MDT for income tax deferral “welcome”, but concerns remain, industry says

Further delays in Making Tax Digital (MTD) for income tax provide welcome respite for businesses, but uncertainty and implementation issues remain, sources say.

Announced via a written statement to the House of Commons on September 23, the rollout of the program has now been postponed to April 2024. This is the latest in a series of delays, with implementation initially scheduled for 2018.

“While we appreciate the government’s efforts to simplify and harmonize reporting deadlines and accommodate the extra time to prepare, our concerns about the impact of the workload on small businesses and accountants due to MTD are still valid, ”said Glenn Collins, head of policy, technical and strategic engagement at the Association of Chartered Chartered Accountants (ACCA).

“Concerns remain about the levels of support required by SMEs and the ability of small accounting firms to meet the workflow needs of regular reporting unmanageable software costs and the low threshold for reporting under MTD. “

While around 1.2 million businesses (those with taxable income above £ 85,000) have been operating under BAT rules since April 2019, the 2024 implementation will see the compliance requirement expand to the remaining number. Generally speaking, the rules require businesses to keep digital records of their sales and purchases and to use software to submit their VAT returns to HMRC.

However, this upcoming deadline may worry many businesses, with a recent study by The Accountancy Partnership revealing that around a third of UK SMEs still use paper systems for VAT returns. In addition, one in ten people store essential documents in a drawer or shoebox, she found.

Likewise, worrying figures emerged following the initial deployment of MTD for VAT in 2019, with some 120,000 companies (around 10%) not meeting the deadline.

“The level of detail required by HMRC as part of MTD’s quarterly reports could create a ‘bottleneck’ around deadlines as well as unmanageable workloads for accountants and small businesses. This could seriously affect broad compliance and late filing rates, ”Collins adds.

“Over the next 12 months, we would like HMRC to use this time to carefully reassess its proposal to reduce the burden on businesses and accountants.”

Concerns were also expressed by Katharine Arthur, partner and private client manager at haysmacintyre, with her warning that the postponement is likely to be damaging and urging HMRC not to issue any further delays.

“It is welcome to see HMRC listening to relevant trade bodies, however, there comes a time when taxpayers need certainty about a fixed departure date and the government cannot continue to kick the road. “she said.

“With MTD expected to bring billions more to the treasury coffers, its implementation is becoming more and more necessary given the huge holes linked to Covid in public finances. “

However, some reacted more favorably to the delay, with Michael Izza, CEO of the Institute for Chartered Accountants in England and Wales (ICAEW) describing it as “welcome news”.

“The previous start date was far too early and risked causing serious damage to the UK tax system,” he said.

“The new start date will give businesses more time to prepare and their advisors more time to make sure their clients are ready. “

The ICAEW has also expressed its approval that the reform of the base period does not come into effect until April 2024, and that more complex partnerships are not included until April 2025.

“While we still believe that the reform of the base period rules should be abandoned, this is a welcome development,” said Frank Haskew, ICAEW’s chief tax officer.

“Changing [complex partnerships’] the base period rules would lead to a considerable increase in uncertainty and costs, not least due to the need to submit year-end tax figures based on estimates which would then need to be amended to reflect the result real.


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LETTER: “Our current taxation is unfair for young people”

Phil Stone’s LAST Weekly Letter on National Insurance Increases to Pay More NHS and Social Care Costs was good (“Is NI Increase Fair ?, Postbag, September 23), but the current system is so out of balance.

Employees earning over £ 9,564 a year and up to £ 50,268 have to pay 12% of their income, then their employers contribute 13.8% more, only part of which is job related like sick pay .

Self-employed workers pay from a similar threshold a sum of £ 158 per year plus 9% of their income from profits.

When I was self-employed and reached retirement age at 65, I couldn’t believe my payments were stopping. Retirees therefore pay nothing.


