Improving personal income tax collection control for foreign workers the case of division of hanoi tax

12 CHAPTER 1: THEORETICAL STRUCTURE OF COLLECTION PERSONAL INCOME TAX FOR FOREIGN WORKERS COMING TO WORK IN VIETNAM AND THE NEED OF PERFECT CONTROL COLLECTION PERSONAL INCOME TAX FOR FO

Cohort 2015– 2017Master’s Thesis

Improving Personal Income tax Collection Control for foreign workers- the case of Division of Hanoi Tax

Table of Contents

LISTS OF ABBREVIATION 5

Acknowledgement 6

Heading 7

1.Reasons for choosing research topics: 7

2 Research objectives of the project: 8

3 Research results: 8

1 The urgency of the topic 11

2 Purpose of the study 12

3 The subject matter of the thesis study 12

4 Research Methodology 12

5 Research questions 12

6 Name and structure of the thesis 12

CHAPTER 1: THEORETICAL STRUCTURE OF COLLECTION PERSONAL INCOME TAX FOR FOREIGN WORKERS COMING TO WORK IN VIETNAM AND THE NEED OF PERFECT CONTROL COLLECTION PERSONAL INCOME TAX FOR FOREIGN WORKERS WORKING IN VIETNAM 14

1.1 Overview of PIT 14

1.1.1 The role of the state in the market economy, taxation, the concept of personal income tax 14

1.1.2 Concept, impact of PIT 15

1.1.3 Principles and methods of personal income tax 15

1.1.4 Role and characteristics of PIT 18

Characteristics of PIT 18

Role of PIT 19

1.2 Definition Control: 20

1.2.1 Control of personal income tax collection 24

1.2.2 Requirements, principles of tax collection control 25

1.3 The need to improve PIT collection control for foreign workers in Vietnam 26

CHAPTER 2: STATUS OF CONTROL COLLECTION PERSONAL INCOME TAX IN VIETNAM BY DIVISION OF HANOI TAX 28

2.1 The status of PIT collection control for foreign workers coming for working in Vietnam 28

2.1.1 General provisions 28

2.1.2.Tax administration of foreigners in Vietnam 38

2.2 Organization of the tax administration 38

2.2.1 General Department of Taxation 38

2.2.2 Division of Hanoi Tax 39

2.3.1 Organizational structure 40

2.2.3 The control of personal income tax collection in Hanoi 46

2.3 Evaluate the results, identify the causes and constraints 48

2.3.1 Cause 48

2.3.2 Complete the tax policy system 48

2.3.3 Administrative reform has been reformed more rationally: 48

2.3.4 Promote information technology application in all stages of PIT collection control 49

2.3.5 The capacity of the tax administration is further enhanced 49

2.4 Comments - general evaluation 70

CHAPTER 3: ORIENTATIONS AND SOLUTIONS FOR THE COMPLETENESS OF PERSONAL INCOME TAX CONTROL COLLECTION WITH FOREIGN WORKERS COMING FOR WORKING IN VIETNAM BY DIVISION OF HANOI TAX 72

3.1 Views and goals complete 72

3.2 Advantages and difficulties in improving the control of collection PIT for foreign workers coming for working in Vietnam by Division of Hanoi Tax 73

3.2.1 Advantages 73

3.2.2 Difficulties 74

3.3 Solution to improve the control collection of personal income tax of foreign workers coming for working in Vietnam 77

3.3.1 Reduction of personal income tax rate 77

3.3.2 Solutions to sign more agreements to avoid overlapping taxation among countries, expand international cooperation with foreign tax authorities 78

3.3.3 Strengthen coordination between tax authorities and public security organs, Department of Labor, Invalids and Social Affairs, Department of Industry and Trade on the control of foreign wokers entering Vietnam 79

3.3.4 Solutions to strengthen the control of income of foreign workers coming to Vietnam for working - Encourage the payment via banking 81

3.3.5 Modernize the tax administration system based on the application of information technology achievements 83

3.3.6 Enhance the compliance of taxpayers on the basis of expanding taxpayer support services and intensifying tax inspections 86

3.3.7 Solutions to further strengthen the organizational structure when implementing the above solutions 90

CONCLUSIONS 91 APPENDIX 96

Acknowledgement

In the process of implementing my graduation paper, I have received lots of help, encouragement and experiences from teachers and frienders Especially, my graduation subject now is completed successfully thanks to all teachers’ support in International School of Hanoi National University

First of all, I would like to express my gratitude to my supervisor Mr Nguyen Vu Hoang Dr who has generously given me invaluable assistance and guidance without his help, my research would have never been succesfully completed

Besides, my sincere thank is also extended to all the teachers in International School

of Hanoi National University for their lectures supporting this study, simultanously,

my thank to all the students who help me fulfill the survey questionaire

Last but not least, I am grateful to my family and friends who have given me such encouragement during the time to carry out this paper

Within the framework of a master's thesis, there is a limited degree and duration of study, although the author has made many efforts but inevitably the shortcomings and limitations The author wishes and hopefully receive the input of researchers, policies maker, teachers and others interested in the field of tax administration in the hope that the thesis can contribute more to the award The method to enhance tax administration

of foreign workers to Vietnam for work in Hanoi To improve the efficiency and quality of Control collection Personal Income Tax of foreign workers coming to Vietnam for their work as well as in the future

Hanoi, June, 2017

Author

Heading

1.Reasons for choosing research topics:

Over the past few years, the Party and State have promoted industrialization and modernization of the country in the context of deepening international economic integration With the rapid development of the economy and the expansion of the labor market, the increase in high-income jobs is a major factor contributing to the increase in income of all classes of the population Individuals are increasingly diverse, so taxpayers are more diversified Implementing the socio-economic development plan for the period 2011-2020, the financial, monetary, capital, labor, real estate, science and technology markets will develop stronger Economic candles will continue to grow rapidly, creating conditions for organizations and individuals to have the opportunity to invest, produce and trade, and have different sources of income In addition, along with the process of international economic integration, the number of foreigners coming to Vietnam to work or invest in Vietnam has increased

In 2007, Vietnam joined the WTO According to statistics, the number of residents in Vietnam has increased rapidly in Vietnam The diversity and increased income of non-residents in Vietnam increases the amount of PIT paid into the state budget and occupies an increasing share

non-With the fast developing trend of countries in the world, it is very important to study and apply a PIT policy suitable to the conditions of our country In the process of reform and international integration in the field of tax administration, implementing the tax collection reform strategy in Vietnam until 2020, the tax department of Vietnam is gradually completing the mechanism of self- To pay taxes on the basis of increasing the information application, promoting propaganda, taxpayers' support services and tax inspections to improve voluntary compliance of tax payers and modernize tax administration

The Control of personal income tax of foreign workers in Vietnam because the work despite the results are certain but still encountered many difficulties, obstacles need to remove as well as contain many inadequacies Mechanism of management, management technology, apparatus and management personnel need to be overcome

