Legal News

[Taxation] Official letter from the Directorate General of Taxation regarding compulsory insurance premiums paid outside Vietnam

2024/01/18

According to Vietnam’s personal income tax law, if a foreigner residing in Vietnam receives salaries and wages abroad and subscribes to compulsory insurance (pension, health insurance, employment insurance, etc.) abroad, this insurance premium is self-reimbursable. It is stipulated that the contribution amount can be deducted when calculating personal income tax (Article 9, Paragraph 2 of Circular No.111/2013/TT-BTC).

Recently, the Vietnam General Administration of Taxation has issued an official letter No. 6002/TCT-DNNCN dated December 29, 2023 (hereinafter referred to as “OL6002”)According to the letter, if a foreigner is seconded or stationed in Vietnam and receives salary from both the Vietnamese local corporation and the overseas corporation, but the Vietnamese local corporation ultimately remits the entire overseas salary (which includes the source of the compulsory insurance premiums paid overseas) to the overseas corporation, i.e., the foreigner’s entire salary is paid by the Vietnamese corporation and not by the home corporation, it states that the premiums paid abroad cannot be deducted when calculating the Vietnamese PIT of the foreigner in question.

Regarding cases similar to those considered in OL6002, the Ho Chi Minh Tax Department has expressed the opinion that deductions can be made in the past, but in the future, tax bureaus in various regions will not be able to deduct such insurance premiums in accordance with the official letter of the Directorate General of Taxation. Care must be taken as there is a possibility of denial.

References:
・Official letter No. 6002/TCT-DNNCN of the Directorate General of Taxation dated December 29, 2023
・Ho Chi Minh Tax Department Official Letter No. 18572/CT-TTHT dated December 31, 2020

*This article was translated by Yarakuzen.