READ MORE: LETTER: “Is the NI hike right?” No’
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The purpose of national insurance is to pay the NHS, state benefits and pensions, but the retirement age dates back to the 1960s. At the time, most retirees did not have a pension. solid private pensions, gym memberships, motorhomes to tour Europe or did not have several houses to rent to young people in difficulty.

The three main political parties have been in power during this century and have continued to pay a very unfair share of insurance to young people who are most likely to have a job, facing high costs for housing and family education.

Young people need to take charge; they need to tell PAOs that they are using the National Health Service, that they are getting their vaccines first, and that they will likely need social care soon.

Covid 19 has now opened the door to retirees paying a larger share of their income above a similar income threshold, than the 1.5% health tax proposed for next year: on income at a time work and private pensions.

ROGER HOUSE
Taunton


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FBR Extends Tax Filing Date Until October 15

The Federal Board of Revenue (FBR) extended the filing date for tax returns to October 15 on Thursday.

In a notification, the FBR said the September 30 deadline had been extended by 15 days due to “serious technical issues” in the Iris portal for electronic filing of tax returns.

The RBF had already stressed on several occasions that the deadline would not be extended. He had, however, ordered his chief commissioners of the Inland Revenue to “generously grant extensions” for the filing of tax returns to people facing “difficulties of any kind”.

“The system operates transparently and approximately 150,000 returns were filed on September 28, the highest number ever filed in a single day. In the meantime, FBR, like last year, has improved the ability of its system to provide transparent services to taxpayers. the tax collection agency said on Wednesday.

However, many social media users complained on Thursday that the Iris portal was not working.

The RBF had received around 1.4 million tax returns by September 28.

KTBA requests 90 day extension

The Karachi Tax Bar Association (KTBA) previously asked Prime Minister Imran Khan for a three-month extension, that is, until December 31.

The KTBA pointed out that compliance with the 90-day time limit was prescribed by law for filing the income tax return under Article 118 of the Income Tax Ordinance 2001. It further pointed out that ‘unavailability of the FBR portal for 15 days. “The 90-day period should only start when a flawless and error-free return of income in accordance with the provisions of the ordinance is uploaded to the Iris portal, which in itself has not yet been notified,” said the ‘association.

The KTBA further stated that the FBR portal, both e-FBR and Iris “remained hacked and disabled from August 14, 2021” and was intermittently not functioning properly until the end of August 2021, which again denied taxpayers 90 uninterrupted days prescribed by law to file the tax return.

On Tuesday, the RBF issued a circular to make it easier for taxpayers to file their tax returns over the past two days with extended hours for filing returns as well as paying taxes. This was in addition to the massive nationwide awareness campaign involving national heroes, urging people to file their returns to improve tax compliance in the country.

This year, the FBR notified tax returns from July 2021 to meet the 90-day (three-month) requirement under tax law.


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Sri Mulyani declares tax harmonization bill for a fair tax system

TEMPO.CO, JakartaFinance Minister Sri Mulyani Indrawati and the House of Representatives’ Finance Committee (DPR) ratified the Tax Harmonization Bill at the first level meeting on Wednesday, September 29. general provisions on taxation (RUU KUP).

“The government believes this bill will help create a fairer and more legal tax system,” Sri Sri said in an official statement on Thursday (September 30th).

According to Sri, several regulations have been agreed in this bill, ranging from the imposition of taxes on crops, provisions on the follow-up of mutual agreement procedure (MAP) decisions, to provisions for administrative sanctions in the process of settlement. objection and appeal. .

The previous bill had been included in the National Priority Legislation Program 2021 (Prolegnas). However, it had not been approved at the plenary meeting held by the DPR today.

The second level meeting or plenary meeting is scheduled in the coming days on the agenda for the ratification of the bill. “It will be next week,” she added.

Sri further reiterated that the bill should strengthen government-led tax administration reform, including the use of Identification Numbers (NIK) as Tax Identification Numbers (NPWP) for individual taxpayers. .