To properly and fully collect and collect timely and still create favorable conditions for encouraging foreigners in Vietnam to maintain and expand their business and investment in Vietnam, thus reducing the burden on tax administration It is imperative for the non-resident to come to Vietnam to work concurrently with the double taxation treaties signed between Vietnam and other countries Therefore, it is necessary to continue reforming the tax system to overcome these shortcomings and weaknesses, to introduce a tax revenue management model for the above objects as appropriate to objective conditions as well Material balances allow is an urgent issue set out These things need to have a thorough research, thorough analysis, science, comprehensive That is also the content of the thesis topic of the author

Through the process of actual work at the personal income tax control office of the Divison of Hanoi Tax, the author has recognized the difficulties and challenges of tax administration of foreigners coming to Vietnam for working Therefore, the research

on the theme "Improving Personal Income tax Collection Control for foreign workers

in Vietnam" has practical and urgent significance in terms of theory and practice

2 Research objectives of the project:

The purpose of this study is to clarify general issues about the tax administration process, both theoretical and practical of the tax administration process of foreign workers coming to Vietnam for their current work in Hanoi, pointed out the advantages and disadvantages, the remaining issues need to be further improved On the basis of theoretical and practical experience in tax reform reform of some countries in the world, the requirements set out in the tax system reform program, the topic will propose some solutions to complete Improve the tax administration process

to suit this type of taxpayers in Hanoi

3 Research results:

Based on the actual control of personal income tax of foreigners coming to Vietnam

on the job at the Division of Hanoi Tax, the control of foreigners come to Vietnam by the authorities; Comparing information on foreign tax payers coming to Vietnam for work on the computer system of Division of Hanoi Tax with information on foreigners earning income in Vietnam of the Administration Immigration, immigration management department - Hanoi Police, the author has studied, analyzed, compared, commented, assessed the role, impact and impact of the PIT law on people Foreigners earn income in Vietnam Research results show that:

The current state of tax administration of agencies and organizations with foreigners working and foreigners earning income in Vietnam from 2013 to 2016 Through analysis and assessment of real situation of tax administration of taxpayers on The thesis has pointed out the strengths of control as the tax policy system has been improved, the administrative procedures have been reformed more rationally, stepping

up the application of information technology to all control stages The collection of personal income tax, the capacity of tax administration has been further enhanced, the implementation of propaganda and support on personal income tax and tax collection These causes have been shown through the tax rate of foreign workers coming to Vietnam because of the work paid into the state budget has increased over the years

At the same time, the thesis also pointed out the shortcomings in tax administration for foreign workers coming to Vietnam for working because of the high tax rates of non-residents; Taxpayers are not fully managed The cause of the tax loss of foreigners in Vietnam is due to: the tax authorities can not manage the number of foreign workers in Vietnam working at agencies and organizations; Can not manage the income of foreign workers coming to Vietnam for working; Infrastructure, computerization of tax administration is incomplete; The propaganda to support the taxpayer has not achieved high efficiency; The capacity of PIT inspection is still

limited As a result, the proportion of PIT to foreigners coming to Vietnam for working as a result of the work on the total PIT has been low, the number of foreigners coming to Vietnam for working by the Hanoi Tax Department The reason

is not commensurate with the number of foreign workers coming to Hanoi for working The number of PIT losses from the above objects still high, causing losses to the State budget; It is unfair to have foreign workers with incomes in Vietnam and Vietnamese working abroad

Since then, the author has made a general assessment of the tax collection control of foreign workers coming to Vietnam for working: The above work has also achieved results: the number of agencies and organizations with foreigners work for , Foreigners in Vietnam voluntarily declare tax However, the following causes have limited the results achieved on: PIT rates for non-resident foreigners are still high in Vietnam, the number of double taxation avoidance treaties signed between Vietnam and Low countries, the current legal documents have not created favorable conditions for the control of tax collection for foreigners in Vietnam and infrastructure for the control of personal income tax collection for Foreigners come to Vietnam because the work of the tax industry in particular and of the whole society in general is still weak and does not meet the requirements of tax collection control

From the above analyzes, the thesis gives basic insights and directions to enhance the control of collection PIT for foreign workers coming to Vietnam for working In order

to come up with feasible solutions that are appropriate to the actual conditions in Vietnam, the author considers the current socio-economic environment in Viet Nam, identifying the advantages and disadvantages of the subject as well as the client For improving the tax collection control of foreign workers coming to Vietnam for working, then boldly propose basic and synchronous solutions that can be applied on all contents of the administration Taxation: tax policy recommendations, organizational structure; Counseling, taxpayer support; Intensify inspections; To apply information technology, strengthen the coordination and exchange of information with relevant functional agencies, sign more agreements to avoid overlapping tax calculation among countries, expand international cooperation with the relevant agencies Foreign taxation, enhancing the control of income of foreigners coming to Vietnam for working - encourage payment tax via banking The above solutions will contribute to improve the efficiency of the collection of PIT for foreign workers with incomes in Vietnam, ensuring high efficiency and feasibility and raising the tax administration skills of Vietnamese tax authorities

Since this is a complex and relatively new problem for Vietnam, it is related to Vietnam's international economic integration process, within the framework of a master's thesis, limited by its level and age Study time, although the author has made many efforts but inevitably the shortcomings, limitations The author wishes and hopefully receive the input of researchers, teachers and others interested in the field of tax administration in the hope that the thesis can contribute more to the award The method to enhance tax administration of foreign wokers to Vietnam for working in

Hanoi Improving the efficiency and quality control of collection PIT of foreign workers coming to Vietnam for their work as well as in the near future

1 The urgency of the topic

Taxation is an important tool of the State It is both a source of revenue for the state budget and a macro-economic instrument In order to use the tax tool effectively, the tax policy system is essentially comprised of indirect taxes and direct taxes Indirect taxes such as Value Added Tax, Special Consumption Tax, Export Tax Direct taxes such as personal income tax, corporate income tax According to national practice, direct taxes will constitute a large proportion, in contrast, gradually reduce indirect taxes Vietnam is entering into deep integration with the international economy and the gradual process of gradual increase proportion of direct taxes is inevitable trend The PIT came into being in 1990 under the name of "Tax Ordinance for High-Income Earners" and has undergone six amendments and additions in 1992, 1994, 1997, 1999,

2001, 2004 to conform with Socio-economic conditions PIT law came into existence

to institutionalize the State line in the financial sector has set new requirements in the control of personal income tax The law takes effect from 01/01/2009 At the moment

of its inception, the PIT in Vietnam also plays a significant role in budget revenue and

is a duty of all workers The PIT regulates personal income based on the principles of equity, equity and taxability

In the past with the rapid development of the economy, the labor market has expanded, which is the main factor contributing to the increase of income of the population Income patterns of individuals are becoming more and more diversified Therefore, the taxpayersare more diversified In addition, with the process of international economic integration, the number of foreigners working in Vietnam , Or investment activities, business in Vietnam also increased

In 2007, Vietnam joined the WTO According to statistics, the number of expatriates

in Vietnam has increased rapidly in Vietnam The diversity and increased income of foreigners in Vietnam increases the amount of PIT paid into the state budget and occupies an increasing share Therefore, it is necessary to have a method of effective control for non-residents in Vietnam in general and in the tax branch in particular To properly and fully collect and collect timely and still create favorable conditions to encourage foreigners in Vietnam to maintain and expand their investment and business in Vietnam

