Changes on Personal Income Tax Regulations for Expats

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Apr. 7 – Vietnam's Ministry of Finance has issued a new circular amending the guidelines on the implementation of the Personal Income Tax law.

One of the most important points of the circular detailed that all stated benefits that expatriates were previously entitled to and which were tax exempt under previous PIT regulations, are now fully re-instated.

These include: one time relocation allowances when expatriates move to Vietnam; one round trip air-tickets for annual leave back to home country; school fees paid by the employer for children of expatriates and employer provided accommodation is taxable at the lower of the actual rent or 15 percent of the expatriate’s total base taxable income.

For foreign workers in Vietnam to qualify, their employer must first enter into and pay these expenses.

Training expense to improve technical knowledge or qualification within a company is now considered tax exempt. Moreover, any other benefit paid by employer that is incapable of being allocated to an individual employee is, also, non-taxable.

The new circular's rules is applicable to all income coming beginning January 1st. Thus payroll and PIT calculations may be needed to be revised accordingly to reflect the changes.