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Quarterly Vietnam HR & Payroll Updates April 2024.

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Quarterly vietnam hr & payroll updates april 2024

Each quarter, Acclime Vietnam releases our Quarterly HR & Payroll Updates, focusing on relevant legislation, regulations, and changes released in the previous quarter, Official Letters released by Vietnam Authorities, and reminders for key dates for implementing HR & Payroll changes coming into effect or upcoming reporting obligations to authorities.

Notes on Tax Policy in 2024

To ensure timely and accurate tax reporting by organisations, the Binh Duong Tax Department has issued Official Letter 1000/CTBDU-TTHT dated 12 January 2024. This document provides essential information related to the 2024 tax policy that businesses should be aware of. Some key points covered include:

  • PIT declarations: Responsibilities regarding the declaration of PIT from salaries and wages
  • Tax agent staff: Responsibilities for reporting and updating knowledge related to tax matters
  • Tax policy expiry: An overview of tax policies set to expire in 2024
  • New policies: Details on the implementation of new tax policies starting in 2024

Guidelines for declaring PIT Finalisation in 2023

On 12 January 2024, the Binh Duong Tax Department also issued Official Letters 1016/CTBDU-TTHT and 1017/CTBDU-TTHT, providing comprehensive guidance on CIT and PIT finalisation for the 2023 tax period.

Specifically, for PIT finalisation:

1. Subjects:

  • Companies are eligible for exemption from declaring PIT finalisation in 2023 only if there were no income payments or temporary suspensions of operations throughout the entire calendar year. However, if any income payments occur in 2023, companies must declare their PIT finalisation, even in cases where no tax deductions apply.
  • For companies that undergo dissolution, bankruptcy, termination of operations, or business reorganisation in 2023 are required to declare PIT finalisation up to the point of dissolution, bankruptcy, termination, or reorganisation. Enterprises, except in cases where the type of enterprise is converted and the converted entity inherits all tax obligations from the previous enterprise, will continue to declare the final settlement at the end of the year, as usual.
  • Individuals subject to direct tax finalisation will be exempted from declaring PIT finalisation in 2023 under the following circumstances:
    • If they have an additional tax amount payable after finalisation of VND 50,000 or less
    • If there is an overpaid tax amount after finalisation, but no tax refund or tax offset is required
    • If their current income does not exceed VND 10 million per month and they have 10% tax deducted at source

2. Submission deadline:

  • For companies, the latest submission date is the last day of the 3rd month following the end of the calendar year
  • For individuals, the deadline is no later than the last day of the 4th month after the end of the calendar year

3. Form of tax finalisation declaration: companies can conveniently submit their PIT finalisation dossiers online via the electronic tax service system (using the HTKK tax declaration support software). There is no need to submit additional paper dossiers. For individuals, the option is to submit the tax finalisation declaration form 02/QTT-TNCN through the electronic tax service system available at this link. However, individuals must also physically sign and send a paper copy to the tax authority if required. It’s important to note that individuals who have not been granted an electronic tax transaction account should be aware of this requirement when preparing their tax finalisation declarations.

Cases eligible for preserving the Unemployment Insurance contribution from 15 February 2024

On 29 December 2023, the Minister of Labour, War Invalids and Social Affairs issued Circular 15/2023/TT-BLDTBXH modifying and supplementing provisions from Circular 28/2015/TT-BLDTBXH and Decree 28/2015/ND-CP related to Unemployment Insurance (UI) under the 2013 Employment Law. Accordingly, the cases in which UI contribution periods are reserved include:

  • When the employee’s contribution month has not been resolved for receiving unemployment benefits
  • When the employee’s decision to receive unemployment benefits is cancelled
  • When the employee receiving unemployment benefits has their benefits terminated
  • When the employee does not collect unemployment benefits
  • Where the employee’s Social Insurance agency confirms additional contribution time after the termination of unemployment benefits

Circular 15/2023/TT-BLDTBXH took effect from 15 February 2024.

Regulations on recruiting foreign employees

On 28 December 2023, the Department of Labour, War Invalids, and Social Affairs of Ho Chi Minh City issued Official Letter 29954/SLDTBXH-VLATLD, outlining regulations related to foreign employees employed in Vietnam.

Effective from 1 January 2024, companies are required to publicly post notices for the recruitment of Vietnamese employees in positions expected to be filled by foreign employees. These notices must be displayed on the Electronic Portal of the Ministry of Labour (Department of Employment) or the Electronic portal of the Employment Service Center for a minimum of 15 days prior to the anticipated reporting date to the Ministry of Labour or the relevant Department of Labour where the foreign employees are expected to be employed.