In Vietnam there has never been a complete model of collecting PIT, personal income

is regulated by various taxes In November 2007, the Personal Income Tax Law passed by the National Assembly and came into effect on January 1, 2009, replaces the Ordinance on Income Tax on High Income Earners, the Law on Corporate Income Tax and the Tax Law land use right transfer The PIT Law details the PIT policy for foreigners in Vietnam However, the current control collection PIT of foreign workers

in Vietnam by the Tax Department of Hanoi still has many shortcomings that need to

be finalized such as the issuance of tax codes, tax declaration, inspection and control Tax investigation

For the above reasons, Topic has been selected as a master thesis with the aim of contributing to improve solutions and improve the efficiency of the control of personal income tax in Vietnam

2 Purpose of the study

Improving Personal Incometax Collection Control for foreign workers in Vietnam by Division of Hanoi Tax To achieve this goal, the following tasks are required:

- Systematize the theories of personal income tax and control of personal income tax

- Analyzing the current status of tax collection control for agencies and organizations having foreign workers working in Vietnam

- Proposing some solutions to perfect the tax collection control for this type of taxpayers in Hanoi

3 The subject matter of the thesis study

- Object of study: The control of collection personal income tax with foreign workers coming to Vietnam for working by Division of Hanoi Tax Hanoi Tax Division

5 Research questions

1 The tax collection control apparatus has successfully implemented the requirements

of control of collection PIT for foreign workers in Vietnam, the causes of the results achieved and the shortcomings to overcome

2 Based on the above reasons, what solutions should be implemented by the tax authorities to fulfill all the above requirements, ensuring the suitability with the socio -economic conditions of Vietnam?

6 Name and structure of the thesis

Thesis title: Improving Personal Income tax Collection Control for foreign workers

In addition to the introduction, conclusion and bibliography, the thesis consists of the following chapters:

Chapter 1: Theoretical structure of collection personal income tax for foreign workers coming to work in vietnam and the need of perfect control collection personal income tax for foreign workers working in vietnam

Chapter 2: Status of control collection personal income tax in vietnam by Division of Hanoi Tax

Chapter 3: Orientations and solutions for the completeness of personal income tax control collection with foreign workers coming for working in vietnam by Division of Hanoi Tax

CHAPTER 1: THEORETICAL STRUCTURE OF COLLECTION PERSONAL INCOME TAX FOR FOREIGN WORKERS COMING TO WORK IN VIETNAM AND THE NEED OF PERFECT CONTROL COLLECTION PERSONAL INCOME TAX FOR FOREIGN WORKERS WORKING IN

VIETNAM

1.1 Overview of PIT

1.1.1 The role of the state in the market economy, taxation, the concept of

personal income tax

Taxation is an indispensable objective product, associated with the birth, existence and development of the State, to perform the functions and tasks of the State assigned to the society On the other hand, the State is a social substitute for providing purely public goods, so the State uses its political power to impose taxes that oblige members

of society to contribute to pay for the use of public goods for the people Taxes are both an economic category, a historical category and a high legal status from the appearance of the state apparatus

Tax is a revenue of the State Budget for socio-economic organizations as well as all members of the society, which is compulsory, not directly repatriated and regulated by law

Based on the subject of taxation, the tax is divided into: PIT, corporate income tax; Property tax; Consumption tax

Based on the regulatory nature, taxes are divided into direct and indirect taxes

- Indirect tax: A tax that does not directly affect the income or assets of taxpayers that indirectly pass through the price of goods or services Consumers of those goods or services are the ones who are subject to this tax Indirect taxation is characterized by taxpayers by law and taxpayers who are not identical Indirect taxes are an integral part of the price of goods and services Taxpayers are producers and traders of goods and services, while taxpayers are consumers of those goods, they buy goods at prices including taxes

- Direct tax: tax imposed directly on income or assets of taxpayers Direct taxation is characterized by taxpayers who are consistent with the tax laws According to the law, the tax directly on income of taxpayers As such, direct taxation makes it more difficult for people and opportunities to shift their tax burden In principle, the tax is progressive because it takes into account the ability of taxpayers, higher taxpayers to pay more taxes, and lower income taxpayers

The basic characteristic of direct taxes is taxpayer and taxable objects are one It hits directly on the taxpayer, ie the person whose taxable income reduces their share of the income, does not have the phenomenon of transferring the burden of tax to another person In our country, these are taxes such as corporate income tax, personal income tax

In direct taxes, PIT plays an increasingly important role in generating revenues for the state budget

1.1.2 Concept, impact of PIT

PIT with a tax base is the income that an individual earns Earned income is the total amount of money and material benefits an individual receives in a tax period, including expenditures spent to obtain income Income earned from many sources: from labor in the form of salaries and wages; From production and business activities

in the form of income, dividends; And from other financial investment activities

So we have the concept of personal income tax as follows: "Personal income tax is the direct tax on the net income of individuals in a year, month or each time of income generation, regardless of source "

PIT reduces the income of taxpayers, creating two effects: Income effect: Make taxpayers' consumption less and work harder

Alternative effect: reduce the motivation of taxpayers Income effects and substitution effects have the opposite effect From a theoretical perspective, it is difficult to determine which effects are more powerful than the other

The advantage of the PIT is that it directly encourages the income of each income earner, and furthermore, it allows consideration of factors that are relatively independent of the income of taxpayers, such as: Therefore, the PIT has a great effect

in regulating income, reducing the significant differences in living standards among the population, so it is said Ensure fairness in society

The disadvantage of PIT is that it is likely to cause a response from taxpayers when the State adjusts the tax increase Moreover, the monitoring, calculating the tax payable and procedures for tax collection and payment are very complex Attendance

to the budget is often slow and tax administration costs are expensive

1.1.3 Principles and methods of personal income tax

Principle of personal income tax

A) Principles for taxation according to status of residence and principle of taxation

by source of income

Determining the tax payer is one of the important contents of personal income tax, which can then be used to calculate the tax accordingly When determining taxpayers, people often rely on two criteria: "place of residence" and "source of income."

According to the "residency" criterion, an individual who is determined to be a resident of a country must pay tax there for any income derived from anywhere in the world, and an individual is determined to be non-resident If you apply this principle, your income tax policy will be neutral and will not affect your decision to invest domestically or foreign investor

According to the "source of income" principle, an individual must pay personal income tax in a country for any income of an individual arising in that country without

having to pay personal income tax for the income Incurred abroad This principle ensures that taxpayers in the country and abroad are treated equally in terms of taxes -The problem of duplicate tax calculation and avoidance of duplicate tax calculation PIT is a direct taxation on an individual's income, derived from the principles of determining taxable rights that are commonly used by all countries, including:

+ Tax calculated at the source of income, ie income arising where it is entitled to calculate income tax on such income

+ Tax calculated in the country where the individual is a citizen

+ Taxes can be calculated for each kind of income as calculated by the individual's gross income

In the implementation of the PIT law, due to the complexity of determining taxable income at the same time as there are many different types and sources of income leading to taxation between countries - Resident and national income sources claim the same taxation rights as the same three when the same income is subject to double taxation This problem becomes more complicated in countries that implement open economic policy, with broad economic exchanges Currently, according to the United Nations as well as the European Union, two concepts of taxation are identical:

