization for some cases as follows:

e.1) In case a resident individual has income arising in a foreign country and has calculated and paid personal income tax according to foreign regulations, the tax amount paid abroad will be deducted. The amount of tax deducted does not exceed the amount of tax payable calculated according to Vietnam's tax table calculated for allocation to income generated abroad. The allocation rate is determined by the ratio between the amount of income generated abroad and the total taxable income.

In addition, according to the instructions in Official Dispatch No. 1568/TCT-DNNCN of 2020 on the deduction of taxes paid abroad issued by the General Department of Taxation as follows:

"Based on the above instructions, foreigners, who are individuals residing in Vietnam, declare tax on income from salaries and wages arising abroad on a quarterly basis, and declare tax on income from investments. capital, capital transfer arising abroad each time it arises according to regulations. When declaring tax for income arising abroad, individuals must enclose documents for payment of income abroad, proof of income in foreign countries. from proving that taxes have been paid abroad to determine taxable income and the amount of personal income tax payable according to the provisions of law."

Thus, in principle, if this foreign worker is determined to be a resident individual; In addition to the salary received in Vietnam, if you also receive additional income abroad and have paid taxes according to foreign regulations, the tax amount paid abroad will be deducted according to the prescribed principles.

In fact, you must submit documents proving income paid abroad and documents proving tax payment abroad to determine taxable income and the amount of personal income tax payable for individuals with income. abroad.

As for the most accurate implementation, it depends on the tax authority what documents they require to provide proof, but in terms of general regulations, there is no specific mention.

2. How to calculate income tax for foreign workers with two incomes?

The way to calculate income tax for foreign workers with income from two places is based on Point b, Clause 1, Article 25, Circular No. 111/2013/TT-BTC as follows:

Tax deductions and tax deduction documents

 Tax deduction

Tax deduction is the act of organizations and individuals paying income calculating and subtracting the tax amount payable from the taxpayer's income before paying income, specifically as follows:..

b) Income from salaries and wages

b.1) For resident individuals who sign labor contracts of three (03) months or more, the organization or individual paying the income shall deduct tax according to the Partial Progressive Tax Schedule, including the case of individuals. Employees sign contracts of three (03) months or more in many places...

b.3) For individuals who are foreigners working in Vietnam, organizations and individuals pay income based on the taxpayer's working time in Vietnam stated in the contract or dispatch document. working in Vietnam to temporarily deduct tax according to the Partial Progressive Schedule (for individuals working in Vietnam from 183 days in the tax year) or according to the Full Tax Schedule (for individuals with a working period of 183 days in Vietnam) or according to the Full Tax Schedule (for individuals with a working period of 183 days in Vietnam). Working time in Vietnam is less than 183 days in the tax year)”

Thus, in principle, if this foreign worker is determined to be a resident individual; Foreign workers who earn income from two places and sign a labor contract of 3 months or more will be charged personal income tax according to the partially progressive tax schedule specified in Clause 1, Article 21, Law on Personal Income Tax. 2007 (amended by Clause 5, Article 1, Personal Income Tax Law amended 2012).