FOREIGNERS WORKING IN VIETNAM

Foreigners working in Vietnam must acquire a Work Permit (“WP”) or a written confirmation of WP exemption (“WPE”), except for the cases of being exempt. Besides, a respective type of and Visa matching his/her immigrant background must be obtained. These requirements for a foreigner coming to Vietnam to work are not new, terms but are always essentialnot so few foreigners decide to omit or circumvent it. It might not be very complicated to obtain these documents but if timing control is not good, iF failure to complyt would may lead to unexpected consequences for to expatriates, i.e., cost the relevant foreigner money penalty or worse leaving may be expelled from the country Vietnam.

Once having received a corresponding WP or a confirmation of being exempted from the WP (“WPE”)E, and an appropriate Visa to enter and work here in Vietnam, the foreigner and his/her employer now need to take care of an employment agreement or appointment to work and the biga crucial part of the journey, the Personal Income Tax (“PIT”).

1. Visa

Depending on the purpose of immigration, the foreigner must apply for an appropriate visa. In theory, a foreigner if entering Vietnam with a visa for one purpose, then if wanting to change to another purpose, must apply for a new appropriate visa including or excludingthat may require him/her to exiting the country and comeing back by with the new visa. Practically, depending on the policies of relevant domestic provincial immigration authorities in each province/city or from the immigration authority, switching a visa to another type of visa might not require the concerned applicant to exit Vietnam.

Several kinds of visas are granted for different entry purposes, i.e. working visas, business visas, internship visas, tourist visas, etc. Applicants can apply for eithera multiple entry or a single entry visa.

At present, Vietnam also applies an electronic visa (E-visa) which the foreigner can apply via a government online channel before coming to Vietnam. In several provinces or cities in Vietnam, switching this E-visa to another traditional physical visa is allowed without needing the requirement to exist in from the country. The E-visa is valid for up to 90 days and can be a single or multiple-entry one.

Checking especially which type of visas the foreigner should apply for and the chance of switching to an appropriate one without the involvement requirement of an exit during the switching process would help save cost and time.

2. Work Permit

Any foreigner intending to work in Vietnam must obtain a WP/WPE, except for certain cases being exempted from the WP aswhich must be listed in the Labor Code and its relevant decree guiding on WP applicable to foreigners.

In typical employment scenarios, after a WP is granted, an employment agreement must be executed. A copy of the employment agreement must be filed with the local labor authority for reporting. Details on the working term, working position, and title in the employment agreement must be accurate as they are inwith the WP.

A WP will have a term of up to 2 years and can be renewed one time.

3. Temporary Resident Card (“TRC”)

Following the appropriate Visa and WP or WPE, athe foreigner can decide to apply for a TRC. He or she can sponsor his/her family members’ relative visas or TRC. The procedure to apply for the TRC is similar to the process of applying for a working visa or business visa.

4. Personal Income Tax (“PIT”)

Any person who has income arising from or in relation to Vietnam willshall be subject to the PIT under its Law on PIT, regardless of the location paying and receiving the income. Depending on the statustype of resident statuscy under the view of the Law on PIT, a non-residents, and residents are taxed differently. ’s iRegarding income from employment, non-residents sourced from Vietnam areis taxable at a flat rate of 20% on the income sourced from Vietnam; and while a residents are taxed on’s worldwide income is taxable following a table of progressive rates from 5% to 35% for residents. These rates apply to incomes from employment. Also, several kinds of individual incomes will be taxed at different rates such as incomes from Capital Investment, Capital Assignment (including share transfer), Real Property Transfer, Royalties/ Technology transfer/ Franchising, and Winnings/ Prizes/ Inheritance/ Gifts.

Several deadlines of tax code registration, PIT filing, payment, and declarations must be controlled as they are normally tied tight while sanctions if failing toimposed on any failure to comply with the given deadlines normally are high.

Foreigners who are citizens of countries having entered into double tax avoidance agreements (“DTA”) with Vietnam will have the option of applying the relevant DTA to utilize the tax benefits they bringmay consider applying for tax relief given. Applying DTA is not automatic but tax authorities would require a dossier must be filed to the management tax authority to consider and decide in writing.

Vietnam has become more and more strict in developing legal legislation and applying high-tech tools in tax enforcement and collection. Recently, many taxpayers have been listed and forced to pay taxes that they either did not prepare or did not pay sufficiently. Preparing and complying strictly with the legal regulations on PIT is therefore strongly recommended.

Nguyen Thi Quynh Nhu - Managing Partner

nhu.ntq@erudituslegal.com

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Disclaimer

This Newsletter contains only brief notes and includes legislation in force as of June 2024. The information herein is general and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one is entitled to rely on this information, and no one should act on such information without appropriate professional advice obtained after a thorough examination of the particular situation.