Legitimacy: This means that a legal person or entity is taxed by two or more different countries for the same income

- Calculate double taxation of economic significance: This means that two different individuals are taxed on the same income

The main types of tax calculation of the PIT are as follows:

- Taxes are identical to income from labor

- Taxes are identical to income from assets

- Taxes are the same on passive income (interest income, equity income, and royalties)

To avoid duplication of taxation, countries may adopt the following methods, depending on the economic characteristics of each country, according to the OECD:

- Tax exemptions: Countries where tax payers are residents do not collect taxes on income that they have paid in another country, can be exempted from full or progressive tax

- Except for the tax: the country where the tax payer is a resident, when calculating the tax on the total income of the taxpayer, deduct the tax payable in the country of residence tax paid abroad, may deduct full or ordinary tax

- Tax stamps: If the resident country applies the above tax deduction methods, even if income is generated in other countries where taxpayers are entitled to tax exemption and reduction, Subtract the tax amount considered as paid abroad

In the course of implementing the double taxation avoidance agreement, tax authorities must regularly exchange information for coordination, prevention of

negative acts, false tax declaration and tax evasion, and good tax collection control According to the objectives set and ensure the goal of social justice for the people

B) Principles for taxation on the basis of existing taxable income

PIT only adjusts the taxable income on the principle of:

Any income of an individual in a tax period, regardless of source, may be included in taxable income after the elimination of items not legally exempt from income tax Taxable income must be net income ie income after deduction of the costs of generating such income and allowances for deduction

Taxable income must be real, identifiable, calculated and consistent with control ability

C) Principles for taxation on the basis of annual income

In order to ensure the reality of the PIT, the state stipulates the period of time for the determination of provisional taxable income for a month or quarter and the exact calculation of PIT payable after one year

When individuals have activities to pay personal income tax liabilities, the personal income tax amount must be calculated and remitted into the State budget after a period

of tax calculation which is usually monthly or quarterly The first tax period is calculated from the date of commencement of the tax liability until the last day of the month or quarter, the last tax period is calculated from the first day of the month or quarter to the date of the end of the arising activity Tax obligations, monthly, individuals with taxable incomes and organizations and individuals paying incomes subject to personal income tax to individuals subject to tax withholding shall declare tax amounts arising in the preceding month and pay declaration to the tax office The monthly tax amounts payable to the tax offices are only the temporarily paid tax amounts into the state budget Next year, the taxpayers shall sum up the data and accurately determine the arising tax amounts for making annual tax settlements Before submission to the tax authorities The amount of PIT arising on tax finalization

is the amount of tax of high legal value, accurately reflecting the amount of tax payable annually into the state budget Therefore, organizations and individuals paying incomes subject to withholding tax, regardless of whether they have withholding or withholding tax, shall have to declare the personal income tax settlement according to regulations

The annual tax period of the PIT must be 12 months, normally calculated by calendar year In cases where the laborer is working in Vietnam for less than 12 months in a year, he / she may make PIT finalization starting from the time he / she arrives in Vietnam the following year

The personal income tax amount to be paid on the settlement is the PIT calculated on the average income of each month in the year, calculated according to the following formula:

Personal income tax payable for the whole year = [(Total taxable income for the

Individuals must pay additional tax or be refunded PIT already paid if there is a difference between the PIT payable for the whole year and PIT paid temporarily in months

The above tax calculation ensures equality between seasonal workers, only earns a few months a year and individuals earning 12 months a year

PIT method

Because the purpose of the PIT law is only to regulate people with high income Thus, the tax policy is designed primarily for individuals with high income from salaries and salaries, taking into account factors of family circumstances Usually in countries, personal income tax collection method is two methods of deduction at source and direct method

- The deduction method from the source, that is monthly organizations, individuals are responsible to withhold personal income tax before paying income to individuals, declare and pay the amount of tax withheld to the state budget At the end of the year, the payers shall be responsible for tax finalization for each individual and tax finalization withheld from the budget This method only applies to non-independent income such as income from wages, real estate

-The method of direct collection applies to different kinds of income, usually income

of income earners such as income from inheritance, gift, gift, income abroad Taxpayers will self-assess and calculate tax on pre-printed forms and send it to the tax office The tax office will check and notify if there is a bias or when there are signs of violation

1.1.4 Role and characteristics of PIT

Characteristics of PIT

As a direct tax, levied on individual income, the PIT has the following characteristics: Firstly: PIT is a mandatory form of compulsory rule Distribution of income through PIT associated with the power of the State

The second is that the PIT is an income tax but different from the CIT in that it is indispensable to the social policy of each country depending on the objective of the country to be achieved As a highly sensitive tax because it directly relates to the specific interests of taxpayers and involves almost every individual in the society, the PIT regulates the exclusion of some earnings before taxes PIT as income is social support, expenses necessary for personal life, family of taxpayers, social humanitarian expenditures

Thirdly: PIT is direct tax on taxpayers' income; Taxpayers are identical with taxpayers

so it is difficult to transfer the tax burden to others Because it is a direct tax, it reflects the consistency of taxpayers by law and taxable objects in economic terms Persons subject to personal income tax are unable to transfer the tax burden to others at the time of taxation

Fourthly: PIT has a very broad tax base, expressed in two respects: one is the subject

of personal income tax is all the income of individuals subject to tax irrespective of

income derived born in the country or abroad; Second, the subject of PIT declaration

is all income earners, including all citizens of the home country and foreigners who reside permanently or irregularly but whose number is present, Income, according to the level prescribed by the PIT law

Fifthly: PIT has a complicated technical taxation angle due to the large tax area, closely related to personal circumstances, specific social policies, applying the progressive method The higher the income, the higher the tax rate In order to ensure social justice, people with higher incomes, before and after paying tax they still have a higher income than those with low incomes when not paying taxes This feature derives from the key role of the PIT as a strong regulator of high income people, contributing to social justice Personal income tax is usually calculated in accordance with the progressive tariff due in part to the fact that the main role of personal income tax is to regulate high income earners and mobilize the capital contribution of low income earners Average input contributes to social justice

Sixthly In economic terms, the PIT is more neutral than other taxes because the increase or decrease of PIT hardly entails changes in economic structure

Role of PIT

PIT has both major tax roles in general and different roles with other taxes:

For the socio-economy:

- Creating funds for the State Budget:

PIT is one of the most important components of the tax system, so it also contributes

an important part to the financing of the state Personal income tax is calculated on a large scale, the ability to generate revenue for the budget is very large

As a tax with a relatively large income elasticity along with the development of the economy, incomes of all classes of people are constantly increasing if there is a reasonable and stable mobilization policy There is no need to change frequently, but the State Budget still earns a desired return

- Contribute to social justice:

PIT is a tool that contributes to social justice, reducing income disparities between high-income and low-income people in society

PIT is always associated with a country's social policy Although it is necessary to develop a neutral tax policy that does not aim at a number of different objectives, in practice there has been no separate country apart from the PIT policy with one Equity

is indicated by progressive tax tariffs, the level of tax regulation increases steadily, high-income taxpayers pay a lot Social policy is expressed through the family deduction mechanism

