Businesses cry foul over taxes for foreigners

In light of current regulations 85 per cent of foreigners’ house rental paid by employers is considered a personal income and foreigners are subject to pay tax on that money.

“We pay our foreign experts a monthly wage of $3,000 and house rental $1,000. They, however, still pay personal income tax (PIT) for the monthly income of $3,850 which is unreasonably high according to the progressive PIT list,” said Alpha To Omega Forwarding Company Limited chief accountant Nguyen Thi Thuy Tinh.

Tinh said relevant competent bodies should help ease financial burdens on businesses through introducing more tax incentives to foreign experts residing and working in Vietnam such as increasing their tax allowances.

A Samsung Vina representative, echoed the need for increases in foreign experts’ tax allowances, voiced some difficulties in handling PIT payments in Vietnam.

“Many our foreign experts currently rent houses in Hanoi’s Trung Hoa-Nhan Chinh new urban area and most cannot show relevant vouchers since the landlords refused to give them to evade tax payments. In these cases, the individuals incur PIT for a lump sum of $4,000 per month but not $3,850 as above stated,” said the representative.

“They can show their house leasing contracts to tax organisations to enjoy the PIT tax reductions and the leasing contracts will help the tax bodies unveil tenants’ tax fraud,” said deputy minister of Finance Do Hoang Anh Tuan.

Tinh pointed out another tax imposition that under current laws local and foreign firms when buying cars (worth VND1.6 million or $77,300 maximally) to transport experts and managers to work, the money is dubbed as legitimate expenses to be deducted when defining taxable incomes.

However, if firms do not buy cars but lease them from specialised transport firms, the sum is considered the personal income of the beneficiaries and incurs taxes.

“Imposing PIT on car lease fees in this case is unjustified and puts more pressure on businesses as they have to pay such taxes on behalf of their employees,” Tinh said.

Tuan admitted the regulation was unreasonable. “This is under the scope of authority of the MoF and it will work with its affiliates to seek a remedy,” Tuan said.

Scores of South Korean firms voiced concerns that around 100,000 South Koreans are working in Ho Chi Minh City and another 30,000-40,000 are working in Hanoi. More than half came to Vietnam to source investment opportunities and then stay in the countries less than 183 days. Therefore, imposing PIT on these individuals would not be justified.

“In the above case, foreign expatriates having incomes in Vietnam can pay PIT via relevant income-paying organisations,” Tuan said.