The bill was also supposed to support Indonesia’s position in international cooperation and produce provisions on the final rate of value added tax, as well as optimize the country’s income through base broadening. tax, Sri Mulyani said.

Read: Sri Mulyani talks about alternative minimum tax plan

FAJAR PEBRIANTO


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Peers in Cumbria pressure government over ‘utterly absurd’ municipal tax system

CUMBRIAN peers continued to press the government to correct a ‘grossly unfair’ municipal tax system that sees some London mansions charged less than the average county house.

Former Cumbrian MP Dale Campbell-Savors is leading a campaign to reform the housing tax and has launched a debate in the House of Lords on the issue.

Lord Campbell-Savors has previously called the house tax system unfair, saying: “It is unfair, it penalizes part of the North and favors London, and it is now in urgent need of reform.”

Speaking during the Lords’ council tax debate, he said: “How can a C-Band house in Cumbria, with municipal taxes of over £ 1,600 a year, pay more than a £ 54million H-Band luxury home in Mayfair in London? Surely such discrepancies in the treatment of homes in the north only serve to further reveal how far the whole house tax system has become completely absurd. Isn’t the concept of a red wall defending the north more than a myth, confirmed by the government’s refusal to reform housing tax and its enormous inconsistencies? ”

Lord Clark of Windermere also spoke on the matter.

He said: “My lords, all over Cumbria, whether in Barrow, Carlisle, Kendal or in the many households in the middle villages, households feel aggrieved to be forced, because of the national framework, to pay more. housing tax than luxury homes in London.

“Even the government has to accept that this is grossly unfair.

“When do they plan to take a small step to alleviate the problem and help level up in Britain?”

The government whip, Viscount Younger de Leckie, replied: “Housing tax is well understood by taxpayers.

“The government has no plans to reform the housing tax, which would be complex and time-consuming to undertake and would create confusion for taxpayers.”


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Honesdale can impose a 1% earned income tax on wages

If enacted, the borough would impose a 1% earned income tax on the salaries of residents and non-residents working in the borough.

HONESDALE, Pa .– The proposed labor income tax ordinance would allow Honesdale to collect 1% from everyone who lives in town and many who work there.

In return, the borough would lower its property tax rate.

“We started out by wanting to make things a bit fairer for them, where they might not have as much or no income earned so that we could give them property tax relief, but without hurting the tax base. but also really watching public safety were watching our storm water systems looking for ways to fund them without sending property taxes through the roof, ”said Jared Newbon, a councilor for Honesdale Borough.

District officials say the EIT ordinance will cut property taxes by 11%.

Still, some taxpayers who showed up to Wednesday night’s board meeting were skeptical.

“Honesdale is a federally declared HUBZone and was already a struggling area and adding this tax is an undue burden that people will not be able to face considering the fact that food costs more. , gas costs more if going to cost more to heat your home, ”said Brian Wilken, president of the Greater Honesdale Partnership.

“Our companies are trying to survive, it is hard enough to retain employees and even less to have to tell them because they work in the district were going to take even more money from them,” said Suzie Frisch, member of the community.

If enacted, the borough would impose a 1% earned income tax on the salaries of residents and non-residents working in the borough.

Two things are important to note.

The earned income tax will not affect education property taxes, and the earned income tax only refers to the taxation of money people earn. It doesn’t affect things like social security and insurance.

“A person who earns $ 25,000 is going to pay $ 250 in tax and the person who earns $ 250,000 in investment income will not pay a dime … This is extremely unfair and I strongly advise against it,” said Tom Shepstone, a resident.

The borough points out that of the more than 2,500 municipalities in Pennsylvania, only 93 of them do not have a tax on labor income.


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Former Democratic senator ‘warns’ Biden’s tax system

Former Democratic Senator Heidi Heitkamp, ​​one of the party’s key tax policy voices, has proposed that President Joe Biden tax assets valued at the time of his death on farms and family businesses. Said to damage the.

