VIETNAM: Deferral of Personal Income Tax Payment - 18 May 2009

Global Employer Services

    Deferral of Personal Income Tax Payment

Introduction

On February 6 and February
18, 2009, the Vietnamese Ministry of Finance (“MoF”) issued
Circular 27/2009/TT-BTC (“Circular 27”) and Official Letter No.
1823/BTC-TCT (“OL 1823”), respectively.  The Circular 27 and
OL 1823 provided guidelines on the deferral of Vietnamese Personal Income Tax
(“PIT”) payments under the new Law on PIT and relevant guiding
documents.

The deferral period will
last from January 1 to May 31, 2009 (“the Deferral Period”), the
MoF is expected to issue further guidance on the treatment of deferred PIT
payments after the National Assembly in May 2009.

Scope of PIT Deferral

During the Deferral Period,
the following income elements are eligible for the PIT deferral:

·        
Tax residents can defer PIT payments on income from private
business activities, employment income, income from capital investment and
transfers (including securities trading), and income from royalty and
franchising.

·        
Non-tax residents can only defer PIT payments on Vietnam
sourced incomes from capital investment and transfers, and income from
royalty and franchising.  Non-tax residents are not permitted to defer
PIT payments on employment income.

For the PIT deferral
purpose, all individuals who leave Vietnam prior to June 30, 2009 or arrived
in Vietnam since January 1, 2009 but have no registered permanent residence or
housing rental contract for more than 90 days, are treated as non-tax
residents.

During the deferral period,
no fine, penalties, or interest on late payment will be imposed on the
withholding entity or the individual taxpayer.

Reporting and Withholding
Obligations

During the deferral period,
all reporting obligations will continue to apply.  For example,
employers are still required to compute PIT payable and reporting the
relevant information to the taxpayers and the tax authorities, and individual
taxpayers are still expected to file PIT returns to the tax
authorities.  However, where withholding applies, the withholding
obligations will be suspended during this period.

Action

Employers should:

·        
Communicate the PIT
deferral to the employees.

·        
Continue to comply with all
employer reporting obligations while suspending the withholding obligations
during the Deferral Period.

·        
Continue to monitor the
developments of the treatment of the PIT deferral.

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