Why Foreign Workers Should Declare Personal Income Tax (PIT) in Vietnam

According to the Vietnam General Department of Taxation, when the Vietnam tax authorities identify those foreign workers in Vietnam, who are subject to Personal Income Tax (PIT) in Vietnam and foreign countries, but fail to declare tax, such foreign workers or foreign employee will be liable to the administrative sanctions on tax in Vietnam.

Even though for foreign workers in Vietnam who have returned to their home countries or relocate to other countries prior to the tax declaration period in order to avoid tax obligations, the tax authorities would cooperate with their employers in Vietnam to collect the tax liabilities of such. Pursuant to the current laws and regulations, tax authorities, based on the scale of the tax violation in Vietnam, shall be able to apply sanctions.

In particular, the warning sanction shall be applied to the not so serious violations having mitigation details and is applicable to warning sanction. The warning sanction shall be decided in writing.  The monetary fines applied to the tax violations are specified as follow: i) maximum fine of VND 200 million (USD 9,000) for the tax payer having the violations on procedures; ii) maximum fine of VND 100 million (USD 4,900) for individual tax payers that violate the tax procedures specified by Law on administrative sanction; iii) for incorrect declarations leading to a decrease in the amount of tax or increase in the amount of tax reimbursement, the fines is 20% of the undeclared tax or the over-reimbursed; iv) for fraudulent activities in tax declaration, the fines shall vary from 1 to 3 times of the tax evaded.

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