The foreign individual mentioned in OL 2267 currently is a Vietnam tax resident who pays PIT both in Vietnam and in the United States, while being entitled to a tax equalization policy in his home country. In particular, the individual receives a monthly fixed income upon deduction of hypo tax in the US.
OL 2267 outlines the following:
- In case that foreign individual is a tax resident in Vietnam, receiving income upon deduction of hypo tax, then assessable income shall be determined as net-take-home exclusive of hypo tax (“NET income”). NET income shall be grossed up to arrive at Vietnam taxable income as regulated.
- For foreign-sourced income, if the individual has already declared and paid corresponding PIT under foreign PIT regulations, he/she would be allowed to deduct PIT paid overseas against PIT liabilities in Vietnam as long as the deductible amount and supporting documents are in accordance with prevailing regulations. Thus, a foreign tax credit may be claimed on foreign-source income taxable in Vietnam to a Vietnam tax resident.
In this case, the individual is not allowed to deduct hypo tax from PIT payable in Vietnam.
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