“I’m trying to sound an economic and political warning to Democrats that this is not the way to go,” she said in an interview with Squawk Box. “The turmoil this brings to small families and the wealth of farmers and families is not worth it. “

Biden proposed to tax assets valued at the time of death for income over $ 1 million. He also proposed raising the capital gains tax to the standard income tax rate. The plan will be discussed within the framework of a parliamentary regulation bill. In his proposal, individuals who inherit millions of private companies of value and real estate could face an immediate capital gains tax of more than 40% without having to sell them.

Now, in what is known as the “base increase”, an individual can inherit a valued asset without paying taxes, and the value is “upgraded” at the current valuation, to the benefit of individuals. interests of the tax deceased. Wipe off. For Biden and many progressive Democrats, the escalation is a huge loophole for the wealthy, with millionaires and millionaires giving their businesses and assets to their families for generations without paying capital gains taxes. They say it will be possible to pass.

Heitkamp, ​​who served in the Senate until 2019, chairs a new nonprofit called Save America’s Family Enterprises (SAFE). The nonprofit is campaigning against the proposal and running family ads. Neither the high camp nor the group revealed the donor.

“Unearned income should not be taxed at a much lower tax rate than income,” said Heitkamp, ​​supporting raising the capital gains tax to a tax rate normal. She also basically prefers to eliminate step-ups. Therefore, the asset does not reach the new valuation when inherited, but retains its original basis when sold.

She said her opposition to Biden’s plan was immediate imposition after death. She explained that families should only pay capital gains taxes when their assets are sold and the profits are made.

“What I find most annoying is that, for the first time, I am suddenly taxing unrealized capital gains,” she said. “My position has always been that you have to make capital gains. “

She gave the example of a truck driver named Sam, whose family has owned a cabin on a lake in Minnesota for generations and whose value has skyrocketed over time due to gentrification. The wealthy buyer next door buys land for $ 2 million and builds a mansion for $ 2 million. If both died, the wealthy landowner would give his property over to his family and could not pay taxes as they had a high current base. But Sam’s family could pay millions in taxes upon his death, even if the family didn’t sell the property.

She said the same applies to family businesses and farms.

“Family assets are more than a balance sheet,” she said. “Family assets are where we work, where we live and where we recreate ourselves. Given the taxation of unrealized capital gains, what you are doing is Pandora’s long-standing unclosed To open the box. “

The White House has said family farms and family businesses are exempt from taxes until the property is sold. Families also have up to 15 years to pay taxes to ease the pressure on them to sell immediately. According to a White House analysis, couples can be exempted up to $ 2.5 million if real estate is included, so only the richest 0.3% of taxpayers have to pay taxes.

Howard Grecman, a senior fellow of the Urban Brookings Tax Policy Center at the Urban Institute, said Biden’s plan to tax assessed assets on death is important to the overall plan to raise capital gains to income rates normal. I said it was a game. Instead of taxing assets assessed at the time of death, he said, wealthy families only hold assets indefinitely to avoid higher taxes on capital gains.

“Biden’s proposal to raise the capital gains tax rate to the normal tax rate would have an unpleasant economic effect, with little income and somehow unrealized at the time of death,” he said. declared. “If you take it up a notch, you won’t be taxed until your heir sells it. It’s decades after the death of the original investor. Lockdown has been around for generations. Investment can get stuck in underperforming assets. ”


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Pendleton adopts proposed public safety income tax hike | New

PENDLETON – With Police Chief Marc Farrer on the importance of additional funding for public safety, Pendleton City Council has passed a resolution to increase income tax for public safety.

City council voted unanimously on Tuesday to increase the public safety income tax for Madison County by 0.3%.

With the action taken in Pendleton, the 30-day deadline for passing the tax increase began with 50 votes required by the Madison County Tax Board.

Farrer said the town of Pendleton had suffered more arrests than the city of Alexandria in the past year.

“We cannot meet the needs,” he said. “We are going to start losing officers to Hancock County because they are offering a higher salary.”

