How Does Foreigner Pay Personal Income Tax?

TT – My husband is a foreigner, his monthly salary is 2.000 USD. We have two children, one is 3 years old, one is 4 months. My husband’s monthly expenses is house renting, traveling expenses, food expenses, etc.

Following the PIT law, My husband can get what kind of tax allowances? is renting house fee exempt from income tax ? can foreigner get higher PIT rate for personal subsistence expenses than Vietnamese (4 million)?  

Answer:  

- Following Clause 1, Article 19 of the PIT law, there is no distinction on family condition deduction between Vietnamese and foreigner, there is only distinction on individual reside or not reside in Vietnam.

As per Point 1, Section I, Part A of Circular No. 84/2008/TT-BTC, dated 30 August 2009 of the Ministry of Finance, a foreigner is considered as residence individual in Vietnam if he/she meet one of following conditions: continuously reside in Vietnam from 183 days and over, have permanent accommodation and remarked in the temporary or permanent residence card that issued by a competence authority of the Police Ministry, have total renting house day under the house renting contract from 90 days and over in tax year (noted: renting house including staying in hotel, guest house, working place, etc. not distinguish individual rent for himself or employer rent for employee).  

Foreigner is individual that not reside in Vietnam if not meet one of the above condition.  

Following Clause 2, Section II, Part A of Circular No. 84/2008/TT-BTc and Clause 1, Article 1 of Circular No. 62/2009/TT-BTC, dated 27 March 2009 of the Finance Ministry, when calculate the PIT, if your husband is individual reside in Vietnam has income from salary, wage, your husband besides getting deduction like a Vietnamese, he can also get other deduction such as.

Allowance for location transfer when reside in Vietnam (the allowance level will be based on the Labor contract or labor agreement between employer and employee), expense for buying airplane return ticket that supplied by employer (based on labor contract and price of airplane ticket), tuition fee for children study at secondary grade in Vietnam of foreigner and paid by employer (based on labor contract and invoice). If individual not reside in Vietnam, he/she is not exempt from this income.  

Following Section V Part A of Circular No. 84, taxable income is calculated in Vietnam dong. Taxable income received in foreign currency must be changed into Vietnam dong under the average exchange rate of the inter-banking exchange rate at the time of arising income.