Personal Income Tax & VAT: Circular 92

The Ministry of Finance issued Circular 92/2015/TT-BTC (“Circular 92”) in June 2015 providing guidance on a number of Personal Income Tax (“PIT”), Value Added Tax (“VAT”) and general tax administration matters. The Circular takes effect from 30 July 2015 and has retrospective application to the full 2015 tax year.

This circular, like other recent releases, is focussed on clarifying and providing better guidance for the implementation of tax laws. It is generally positive in nature and does tend to provide clarity to individuals and businesses operating in Vietnam. Changes include:

EMPLOYEE INCOME NOT SUBJECT TO PIT

Certain items paid for and provided by employers to employees have been clarified as being exempt from PIT in the hands of employees:
– Accommodation and associated costs, where the accommodation is built for and provided by employers to employees in industrial zones, economic zones and other specified areas, are not taxable for employees.
– Costs of transporting employees to and from their place of residence to their work in accordance with company policies is not regarded as income for employees. Previously, where employee’s name was specifically stated, the transportation benefit was regarded as taxable income of the employee.
– Certain additional insurance premiums paid by employers for employees are specifically excluded from PIT for employees.
– One-off relocation allowances paid to Vietnamese returning to Vietnam after extended periods working abroad are exempt from PIT.

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