This month we look at a proposal for structural changes to Vietnam’s taxation system in this September 2017 publication of our Tax Updates from Domicile Corporate Services. We also look at other releases from the authorities that we believe are of interest to taxpayers in Vietnam.
This August 2017 Tax Updates publication from Domicile Corporate Services looks at selected changes that have an impact on businesses operating in Vietnam. If you have any questions arising from this publication, then please contact us.
At the present time, foreign individuals working in Vietnam are only subject to compulsory government Health Insurance and Personal Income Tax on their salary. However, changes from 1 January 2018 will result in Social Insurance becoming compulsory for most foreign employees in Vietnam. With a total impact to salaries of up to 25.5% (17.5% employer portion and 8% employee portion), this may result in a substantial impact on payroll costs and take-home salaries.
Changes released during 2017 to the Transfer Pricing regulations in Vietnam, together with the additional procedural changes from the Vietnam tax authorities, have made the process of transacting with related companies abroad from Vietnam more complicated and uncertain, particularly for smaller foreign invested businesses.
Work Permits appear to cause much confusion and stress in Vietnam, yet this is unnecessary and they are far less complicated or stressful than many make out.
Fundamentally, all foreign individuals require a Vietnamese Work Permit before they commence or undertake any work in Vietnam, unless they are covered by an exemption category. This also means that foreign individuals need a Work Permit even during probation periods.
We have updated our 2017 Vietnam Payroll Quick Guide effective 1 July 2017, helping employers and employees understand general calculations and obligations with payroll and payroll related taxes in Vietnam.
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