Farrer said he was “super excited” at the possibility of additional funding for public safety in the community.

“It will benefit all of Madison County,” he said.

George Gasparovic, the Pendleton City Court judge, asked what the impact of the tax increase would be on the citizens of Madison County.

Madison County Sheriff Scott Mellinger said county and local community budgets continued to be squeezed over the past 15 to 20 years.

“We will either continue the public security services or cut other services,” he said.

City Councilor Bob Jones asked about the possibility of the state of Indiana providing more funds to hire assistant prosecutors and public defenders in Madison County.

Andrew Hanna, deputy chief prosecutor, said 91 other prosecutors’ offices would seek additional public funding. He doubted the county would receive additional state aid.

Council Chairman Chet Babb said the town of Pendleton had been doing well in recent years.

Babb said he had supported the hiring of more police officers at Pendleton for several years, but funding was not available.

“I don’t see how we can’t get past this,” he said. “This is a plus for the County and Town of Pendleton.”

Hanna said the proposed tax increase is of paramount importance to every community.

“The $ 8 million will be spent by all municipalities based on population,” he said.

Hanna said the county’s criminal justice system has been underfunded for decades.

He said Pendleton will receive around $ 237,000 starting in 2022 if the 0.3% tax increase is approved.

Hanna said Madison County’s tax burden will still be lower than 26 other counties in Indiana.

“It’s not a big jump,” he said. “The taxes raised will be dollars spent on public safety. The cumulative effect will be a safer Madison County.

Mellinger said the crime rate is a county-wide problem.

“It’s a quality of life issue for every citizen of this county,” he said.

Criminal justice handled the high crime rate as well as possible, Mellinger said.

“To maintain this high level, he needs a bullet in the arm,” he said. “The tax has not been increased for 25 years. The county took money out of the general public safety fund. The well has dried up.

To follow Ken de la Bastide on Twitter @KendelaBastide, or call 765-640-4863.


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Pendleton adopts proposed public safety income tax hike | Local News

PENDLETON – With Police Chief Marc Farrer on the importance of additional funding for public safety, Pendleton City Council has passed a resolution to increase income tax for public safety.

City council voted unanimously on Tuesday to increase the public safety income tax for Madison County by 0.3%.

With the action taken in Pendleton, the 30-day deadline for passing the tax increase began with 50 votes required by the Madison County Tax Board.

Farrer said the town of Pendleton had suffered more arrests than the city of Alexandria in the past year.

“We cannot meet the needs,” he said. “We are going to start losing officers to Hancock County because they are offering a higher salary.”

Farrer said he was “super excited” at the possibility of additional funding for public safety in the community.

“It will benefit all of Madison County,” he said.

George Gasparovic, the Pendleton City Court judge, asked what the impact of the tax increase would be on the citizens of Madison County.

Madison County Sheriff Scott Mellinger said county and local community budgets continued to be squeezed over the past 15 to 20 years.

“We will either continue the public security services or cut other services,” he said.

City Councilor Bob Jones asked about the possibility of the state of Indiana providing more funds to hire assistant prosecutors and public defenders in Madison County.

Andrew Hanna, deputy chief prosecutor, said 91 other prosecutors’ offices would seek additional public funding. He doubted the county would receive additional state aid.

Council Chairman Chet Babb said the town of Pendleton had been doing well in recent years.

Babb said he had supported the hiring of more police officers at Pendleton for several years, but funding was not available.

“I don’t see how we can’t get past this,” he said. “This is a plus for the County and Town of Pendleton.”

Hanna said the proposed tax increase is of paramount importance to every community.

“The $ 8 million will be spent by all municipalities based on population,” he said.

Hanna said the county’s criminal justice system has been underfunded for decades.

He said Pendleton will receive around $ 237,000 starting in 2022 if the 0.3% tax increase is approved.

Hanna said Madison County’s tax burden will still be lower than 26 other counties in Indiana.

“It’s not a big jump,” he said. “The taxes raised will be dollars spent on public safety. The cumulative effect will be a safer Madison County.