When assembling application dossiers for Work Permits, companies must submit comprehensive documentation verifying professional qualifications, work experience, diplomas, training certificates, and compliance with requirements for the specific job position. This submission should align with the content provided in the report explaining the organisation’s labour needs.

Upon finalising a labour contract with a foreign employee, the enterprise must promptly forward the signed contract to the Work Permit issuing authority. It is crucial to ensure that the contract accurately reflects the designated position, job title, working hours, and other relevant details as recorded on the Work Permit.

For foreign employees whose Work Permits have expired, the enterprise must initiate the Work Permit’s revocation process. The Work Permit should be returned to the Ministry of Labour or the Department of Labour that originally issued it, accompanied by a clear document outlining the reason for revocation. Within 5 working days of returning the Work Permit, the enterprise should also liaise with the Department of Labour to obtain official confirmation of the permit’s revocation, which may be necessary for future reference.

Recruitment process for Vietnamese employees in positions expected to be reserved for foreign employees from 2024

On 25 December 2023, the Department of Labour, War Invalids, and Social Affairs of Ho Chi Minh City issued Official Letter 6932/TTDVVL-GTVL, providing instructions for recruiting Vietnamese employees into positions that are anticipated to be filled by foreign employees. This directive pertains to the City Employment Service Center’s website.

The document outlines specific guidelines for companies operating within Ho Chi Minh City. Starting 1 January 2024, companies are mandated to post recruitment information for Vietnamese employees in positions expected to employ foreign employees through the Electronic Information Portal of the Employment Service Center. To initiate recruitment, companies in the city should visit the Employment Center’s websites: vieclamhcm.com.vn and vieclamhcm.net. For city-specific job postings, they should select the category labelled “Recruitment according to Decree 70.”

Upon submission, the employment service centre will review and approve the enterprise’s recruitment announcement documents within the same day (during working days from Monday to Friday). Once approved, the recruitment information will be posted on the website.

The centre also plays a crucial role in screening, advising, and introducing job positions to workers who seek employment opportunities that align with the business’s requirements. Within 15 days of receiving the recruitment notice, the centre will facilitate this process.

Where the enterprise’s recruitment information is incomplete or inaccurate, the centre will withhold approval and provide feedback via registered email, specifying necessary additions or corrections.

The recruitment notice form and steps for posting the recruitment notice on the website of the City Employment Service Center are guided in the attached appendix.

Official Letter released

Official Letters are releases showing the interpretation and application of Vietnam’s Taxation Laws by applicable authorities, providing guidance to enterprises and individuals in Vietnam. In this update, we will focus on Official Letters indicating HR & Payroll matters.

Policies for PIT related to life insurance

On 23 February 2024, the Hanoi Tax Department issued Official Letter 8974/CTHN-TTHT on Corporate Income Tax (CIT) and Personal Income Tax (PIT) policies for life insurance.

Specifically, for individuals as per Circular 111/2013/TT-BTC and Circular 92/2015/TT-BTC:

  • The money spent on purchasing life insurance is not considered mandatory insurance participation, so it is not included in the list of deductible items for calculating PIT.
  • If a company purchases life insurance for its employees and there is an accumulation of insurance premiums, the taxable income and the eligible tax deduction are determined based on the accumulated premiums. Income from the life insurance contract’s interest and the insurance contract’s compensation is exempt from PIT.
  • If a company purchases life insurance for its employees without any accumulation of insurance premiums, the money spent on this insurance is not considered part of the individual’s taxable income for PIT.

Brokerage tax on sales to foreign individuals

On 1 March 2024, the General Department of Taxation issued Official Letter 764/TCT-DNNCN on determining taxable income from sales brokerage service contracts and product promotion.

According to the General Department of Taxation, for non-resident individuals who generate income from service contracts related to sales brokerage and product promotion with a local company, the following rules apply:

  • If the individual’s income is determined to be from independent business activities in fields or industries for which licenses or professional certificates are issued according to legal regulations, then this income is considered business income.
  • If the individual’s income is determined to be commission fees for agency sales of goods or brokerage fees, then this income is subject to taxation as salary or wages.
  • Where there are differences between provisions in international agreements and domestic tax laws, the provisions of the international agreement will apply.

Tax deduction for compulsory insurance paid abroad

On 29 December 2023, the General Department of Taxation issued Official Letter 6002/TCT-DNNCN on PIT policy for compulsory insurance payments abroad.

