Last week, we were contacted by an expatriate seeking my assistance regarding his personal income tax (PIT) obligations in Vietnam. The local tax authority had requested him to declare his overseas income for PIT reporting purposes in Vietnam, along with the applicable penalties and late payment interest.
The individual has been working in Vietnam for over 5 years and has been treated as a tax resident in Vietnam. By laws, tax residents of Vietnam are required to declare their worldwide income, not just income sourced from Vietnam, for Vietnam PIT purposes. In this case, the expatriate has earned substantial non-employment income from capital investments abroad (including securities trading on a foreign stock exchange) but has never reported such income in Vietnam. Consequently, the tax liability together with penalties and late payment interest have become significant.
The Vietnamese tax authorities have recently identified cases of individuals receiving overseas non-employment income and have subsequently required them to fulfill their tax obligations in accordance with the worldwide income principle applicable to tax residents. This discovery may have been facilitated, among other sources, by the exchange of information mechanisms provided under Vietnam’s network of double tax treaties
Foreign Non-Employment Income and Vietnam Tax: Declare or Face Penalties?
We believe that other resident expatriates residing and working in Vietnam may also earn overseas non-employment income that might not have been declared in Vietnam. We advise caution, as the risk of detection by the tax authorities is real and increasing.
Should you wish to discuss your specific circumstances or seek advice, please contact us at:
jamesphan@hthpartners.com.vn or legalenquiries@hthpartners.com.vn