Personal income tax with the implementation of progressive tariffs has partially made the regulation of income, ensuring equity in society both vertically and horizontally Because high-income people pay more taxes and people with the same income, the tax

will be equally charged, thereby reducing the gap between the rich and the poor in the market economy

- Regulation of income, consumption and savings:

PIT is not only a tool to mobilize state budget revenues and social justice, but is also one of the important instruments of the State in regulating the macro economy Passing personal income tax and tax exemption and reduction can encourage investment, saving

Personal income tax directly regulates personal income, which, on the one hand, directly impacts on saving, and on the other hand makes the solvency of individuals reduced As a result, the demand for goods and services will affect the goods and services of the economy Therefore, the PIT also regulates the macro economy

- Contribute to the detection of illegal income

PIT is also a tool to meet the income control requirements of some subjects, limiting the sources of illicit income The fact is that many of the income of some individuals

is derived from the implementation of illegal activities that the State can not control These behaviors have a negative impact on the socio-economic life of the commune Assembly of each nation, effective measures must be taken to prevent and combat these behaviors One of the preventive measures is the role of PIT

For the tax system

- Contribute to overcome the disadvantages of some other taxes:

Some indirect taxes (value added tax, excise tax, import tax), when consuming the same amount of goods, people regardless of rich and poor are subject to the same tax

- Contribute to limiting the loss of corporate income tax

In corporate life, there are both CIT and PIT Between these two taxes there is always

a bond between them In cases where the enterprise declares to be higher than the actual expenses to be paid by individuals for reasonable expenses in order to reduce the taxed income of the enterprise for the purpose of evading CIT, The above payment will be subject to additional PIT for the income received Thus, PIT also contribute to overcome the loss of corporate income tax when the collusion between businesses and individuals

In general, PIT plays a very important role in the economic development of each country However, as the PIT control is still limited, these roles have not really been promoted in developing countries

1.2 Definition Control:

A broad definition of “control” can be found in the Oxford English Dictionary: “to

determine the behaviour or supervise the running of, to maintain influence or authority over to regulate ”, “to hold sway over, to dominate, to command To hold in check

or repress one’s passions or emotions; so to control one’s feelings, etc.” Some concrete examples of the use of the word “control” are: to control one’s breathing, air-traffic control, etc In other words, it encompasses the idea of a deliberate intervention

on the part of an agent in order to produce desired effects Control is the opposite of

chance, but is also at odds with an excessive dependence on external factors It is related to the notions of command and regulation

Difference definition of “control” is the process of measuring, evaluating and acting

on the object, check to ensure that control objectives, the plan of the organization

Control process: dynamic management process made up of two major phases:

planning and the monitoring and analysis of results

Control Activities: Control activities are the actions established through policies and

procedures that help ensure that management's directives to mitigate risks to the achievement of objectives are carried out Control activities are performed at all levels

of the entity, at various stages within business processes, and over the technology environment

The basic goal of controlling collection PIT for helping management of revenues for the state budget in the best way, focusing and full mobilization of currency for budget NN Second, uphold self-discipline executive tax policies and facilitates the implementation of taxpayers obliged pit Thirtd, aims to adjust the unreasonable tax policy, limiting the status of tax evasion , timely handling of violations Fourth, improving tax administration procedures, assignment, clear responsibilities, standardize the management of taxation, such a capacity of five civil servants Thursday, tax control PIT must contribute to the promotion of the role of the economy , that is to provide timely, accurate information for the management of PIT

They may be preventive or detective in nature and may encompass a range of manual and automated activities such as authorizations and approvals , verifications, reconciliations, and business performance reviews Segregation of duties is typically built into the selection and development of control activities Where segregation of duties is not practical, management selects and develops alternative control activities

For the field of tax collection control

Ministry of Finance issued Circular No 204/2015/TT-BTC on 21/12/2015 regulation

on application of risk control in the tax collection control This circular regulates the application of risk management in the Agency's tax Manager tax levels to evaluate compliance with the tax law for the taxpayer in the tax management services, including: tax registration; the tax return; pay tax; tax debt and coercive enforcement

of the decision of the tax administration; tax refund; check out; the tax inspector; create, print, distribute, manage, and use only professional Indian tax and other tax management during the implementation of the business activities, including: 1 The collection, processing, use of management information, relevant data on taxpayers 2

compliance with tax laws for taxpayers to meet the requirements of tax management

in each period

Principles of applied risk control in tax collection control

1 The tax authorities apply risk management to encourage and create conditions favorable to the taxpayer complies with the provisions of the law, and the prevention, detection, timely processing of tax law violations in tax management for taxpayers

2 In the administration of tax the taxpayer must be risk assessment to apply selected test cases, tax inspectors, tax refund, records classification measures coercive enforcement of the decision of the tax administration, classification of cases create, print, distribute, manage, use tax and prints professional measures necessary at the appropriate level in order to ensure compliance with tax laws

3 The risk assessment, reviews of law abiding taxpayers pursuant to the provisions of the law, the processes, the business tax management measures, based on criteria of risk management, information services and information, the data on the "database system on taxpayers" of the General Department of Taxation

4 The tax authorities performed test, inspection, monitoring and control on the basis

of reviews rank the level of risk is high, apply suitable measures for the case to be reviews rated low risk level

5 The tax authorities performed a full update on the database system business tax information and database system on taxpayers under the principle of electronic, digitized the documents, relevant information The work must be done on the system, make sure to update the status of regular, ongoing management

Contents apply risk control in the tax agency apply risk control techniques for:

1 Tax registration;

2 Check tax, tax inspection;

3 Control finalizing tax;

4 Identify, selecting taxpayers to make put in test plans, the tax inspector as prescribed by law;

5 Control tax debt and coercive enforcement of the decision of the tax administration;

6 Classification of taxpayers applies management measures in creating, printing, publishing, management, use, push the tax only;

7 Collect, analyze information, identify key oversight with respect to the taxpayer signs violated the tax law;

8 Provide information, data, support other business activities in tax control

Within the scope of the topic, control the activities of collecting personal income tax Control objects include: control the income, tax declaration, tax payment

Risk assessment involves flexible and repeated procedures to identify and assess risks Management processes such as tax declaration process, tax exemption, tax reduction process, debt management and tax debt enforcement process, tax refund process, tax inspection process, tax inspection process Tax officials and tax officers implement and guide taxpayers to follow the procedures

Risk assessment is the foundation upon which risks are managed, and the manager takes measures to handle that risk

Some lessons learned

International experience in developing criteria for assessing tax risk

In the field of taxation, the risk is divided into four categories: tax registration risk, compliance risk, declaration risk, tax risk

The risks directly affect the performance of state tax collection The experience of many countries shows that the development of risk criteria is absolutely necessary, increasing the impartiality and transparency in inspections and inspections

Organization for Economic Co-operation and Development (OECD)

The Organization for Economic Co-operation and Development (OECD) has published a guiding paper on "Regulatory Compliance Management: Managing and Improving Tax Compliance"

