Tax Finalization For Expat Experts: Problems And Solutions

The tax rates of residence status for expat experts will vary depending on their stay duration.

Differentiating the residence status of Expat experts

The tax rates of residence status for expat experts will vary depending on their stay duration, so it is mandatory to have a clear distinction and basic understanding of residents and non-residents.

Tax residents are those individuals meeting one of the following criteria:

• Residing in Vietnam for 183 days or more in either the calendar year or the period of 12 consecutive months from the date of arrival in Vietnam.
• Having a permanent residence place in Vietnam as reflected on the permanent residence card or temporary residence card.
• Signing a lease for 183 days or more in a tax year.

Non-tax residents are those who fail to meet the conditions mentioned above. Upon the determination of residence status, the tax filing will be proceeded based on the prescribed rate. 

Tax rate implications

The tax rates shall be applicable and updated over time and according to the host country’s economic situation. Businesses that employ the expat experts must stay up-to-date with the latest tax data and changes.

For non-residents, the applicable tax rate for fixed taxable income is 20%. For residents, personal income tax is calculated according to the partially progressive tax schedule (on monthly taxable income):

• 5%: up to VND 5,000,000
• 10%: VND 5,000,001 – 10,000,000
• 15%: VND 10,000,001 – 18,000,000
• 20%: VND 18,000,001 – 32,000,000
• 25%: VND 32,000,001 – 52,000,000
• 30%: VND 52,000,001 – 80,000,000
• 35%: >VND 80,000,000

Since July 1, 2020, there is a change in the taxpayer’s family circumstance deduction level, which prescribes the deduction for the taxpayer increased from 9 to 11 million/ month, and the deduction per the taxpayer’s dependent increased from 3.6 to 4.4 million/ month.

Employment benefits and incomes that are not subject to PIT

Expat experts are exempt from PIT for several exceptional incomes, including: round-trip airfares paid once a year by employers for expat experts who are on annual leave; tuition fees paid by the employer for the expatriates’ children studying in Vietnam (from kindergarten to high school); one-off relocation allowance for foreigners to relocate to Vietnam.

Other payments such as funeral or wedding benefits under the company’s policy, optional insurance, and no accumulation of premiums purchased by insurance companies are established and operated under the law. For a detailed list of other non-taxable benefits, you should directly consult the Government’s documents.

In fact, for expat experts, it is advised for the business responsible for tax finalization to seek professional expat tax services. The procedure related to calculating PIT for expat experts in Vietnam is complicated and time-consuming. The detailed contents of PIT payment for expatriates are also rigorous and require in-depth knowledge.

Businesses employing expat experts are counseled to seek professional expat services providers such as Talentnet Corporation, which helps businesses optimize resources and costs. The assignment of expatriate services for Talentnet also helps businesses reduce legal risks and demonstrate professionalism with their employees and partners.