Mellinger said the crime rate is a county-wide problem.

“It’s a quality of life issue for every citizen of this county,” he said.

Criminal justice handled the high crime rate as well as possible, Mellinger said.

“To maintain this high level, he needs a bullet in the arm,” he said. “The tax has not been increased for 25 years. The county took money out of the general public safety fund. The well has dried up. “

Follow Ken de la Bastide on Twitter @KendelaBastide, or call 765-640-4863.


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Personal income tax and social insurance obligations for foreigners making an internal transfer within a company

The representative office of a foreign trader in Vietnam (hereinafter referred to as “Representative office”) Is a dependent unit of this foreign trader established under Vietnamese laws. Upon entering the Vietnamese market, foreign traders can choose many different forms to participate. However, the establishment of a representative office is an optimal test step to reduce costs, avoid risks associated with local procedures such as non-application of value added tax, income tax, corporate tax, no financial statement, no independent audit required…. in the early stages of accession. With the function of strengthening and helping foreign traders find customers, promote purchase and sale contracts with local partners, research and develop products, foreign traders usually appoint the employee who has worked for foreign traders for a long time and understood their products to go to Vietnam, take the post of head of representative office and operate representative office business or work as representative office employee in Vietnam. These foreign employees are considered foreigners in internal change within a company.

Social insurance obligations for Foreigner undergoing internal change within a company

Social insurance is a policy of the social security system primarily concerned with the government to provide benefits to employees based on contributions from employees and employers. The essence of social insurance is a guarantee to compensate or partially replace the income of employees when they experience a decrease or loss of income due to illness, maternity, work accident. , occupational disease, unemployment, when they reach the end of working age or die on the basis of contributions to the social insurance fund organized by the government. However, each employee will be subject to different social insurance policies. According to the provisions of clause 1, article 2 of government decree 143/2018 / ND-CP on subjects participating in compulsory social insurance: “Foreign employees working in Vietnam are required to participate in compulsory social insurance. ‘they have work permits, certificates of practice, permits to practice issued in Vietnam, employment contracts of indefinite duration or employment contracts valid for at least one year with employers in Vietnam. In the event of an intra-company move of the foreign employee, the foreign employees sign the employment contract with the foreign traders and are not required to apply for a work permit as provided for in clause 3, article 7 of decree 152/2020 / ND -CP: “Intra-company moving in 11 sectors of the Vietnam-WTO services commitments schedule, including business services, communication services, construction services, distribution services, services education, environmental services, financial services, health services, tourism services, recreational and cultural services, and transportation services.

Consequently, foreigners transferring internally within a company are not subject to compulsory social insurance.

The subjects affiliated to health insurance are employees working under a fixed-term employment contract for a total duration of 3 months or more, employment contracts of indefinite duration. The monthly health insurance payment is equal to 4.5% of the salary serving as the basis for the amount of compulsory social insurance (monthly salary) with the employer contribution of 3% and the employee contribution of 1.5%. Thus, subjects affiliated with health insurance do not discriminate against Vietnamese citizens or foreign employees. In addition, in accordance with Clause 2, Article 1 of the Social Insurance Law 2008 as amended and supplemented in 2014 (hereinafter referred to as “Health Insurance Law 2004”), foreign organizations and natural persons in Vietnam are also subject to the provisions of the Health Insurance Law 2004. Therefore, we believe that the foreigner transferred within a company if he works under an employment contract of indefinite duration or of an employment contract of a duration of 3 months or more is also subject to the Health Insurance Act 2004 and must participate in health insurance under the laws.