European Commission

The European Commission (EC) provides guidance on risk management for tax authorities of countries A number of countries, such as Sweden, the UK, the Netherlands, Poland, Austria and Germany, have developed software and data warehouses and set criteria for each individual (enterprise, individual) The type of risk for each tax (VAT, CIT, PIT)

In Canada, the performance of the national risk identification systems is measured on

an ongoing basis to determine effectiveness in identifying risk This typically involves comparing audit results for different groupings of estimated risk One expects that as the estimated risk increases, so too will the audit adjustment amounts By examining that relationship the effect of targeting using the national systems can be compared to what might be expected if audits were selected randomly Recent CRA studies show that the ‘lift’ factor from targeting using the national systems is 2.5 times to 4.4 times what one would expect without targeting, depending on the particular revenue product risk (individual income tax, corporate income tax, or goods and services tax) Lift is a measure of the effectiveness of a predictive model calculated as the ratio between the results obtained with and without the predictive model It measures the degree of improvement in selecting files on the basis of the risk estimates provided On the basis

of random audits of small and medium sized unincorporated businesses, 7.4 percent fell in the high-risk range But 32.4 percent of the adjustments were in this group, 4.4 times higher than one would expect if there was no relationship between risk estimates

and results Comparable results were found for other criteria, such as ‘hit rate’ and

‘high change rate’

1.2.1 Control of personal income tax collection

Objectives of PIT control

On the state control perspective, tax administration is an overall activity of the tax administration and other relevant agencies for the process of implementing the tax obligations of taxpayers to use Effectively available resources of the control agency and create conditions for proper collection and collection of tax amounts into the state budget in a convenient and lawful manner

According to the above content, tax administration only covers the executive and judicial sectors not including the legislative part On the executive side, tax administration is the organization that implements the tax laws In judicial terms, tax administration is the inspection and taxation process on the basis of the tax laws enacted

The control of personal income tax aims to achieve the following basic objectives:

A ) To intensify the collection and mobilization of revenues for the State budget in strict accordance with the provisions of the PIT Law, on the basis of constantly nurturing and developing the revenue sources

PIT accounts for a large share of the state budget revenues in most developed countries around the world Therefore, good tax administration in general and PIT in particular will have a great effect in concentrating, mobilizing sufficient and timely revenue for the State budget in accordance with the provisions of the PIT law

In addition, the PIT directly affects individuals' incomes, which may reduce the work effort because the higher return benefits from work and triggers immediate responses from the workforce Taxable as tax evasion In order to strengthen and stabilize the state budget revenues in the future, the control of personal income tax should also be paid attention to maintain and develop the basis of income tax collection of individuals

B) To contribute to raising the sense of law observance for economic organizations and population:

In the market economy, the sense of law enforcement by economic organizations and residents will have an impact on the macro economy Tax authorities through the implementation and inspection of the implementation of the tax laws in general and PIT in particular, together with the strengthening of the tax policy, the sense of compliance with tax policies will be raised High, thus creating the habit of "living and working under the law."

In developing countries, people still have to pay taxes but feel less about the impact of the tax, even knowing about taxes, mainly because of indirect taxes People buy goods and services at prices that have taxes in them Moreover, due to low income, PIT is a

new issue for many people Consequently, the consciousness of state tax obligations is generally low

C) Compliance with international commitments, double tax avoidance agreements: International commitments and tax treaties arise only in the tax system of a country as

it participates in regional and international economic integration This is a new element in the system, but they have a big impact on the tax system of that country The tax administration law in Vietnam has provided the legal basis for changing the relationship between taxpayers and tax authorities Taxpayer from the position is subject to tax control, tax collection to taxpayers, self-discipline of taxpayers in the declaration and payment of taxes under the mechanism of self-declaration, self-pay, self-responsibility The tax office from the position of the tax collection agency to the role of responsibility to support and create favorable conditions for the tax payer; To supervise and prevent acts of tax law violation, ensure equality between tax payers, create a healthy economic development environment and take the initiative in international integration; Organizations and individuals in society have the responsibility to participate in tax administration

The control of personal income tax contributes to improve tax compliance of tax payers in the implementation of tax law in Vietnam

1.2.2 Requirements, principles of tax collection control

Tax collection control is the stage of implementing tax policies of tax authorities at all levels It is the establishment of a system of organizations, the assignment of functions, tasks and powers for these organizations, Relational coordination between departments is an effective way of implementing tax policies to meet set goals, in a changing environment

Tax collection control is a state activity where the tax office is the representative to organize and administer the tax collection control system in order to mobilize tax revenues into the State budget according to the provisions of tax law Fees and charges, and the introduction of tax law to life, to achieve the objectives set by the tax authorities in each period

First of all, tax collection control is concerned with the implementation of tax policy

In order to well manage the tax collection, it is necessary to have a reasonable and feasible tax policy Once the tax policy is set and passed, the policy is implemented in practice Tax administration plays a decisive role in bringing tax policies into the hands of the taxpayer Tax administration is an organized, regulated, and state-regulated activity This can also be seen as administrative-economic control in the tax area

Control of tax collection is done by specific rules and procedures, with the functions, duties and powers prescribed by law

Requirements and principles of tax collection control

In order to build up an effective tax collection mechanism, the following requirements and principles of tax collection control should be fulfilled

- Tax policy must be clear, easy to understand, easy to follow, realistic to ensure feasibility

- Ensure the correct implementation of tax administration law, general tax laws and PIT law in particular and double taxation agreements signed between Vietnam and other countries

To ensure the observance of tax law by organizations and individuals, to fully and promptly remit the collected revenues according to the prescribed regime into the state budget

- To make full use of revenue sources, combining the raising of revenues, such as the collection of collected amounts so as not to suffer arrears; To closely supervise taxpayers, taxable objects and taxable incomes; Exactly enough, in line with the business process set by the industry

- Disseminating widely and regularly the tax laws and sub-law documents so that the taxpayers understand the tax obligations; To raise the sense of voluntary self-observance of tax law and take self-responsibility before law for the tax obligation The acts of fraud, tax evasion must be condemned and punished by society; and fully taxable organizations or individuals must be respected, commended and have certain rights

- Raising the control capacity of tax offices according to law and tax administrative reform The tax administration system must be centralized and specialized according

to the functions and tasks at each level

- Tax officers are trained in skills in each job function

- Tax administration must be based on modern control techniques and risk control techniques, widely applied information technology to tax collection control

- The tax office must have the authority to perform all functions as prescribed by law, such as investigation, prosecution and enforcement

1.3 The need to improve PIT collection control for foreign workers in Vietnam

In the past, with the rapid development of the economy, the labor market has been expanded, the increase in high-income jobs has been the main factors contributing to increasing the income of the population Income patterns of individuals are increasingly diversified, so the taxpayers are more diversified Implementing the plan

of socio-economic development, financial markets, currency, capital, labor, real estate, science and technology have strong development Economic candles will continue to grow artificial conditions for organizations and individuals to have the opportunity to invest, produce and trade, and have different sources of income In addition, along with the process of international economic integration, the number of foreigners coming to Vietnam to work or invest and do business in Vietnam has also increased, the number of Vietnamese people earning income From abroad also increased The diversity and increase of income of individuals in society will make the gap of income gap among different classes of the population grow

