On 15 August 2013, Ministry of Finance issued Circular No. 111/2013/TT-BTC (“Circular 111”) providing guidance on the implementation of Law No. 26/2012/QH13 dated 22/11/2012 and Decree No. 65/2013/ND-CP dated 27/06/2013 on PIT.Circular 111 will be effective from 01 October 2013 for the provisions that are not clearly defined under the Law and Decree. The other provisions that are regulated under Law and Decree, are still effective from 01 July 2013.

There are some notable changes in the Circular 111 as follow:

I. Employment income

1. Change in determination of residency status – 90 days house lease term is removed

A taxpayer resides in Vietnam from 183 days and above or has a permanent residence in Vietnam including a house lease with lease duration of 183 days or more will be regarded as a tax resident.

An individual who has a permanent residence in Vietnam (a registered permanent residence in the case of Vietnamese, or a registered residence which is recorded on their permanent/temporary residency card, house lease contract with the duration of 183 days and above) but stays in Vietnam for less than 183 days in a tax year and he/she can prove that he/she is a tax resident in another country; he/she will be treated as a Vietnam tax nonresident in that tax year.

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