As you may be aware, the current tax deficit has caused the Government to focus more on finding other avenues to collect taxes. Collection of tax through PIT has been one of them where the tax authorities step up on PIT compliance.
Here are some of our observations:
• Provincial tax authorities have increased their PIT audit activities to Vietnam Representative Office;
• An increase of PIT audits to foreign employees who have completed their Vietnam assignment; and
• Employees of foreign contractors and foreign sub-contractors who are in Vietnam on a short term basis to execute the contracts signed between their employer and a local Vietnamese company.
Enforcement actions taken by the provincial tax authorities include sending a list of individuals with outstanding PIT debts to the immigration authority to help them trace tax debtors on entry/exit to Vietnam.
Additionally, pursuant to PIT regulations, Vietnamese companies are required to submit a notification to the local tax authorities providing information on foreign contractor’s employees (including their name, income information, passport number, etc.) that are sent to provide service in Vietnam at least days before the individuals start working in Vietnam. The local tax authorities would then pursue the foreign contractors and foreign sub-contractors directly with respect to any unpaid taxes relating to their employees.
PwC suggest companies, RO and individuals review their payment history and reconcile any outstanding amount with the tax authorities to avoid actions by the immigration authority.
PwC also recommend employer to consider conducting a PIT health check to ascertain they are in compliance with the PIT tax laws to avoid unexpected tax costs.
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