Whether foreign artists, singers, football players and supermodels carrying out performances in Vietnam have to pay Personal Income Tax?
With the trend towards global integration and international cultural exchange in recent years, Vietnam frequently welcomes foreign artists, singers, athletes, football players and supermodels to perform or play in the country.
These foreigners may receive income in different ways, such as receiving it directly from the performance organizer in Vietnam or receiving it from their foreign management companies or foreign football team. Vietnamese organizers may also have to pay for other benefits-in-kind, such as five-star hotels, luxury transport, or 24/7 security, etc.
In this newsletter, Grant Thornton Vietnam would like to discuss whether the foreign artists, singers, athletes, football players and supermodels are required to pay personal income tax (PIT) for income from such visits.
Pursuant to Vietnamese law, income derived from participating in performances of culture, art, and sports, advertising fees, other service fees, other remuneration, and benefits-in-kind such as hotel, transport, etc. is considered taxable income. Accordingly, foreign artists, singers, athletes, football players and supermodels are subject to PIT for earnings from playing or performing in Vietnam. In cases where Vietnamese organizers pay service fees to foreign management companies, such service payments shall be subject to foreign contractor tax in Vietnam. Below are some examples:
Example 1: Further to an invitation from Company V in Vietnam, a singer, who is a tax resident in South Korea, performs at a concert in Vietnam and receives a remuneration package of VND500 million. Company V. also pays the hotel and private transport bills for the singer. The number of days in Vietnam for this performance is three. According to Vietnamese regulations, the singer has an obligation to pay PIT on the remuneration and benefits-in-kind (i.e. the hotel and private transport costs) in Vietnam.
Example 2: A South Korean singer comes to Vietnam to perform under a contract between Company V in Vietnam and Company X in South Korea (negotiated and signed in South Korea). According to Vietnamese regulations, Company X is subject to foreign contractor tax in Vietnam on income derived from this contract. In the event of the contract segregating service fees and benefits-in-kind for the singer of Company X, both payments shall be regarded as income of Company X and subject to foreign contractor tax in Vietnam.
Vietnam has entered into avoidance of double taxation and prevention of tax evasion agreements (tax treaties) with 75 countries and territories around the world. Tax treaties support the elimination of double taxation on income that Vietnam or the other countries may tax, in which the tax treaties usually have a specific article for artists and athletes. Accordingly, it is very important to review the specific article under each tax treaty in order to determine whether the individual and foreign company generating income from performances are subject to tax in Vietnam or not.
If there are tax liabilities for artists, singers, athletes, football players, and supermodels deriving income from their performances in Vietnam through payments from foreign management companies or football teams, these individuals have an obligation to file PIT directly with local tax authorities in Vietnam.
A late tax filing in accordance with Vietnamese regulations may lead to various risks, such as penalties for violating administrative procedures or penalties for late payment of taxes, or in the worse scenario it could affect the reputation of the artists, singers, athletes, football players, supermodels and foreign management companies in the event the tax violations are published in the media.
With many years of experience in supporting artists, singers, athletes, football players, supermodels, foreign management companies and foreign football teams to comply with Vietnamese tax regulations, Grant Thornton Vietnam is pleased to advise and provide assistance to ensure accuracy and compliance with PIT liabilities or to apply the tax treaty appropriately in each specific case.
Please contact Grant Thornton Vietnam’s professional tax advisors for specific support:
Services: Audit Tax Advisory Outsourcing
For more details, please visit : www.grantthornton.com.vn, Tax Newsletter February 2017 (PDF Version)
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