However, according to official letter No. 288 / BHXH-QLT dated February 18, 2020, from Ho Chi Minh City Social Insurance Agency, Ho Chi Minh City Social Insurance Agency instructs employers in Ho Chi Minh City than the foreigner transferred internally to a Companies are not subject to health insurance from February 1, 2020. Sharing the same opinion with the Social Insurance Agency of Ho Chi Minh- City, in the online policy explanation on the government portal, the Social Insurance Agency of Vietnam also said that the internal overseas transfer within a company is not eligible to participate in health insurance because foreign workers in Vietnam are not specifically regulated to participate in health insurance under Article 12 of the Health Insurance Law of 2004 and Decree 146/2018 of October 17, 2018 government on detailing and guiding the implementation of cert thus articles of the law on health insurance which do not specifically regulate the mechanism applicable to its group of subjects. However, the Official Dispatch is not a normative legal document and is only an internal administrative document or applicable to regions and localities. Therefore, in our opinion, to avoid risks in determining social insurance obligations for foreign employees making an intra-company move, the representative office should send a written consultation to the social insurance body where it is located. find the office to consult, exchange views in advance to comply with regulations.

Tax obligations of natural persons foreign employees moving within the company

Unlike other matters, foreigners living and working in Vietnam must declare and pay personal income tax. However, it is necessary to determine the residence status of the foreigner (resident or non-resident) to determine the rate of personal income tax payable for foreigners.

Foreigners who make an internal transfer within a company are identified as residing in Vietnam. The representative office must declare a personal income tax similar to that of Vietnamese employees.

For foreign workers who do not reside in Vietnam, it is true that the employee (usually the head of the representative office) is a foreigner making an intra-company move but has not been present in Vietnam for 183 days or more. and does not have a usual address in Vietnam, they are therefore considered a non-resident natural person in accordance with clauses 2 and 3, article 2 of decree 65/2013 / ND-CP. We can consider the tax obligations of natural persons from abroad in internal transfer within a company in the following two cases:

  • Case 1: The foreigner who makes an internal transfer within a company does not reside in Vietnam but generates income in Vietnam. The representative office must declare personal income tax on wages / salaries incurred in Vietnam.
  • Case 2: The foreigner who makes an internal transfer within a company does not reside in Vietnam, does not generate any income in Vietnam and is not entitled to a salary / wages for work performed in Vietnam. Consequently, foreigners are not subject to personal income tax. However, in accordance with the provisions of Clause 2, Clause 3, Article 7 of Decree 126/2020 / ND-CP, the Representative Office must always declare the income tax of foreign workers on a quarterly basis, whether or not they generate income. taxable income from October 1, 2020. On the other hand, Official Letter n ° 2393 / TCT-DNNCN dated July 1, 2021, from the Directorate General of Taxes relating to the personal income tax declaration, in the event that organizations and individuals pay taxable income, they will be subject to personal income tax. declaration. Therefore, if organizations and individuals do not generate and pay taxable income on personal income, they are not subject to the provisions of the Personal Income Tax Act. Therefore, organizations and individuals who do not pay personal income taxable income during a month / quarter are not required to report personal income tax for that month / quarter.

For this case, in our opinion, the official letter 2393 is only used as a reference. According to the official letter 2393, the representative office can explain to avoid administrative penalties for non-declaration of income tax of foreign employees from July 1, 2020 until now. Then, the representative office must declare the income tax of foreign employees, whether or not they have taxable income in accordance with Decree 126/2020 / ND-CP.

In addition, for the declaration of no income in Vietnam, we have come across many cases in our consulting practice where the Representative Office has declared no income. However, the tax authorities still applied personal tax rates for income paid by foreign traders. Therefore, in our opinion, you should consult the tax administration to declare and pay the income tax of foreign workers with no income in Vietnam before doing so to avoid the risk of tax penalties.

The issues of personal income tax and social insurance obligations for foreign employees in Vietnam are complicated in terms of laws and practices, especially in the case of foreign employees making an intra-company move. It becomes even more difficult to determine their obligations as they frequently change their residence address between their country and Vietnam. Therefore, representative offices of foreign traders in particular and employers in general should carefully review, understand legal regulations, and regularly consult with experts to determine income tax and social insurance obligations in order to to avoid violations during implementation.


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