Vietnam joined the international trade organization WTO in 2007 The number of foreign workers earning in Vietnam has increased rapidly The diversification and increased income of foreign workers in Vietnam increases the amount of PIT paid into the state budget and occupies an increasing share Besides agencies and organizations that well fulfill the tax obligations for foreign workers working as foreign-invested enterprises, there are also representative offices and projects with foreigners working

in Vietnam which have not yet implemented Therefore, it is necessary to have an effective control method for foreign workers in Vietnam in general and in the tax branch in particular To properly and fully collect and collect timely and still create favorable conditions to encourage foreign workers in Vietnam to maintain and expand their investment and business in Vietnam In addition, the collection of PIT for foreign workers not residing in Vietnam to ensure equity by the Vietnamese abroad is also subject to tax Therefore, the requirements of tax administration for foreign workers in Vietnam are:

- Managing the number of foreign workers earning income in Vietnam, accurately determining the number of foreign workers residing or not residing in Vietnam according to each locality, residence address and place of work in Vietnam

- Manage the income of foreign workers earning income in Vietnam through the control of organizations and individuals paying incomes for them, managing income sources for foreigners in Vietnam

- To abide by the agreements on avoidance of double taxation, which have been signed with other countries and international practices on PIT in the world, ensuring fairness and equality of tax obligations between Vietnamese working abroad And foreigners working in Vietnam

From the above-mentioned reasons, the Law on Personal Income Tax ("PIT") was amended to amend the regulations on control of tax collection of non-residents in Vietnam as compared to the Ordinance on Income Tax on High-Income Earners:

- Objects are residents, not residents

- Specifying taxable incomes, taxed income and tax rates between residents and residents so as to have legal bases for managing the collection of foreigners' tax in Vietnam

non-CHAPTER 2: STATUS OF CONTROL COLLECTION PERSONAL INCOME

TAX IN VIETNAM BY DIVISION OF HANOI TAX

2.1 The status of PIT collection control for foreign workers coming for working

in Vietnam

PIT in Vietnam was introduced in 1990 as "Ordinance on Income Tax on High Income Earners" The Ordinance on Income Tax on High-Income Earners underwent six amendments and additions in 1992, 1994, 1997, 1999, 2001 and 2004 in line with socio-economic changes By 2007, the PIT law came into force and came into effect

on January 1, 2009, replacing the Ordinance on Income Tax on High-Income Earners toward the extension of taxable objects Adjust the tax obligations of individuals with incomes from different sources, eliminate discrimination between taxpayers who are Vietnamese and foreigners, and contribute to and facilitate the control of social income The PIT law is an indispensable objective to meet the requirements of socio-economic development and international economic integration

Law on PIT regulates tax payers, taxable income, income exempt from tax, reduction

of tax and bases for personal income tax Based on the characteristics of foreigners residing or not residing in Vietnam as foreigners implementing investment projects already licensed by competent Vietnamese State bodies Taxpayers working in enterprises, representative offices, branches of foreign economic, cultural and professional organizations; A non-governmental organization based in Vietnam The group of people has three outstanding features:

- They are high income earners who have high taxes due to their high professional qualification, which affects the investment decisions of foreign companies as well as the international organizations they work with

- Wide range of activities: worldwide, always moving, having broad relationships, communicating with them is not easy Foreigners come from many countries, in many different professions, very diverse in culture and lifestyle

- International: They are subject to many international laws, conventions and practices such as tax laws, residence law and double taxation avoidance agreements From many different countries, law-related cases are more likely

2.1.1 General provisions

2.1.1.1.Taxpayers

Taxpayers are residents and non-residents according to Article 2 of the Government's Decree No 65/2013/NĐ-CP elaborating a number of articles of the Law on Personal income tax and the Law on the amendments to the Law on Personal income tax (hereinafter referred to as the Decree No 65/2013/NĐ-CP) and earn taxable incomes according to Article 3 of the Law on Personal income tax and Article 3 of the Decree

No 65/2013/NĐ-CP

Determination of taxable incomes earned by taxpayers:

Taxable incomes earned by residents are the incomes earned within or outside Vietnam’s territory, regardless of locations or payment and receipt

Taxable incomes earned by non-residents are the incomes earned within Vietnam’s territory, regardless of the location of payment and receipt

1 A resident is a person that meets one of the conditions below:

a) The person has been present in Vietnam for 183 days or longer in a calendar year,

or for 12 consecutive months from the day on which that person arrives at Vietnam (the date of arrival and date of departure are considered 01 day) The date of arrival and date of departure depends on the certification of the immigration agency on the passport (or laissez-passers) when that person enters and leaves Vietnam If the person enters and leaves Vietnam within one day, it is considered a day of residence

A person in Vietnam defined in this Point is the presence of that person in Vietnam’s territory

b) The person has a regular residence in Vietnam in one of two cases below:

b.1) The person has a regular residence according to legislation on residence:

b.1.1) For Vietnamese citizen: the regular residence is the place where that person regularly, stably, and indefinitely lives and has been registered as permanent residence

as prescribed by legislation on residence

b.1.2) For foreigners: the regular residence is the permanent written in the permanent residence card, or the temporary residence when applying for the temporary residence card issued by competent authorities affiliated to the Ministry of Public Security b.2) The person rents a house in Vietnam according to legislation on housing under a contract that lasts 183 days or longer in the tax year, in particular:

b.2.1) The person has no regular residence as guided in Point b.1 Clause 1 of this Article, but has rented the house for totally 183 days in the tax year is also considered

a resident, even that person rents houses in various areas

b.2.2) The rented houses include hotels, guesthouses, motels, offices, etc whether they are rented by the person or their employer

If the person has no regular residence in Vietnam according to this Clause but actually

is present in Vietnam for fewer than 183 days in the tax year, and fails to prove his or her residence in any country, that person shall be considered a resident of Vietnam The residency in another country shall be proved by the Certificate of residence If the person belongs to a country or territory that signs tax agreements with Vietnam and does not issue the Certificate of residence, that person shall present a photocopy of the passport to prove the period of residence

2.Non-residents are the persons that fail to meet the conditions of resident persons

Taxpayers in some specific cases are identified as follows:

a) For the person that earns incomes from business:

a.1) If only one person is registered in the Certificate of Business, the taxpayer is person whose name is registered in the Certificate of Business registration

a.2) If multiple people are registered in the Certificate of Business registration and participate in the business, the taxpayers are the persons whose names are registered in the Certificate of Business registration

a.3) If multiple members of a household participate in the business but only one person is registered in the Certificate of Business registration, the taxpayer is the person whose name is registered in the Certificate of Business registration

a.4) If the person or household does business without the Certificate of Business registration (or practice certificate), the taxpayer is the person doing business

a.5) When leasing a house, the right to use land, water surface, and other property without business registration, the taxpayer is the person that owns the house, the right

to use land, water surface and other property If the house, the right to use land, water surface, and other property is under the ownership of multiple persons, the taxpayers are all the owners

b) Other individuals that earn taxable incomes

b.1) When transferring real estate under a co-ownership, taxpayers are the co-owners

of such real estate

b.2) If the person delegated to manage real estate has the right to transfer real estate or similar rights to those the real estate owner, the taxpayer is the delegating person b.3) If the person that transfers the ownership, the right to use protected entities according to the Law on Intellectual property and the Law on Technology transfers is the co-owner or co-author, the taxpayer is co-owner and co-author that earn incomes from such transfer

b.4) If multiple persons participate in a franchise according to the Law on Commerce, the taxpayers are all persons that earn incomes from the franchise