According to the provisions of Clause 2, Article 9 of Circular 111/2013/TT-BTC, if foreign individuals residing in Vietnam have income from salaries and wages abroad and have participated in compulsory insurance (Social Insurance, Health Insurance, Professional Liability Insurance, etc.) from abroad, those insurance fees can be deducted when calculating PIT.

However, according to the General Department of Taxation, in the case of foreign workers sent to Vietnam as internal employees, receiving salaries from companies in Vietnam and companies abroad, of which the salary is in foreign countries (including compulsory insurance paid abroad) and is fully refunded by the Vietnamese company to the overseas company, the insurance paid abroad cannot be deducted when calculating PIT in Vietnam.

Update personal identification information for the tax authority to standardise the personal tax codes

On 20 December 2023, the Tax Department of Ho Chi Minh City issued Notice 27273/TB-CTTPHCM on standardising personal tax code data.

Accordingly, the tax authority has been reviewing and standardising personal tax code data, aiming to use personal identification numbers as personal tax codes according to Law on Tax Management 2019. Therefore, individual taxpayers, for their own sake, are responsible for updating their changes in tax registration information to the tax authority, including the personal identification numbers, in either of two ways as follows:

  • Method 1: Declare online via the Tax Portal of the General Department of Taxation
  • Method 2: The income paying organisation or the individual can declare directly to the tax offices, where the individual registers the permanent/temporary residence.

In case of declaration through the organisation, the organisation will collect the updated information of the individual/ dependents via form 08/MST together with a copy of the chip-attached identification card and form 20/DK-NPT (issued in Circular 105/2020/TT-BTC) and update such information on https://thuedientu.gdt.gov.vn (select “Standardise personal tax code” section).

Penalty for taxpayers who do not declare or have a late declaration of Personal Income Tax finalisation return

On 21 December 2023, the General Department of Taxation (GDT) issued Official Letter 5852/TCT-PC on administrative penalties for individuals who do not declare personal income tax (PIT) finalisation.

Where an individual has income from brokerage commissions, which was withheld 10% tax by the income payment entity, but is still subject to direct tax finalisation, the individual is responsible for submitting the PIT finalisation return and making full payment of the outstanding PIT amount to the State budget.

Where an individual has submitted the PIT finalisation return and fully paid the PIT and late payment interest (if any) before the tax minute for late submission over 90 days issued by the tax authority, an administrative penalty on late submission is applied for the taxpayers.

Where the tax authority issues a tax minute indicating the taxpayer (i) did not submit the PIT finalisation return or (ii) submitted the PIT finalisation return with PIT payable over 90 days late, then a penalty on tax avoidance or administrative penalty for tax avoidance signs is applied to the respective taxpayer.

Tax declaration for foreign investors selling companies in Vietnam

On 11 December 2023, the General Department of Taxation (GDT) issued Official Letter 5567/TCT-CS on tax policy for the transfer of all capital in one-member limited liability companies (LLC) owned by organisations.

Accordingly, in case a foreign investor transfers 100% of capital contribution in an LLC in Vietnam if the transfer of capital contribution is attached to real estate, the corporate income tax (CIT) is paid for each time arising and declaring following form 06/TNDN issued with Circular 151/2014/TT-BTC (for capital transfer transactions before 1 January 2022) or Circular 80/2021/TT-BTC (for transactions capital transfer from 1 January 2022 onwards). Organisations and individuals receiving capital transfers are responsible for determining, declaring, deducting and paying taxes on behalf of foreign investors.

The above capital transfer activity of a foreign investor is in accordance with the law on enterprises and investment and it is not subject to VAT.

Where the transferee of foreign investor’s capital contribution changes the project’s operational objectives, if the change in project objectives is in accordance with the law and the transferee continues to implement the project to invest in the production and trading of goods and services subject to VAT, the project will not have the refunded VAT amount revoked. Otherwise, if the transferee of capital does not continue to implement the investment project in relation to the production and trading of goods and services subject to VAT, the refunded VAT amount of the project will be revoked.

Reminder of upcoming periodical reports in Quarter 2, 2024

Upcoming periodical reportsDeadline
Semi-annual Report on changes to employment for the first 6 months of 2024Prior to 5 June 2024
PIT Self Finalisation by individual taxpayersPrior to 2 May 2024
Report on Using PIT Withholding Certificate for Quarter 1 of 2024 (where required)By 30 April 2024
PIT Declaration Report and Payment for Quarter 1 of 2024By 30 April 2024
Monthly Report on Labour ChangePrior to 3 each month of 2024

For more information on HR & Payroll Updates and other compliance requirements for businesses operating in Vietnam, follow our monthly releases on the website and social media channels at vietnam.acclime.com.

Updated on April 1, 2024
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