OFFICIAL LETTER 1827/TCT-TNCN DATED 17 MAY 2018 OF GDT GUIDING ON PIT AND PIT ALLOCATION OF OVERSEA PAID AMOUNT
Official letter 1827/TCT-TNCN dated 17 May 2018 of GDT guiding on PIT formula and PIT allocation of oversea paid amount as follows:
1. The formula for calculating PIT:
In case, Nguyen Van A is an resident individual in Vietnam, receive the income excluding PIT (net income) at the Representative Office and receives income excluding PIT (net income) at Company X in a foreign country belonging to the same group:
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Income used as a basis for conversion into taxable income
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=
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Actual receipt
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+
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Benefits paid by the employer on behalf of the employee (if any)
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-
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Deductions
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Actual income is defined as salary or wage which does not include taxes that employees receive monthly (excluding income exempted from tax).
2. PIT allocation of oversea paid amount:
In case, Nguyen Van A is an individual residing in Vietnam, the income does not include PIT (net income) at the Representative Office and receives income excluding PIT (net income) at Foreign company X of the same group in a country which has signed an agreement on avoidance of double taxation with Vietnam shall be entitled to deduct the tax amount already paid abroad on the income received at Company X. The tax amount to be subtracted It must not exceed the payable tax amount calculated according to the tax table of Vietnam, which is distributed to the income generated abroad. The rate of distribution is determined by the ratio of income generated abroad and total taxable income.
