The Ministry of Finance (“MoF”) issued Circular 111/2013/TT-BTC (“Circular 111”) on 15 August 2013 to guide the implementation of the new PIT Law and Decree 65/2013/ND-CP (“Decree 65”).Circular 111 restates many of the provisions contained in Decree 65. Please refer to our NewsBrief dated 2 July 2013 in relation to Decree 65. We summarise the key points contained in Circular 111:

Tax residency

• Evidence of tax residency of another country is normally by way of a tax residency certificate (“TRC”) issued by the foreign tax authority. Where a TRC cannot be obtained from a country which has signed a tax treaty with Vietnam, alternative document , such as a passport, can be used.

Grossing up of benefits-in-kind (“BIK”)

• BIK, including housing accommodation, provided by the employer are required to be grossed up to include the tax element if the Vietnam taxes on the BIK are borne by the employer.

Life and other non-compulsory insurance/voluntary retirement pensions schemes

• Employer accumulated contributions to life insurance/non-compulsory insurance/voluntary retirement pension schemes are taxable at the time of payout/distribution. The insurance company, pension fund management company are required to withhold 10% tax on the accumulated contributions.

Employee’s contribution to voluntary pension scheme

• Employee can claim deduction of up to VND1 million/month to the voluntary pension scheme set up in accordance with the guidance of the MoF

Dependent relief

• Qualifying dependents will be granted a tax code for dependent relief purposes.

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