Clearer Regulations on Income Tax Exemption for Foreign Experts

 

This decision stipulates personal income tax exemption for foreign experts who are employed to conduct activities under programmes or projects funded by foreign NGOs in Vietnam. Tax-exempted incomes include direct pay for work for programmes or projects funded by foreign NGOs.

 

To reduce administrative procedures, facilitate and encourage nongovernmental aid projects in Vietnam, on June 28, 2016, the Ministry of Finance issued Circular 96/2016/TT-BTC on guidance for documents and procedures concerning personal income tax for these entities. The circular gives clear guidance on tax exemption procedures for foreign specialists. Accordingly, tax exemption records will include a verified record of foreign specialists and personal income tax exemption request from their employer or foreign NGO; a copy of following documents: decisions and documents approved by competent agencies of Vietnam, employment contract signed between foreign specialists and their employer or NGO. This ruling came in response to a written request from foreign NGOs for tax exemption.

 

Besides, the circular stipulates changes the scope of application for tax exemption. Previously, specialists employed by foreign NGOs had to show required documents on their own, but the current rule provides that the employer or the owner of foreign nongovernmental aid send tax exemption documents to the Provincial/Municipal Department of Taxation within 30 days after the effective date of employment contract with foreign specialists. In addition, tax authorities are obliged to verify the eligibility of tax relief for individuals or make an announcement on ineligibility of tax relief for individual in case of being not eligible. This is another improvement in this policy. Tax authorities must return application documents within 15 days of receiving all required documents.