According to the provisions of Circular 35/2016/TT-BCT, workers move internally within the enterprise and work in 11 service sub-sectors specified in the Schedule of Specific Commitments on Services of Vietnam with the World Trade Organization (WTO) will be entitled to work permit exemption in Vietnam.
1. Basis for determining whether foreign workers are entitled to work permit exemption based on intra-enterprise transfer
a. Foreign enterprises have established commercial presence in Vietnamese territory;
b. Commercial presence of foreign enterprises operating within the scope of:
– 11 service industries specified in Appendix I of Circular 35/2016/TT-BCT for foreign employees who are managers, executives, and experts moving within the enterprise;
– 11 service industries specified in Appendix II of Circular 35/2016/TT-BCT for foreign workers who are technical workers moving within the enterprise;
c. Foreign workers have been recruited by a foreign enterprise for at least 12 months before being sent to Vietnam to work at that foreign enterprise’s commercial presence in Vietnamese territory.
2. Documents proving that the foreign worker is not subject to a work permit for internal transfer within the enterprise
a. Document of a foreign enterprise sending a worker to work at that foreign enterprise’s commercial presence in the territory of Vietnam, stating the job position, job title and working time;
b. Document proving that the foreign worker is an expert of the enterprise abroad;
c. Documents proving that the foreign employee is a technical worker of the enterprise abroad, that the foreign employee has been trained in a technical or other major for at least 01 year and documents proving that the foreign employee has had at least 03 years work experience in specialized training suitable to the job position that the foreign employee is expected to work in Vietnam;
d. Document proving that the foreign employee has been recruited by a foreign enterprise for at least 12 months before being sent to work at that foreign enterprise’s commercial presence in the territory of Vietnam. This written proof may include one of the following documents:
– Written confirmation from the foreign enterprise that it has recruited foreign workers;
– Labor contract;
– Decide on recruitment of foreign workers;
– Tax or insurance payment certificate of foreign employees;
e. Document proving the commercial presence of a foreign enterprise in the territory of Vietnam operating within the 11 service industries specified in the Appendices of Circular 35/2016/TT-BCT, which may include one of the following documents:
– Business registration certificate or documents of equivalent legal value;
– Representative office establishment license; or
– Branch establishment license, issued by a competent Vietnamese agency.
3. Tax exemption for foreign workers moving within the enterprise
a. In addition to cases of work permit exemption, foreign employees moving within the enterprise can also be exempted from personal income tax based on tax laws as well as agreements on avoiding double taxation between Vietnam and some countries.
b. Typically, a foreign employee moves within an enterprise from Japan and stays in Vietnam for less than 183 days in a tax year. This subject is considered a non-resident individual and the household’s taxable income will be calculated as income arising in Vietnam, regardless of where the income is paid and received. In addition, the Agreement on the avoidance of double taxation and prevention of tax evasion with respect to taxes on income was signed between the Government of Japan and the Government of the Socialist Republic of Vietnam stipulated as follows:
– Salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that Contracting State unless the the business of that person is performed in the other Contracting State. If such employment is so performed, the remuneration paid thereto may be taxed in the other Contracting State.
– Notwithstanding the above provisions, remuneration derived by a resident of a Contracting State in respect of employment in the other Contracting State shall be taxable in that first-mentioned State only if:
+ The recipient is present in the other State for a period or periods totaling not more than 183 days in the relevant calendar year;
+ The employer or the employer’s representative paying the labor wages is not a resident of the other State;
+ The remuneration does not have to arise at a permanent establishment or a fixed base that the employer has in the other State.
Therefore, if all three conditions above are met, the income of foreign employees moving within an enterprise from Japan and generating income from public work in Vietnam will only be subject to personal income tax in Japan (exempted). personal income tax in Vietnam).
- Circular 35/2016/TT-BCT;
- Circular 40/2016/TT-BLDTBXH;
- Circular 119/2014/TT-BTC;
- Decree No. 65/2013/ND-CP;
- Agreement on avoiding double taxation and preventing tax evasion with respect to taxes on income was signed between the Government of Japan and the Government of the Socialist Republic of Vietnam.
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