The taxpayers include:

a) The persons that hold Vietnamese nationality, including the persons sent to work or study overseas, and earn taxable incomes

b) The persons that do not hold Vietnamese nationality but earn taxable income, including: foreign workers working in Vietnam, foreigners that are not present in Vietnam but earn taxable incomes from Vietnam

Legal regulations on non-resident individuals are individuals who have no place of residence in Japan and live in Japan for less than one year

In France, a person who is considered to be a resident of France considers France to be the principal place of residence, a principal practitioner or a privileged center or place

in France for more than 6 months in a year or France as the place of residence Left most of the income

The US personal income tax law requires that resident individuals be US citizens and residents of the United States at least 330 days and nights

For Koreans, resident individuals are persons who have a house or residence in Korea for a period of one year or more

Sweden stipulates that all Swedish citizens and foreigners residing in Sweden earning income from anywhere are liable to pay personal income tax, unless the Swedes stay abroad for more than 6 months

2.1.1.2 Taxable incomes

All of taxable incomes was listed in Appendix 2

According to Article 3 of the Law on Personal income tax and Article 3 of the Decree

No 65/2013/NĐ-CP, the incomes subjects to personal income tax (hereinafter referred

to as taxable incomes) include:

1.Incomes from business

Incomes from business are incomes earned from the production and sale; independent professional activities of individuals who have a license or certificate to practice pursuant to the law; incomes not eligible for tax exemption

2.Incomes from wages and remunerations

Incomes from wages and remunerations (hereinafter referred to as wages) are incomes paid to workers from employers

3.Incomes from capital investment

a) loan interest; b) return on shares; c) income from equity investments in other forms, including cases of investment capital contribution in kind, the reputation, the land use, the invention, the patent; except for income received from interest on Government bonds

4.Incomes from capital transfer

a) income from the transfer of part of capital in the economic organizations; b) income from the transfer of securities; c) income from the capital transfer under other forms;

5.Incomes from real estate transfer

a) income from the transfer of land use right and property affixed to the land, including the construction of formation in the future; b) income from the transfer of ownership or use of housing, including housing form in the future; c) income from the transfer of land rent right, the right to lease water; d) other earnings received from the transfer of property in any form Taxable income in this account including earnings from the property manager authorization that authorized users have the right to transfer property or rights as the owner of the property under the provisions of the law

6.Incomes from winning prizes

Incomes from wining prizes are amounts of money or items received by the person in the form of:

a) Winning lottery prizes b) Wining prizes from promotion programs when buying products or services according to the Law on Commerce c) Winning prizes from the types of betting permitted by law d) Winning prizes in the casino permitted by law dd) Winning prizes from the games with prizes and the like held by economic organizations, administrative agencies, associations, other organizations and

individuals

7.Incomes from copyright

Incomes from copyright are incomes from the transfer of ownership, rights to use the subjects of intellectual property rights according to the Law on Intellectual property,

incomes from technology transfers according to the Law on Technology transfers

8.Incomes from franchising

Franchise is a commercial operation in which the franchiser allows and requests the franchisee to sell goods and services under the conditions set out by the franchiser in the franchise contract

Incomes from franchising are the incomes the person earned from the aforesaid

franchise contracts, including re-franchise according to legislation on franchise

9.Incomes from inheritance

Income from securities, inheritance is stake in the economic organizations, business establishments, real estate and other assets to register or subscribe to use

10.Incomes from receipt of gifts

Income from receiving gifts is stock, part of capital in the economic organizations, business establishments, real estate and other assets to register or subscribe to use

b) Incomes from transferring houses, rights to use land and property on land of the person if only one house or right to use of only one land plot in Vietnam is transfer c) Incomes from the person’s rights to use land allocated by the State that is eligible for land levy exemption or reduction

d) Incomes from inherited real estate

dd) Incomes from conversion of agricultural land, which is allocated by the State, to rationalize agricultural production without changing land purposes of the household or person engaged in agricultural production

e) Incomes of households and persons engaged in agriculture, forestry, salt production, and fishery

g) Incomes from interest on deposits at credit institutions and branches of foreign banks, interest on life insurance contracts; incomes from interest on Government bonds

h) Income from remittances are is the amount of money the person receives from their relatives being Vietnamese people residing abroad, Vietnamese people that work or study abroad

i) Incomes from the additional payments for working at night or working overtime in excess of wages according to the Labor Code In particular:

k) Pensions paid by Social Insurance Fund according to the Law on Social insurance; monthly pensions from the voluntary pension fund

The pensions paid from abroad to the people living and working in Vietnam are free

tax-m) Incomes from scholarships, including:

n) Incomes from indemnities under the contract for life insurance, non-life insurance,

or health insurance; compensation for occupational accidents; compensation and support according to legislation on compensation, support, and relocation; compensations provided by the State and other compensations prescribed by law In particular:

p) Incomes from non-profit charitable trusts accredited by competent authorities, which aim for charity, humanitarianism, and study encouragement

q) Incomes from foreign aids for charitable and humanitarian purposes, whether governmental or non-governmental, that are approved by competent authorities The basis for identifying the tax-free income in this Point is written approval for receipt of aids made bye competent authorities

2 The procedure and application for tax exemption in the cases in Points a, b, c, d, dd Clause 1 of this Article shall comply with guiding documents on tax administration

2.1.1.4 Tax reduction

According to Article 5 of the Law on Personal income tax and Article 5 of the Decree

No 65/2013/NĐ-CP, the taxpayers facing difficulties in paying tax due to natural disasters, accidents, or fatal diseases shall receive a tax reduction in proportion to the damage The reduction shall not exceed the tax payable

2.1.1.5.Converting taxable income into VND

1 Taxable incomes are calculated in VND The taxable incomes received in foreign currencies must be converted into VND at the average exchange rate on the inter-bank foreign exchange market when the incomes are earned

The foreign currencies without rates of exchange into VND shall be converted into a foreign currency that has a rate of exchange into VND

2 Non-cash taxable incomes must be converted into VND at the market prices of such products/services or the similar products/services when the incomes are earned

b) Declaring tax when an income is earned: applicable to incomes from capital investment, incomes from capital transfer, incomes from real estate transfer, incomes from winning prizes, incomes from royalties, incomes from franchising, incomes from inheritance, and incomes from gifts

c) Tax on incomes from transferring securities shall be declared annually or when it is incurred

2 For non-residents:

Non-residents shall declare tax whenever an income is earned

Where the business person does not have a fixed business location such as a shop or counter, the tax period is similar to that applicable to residents earning incomes from business

2.1.1.7.Basis for calculating tax incurerd by residents

Basis for calculating tax on taxable incomes from business, wages

The basis for calculating tax on incomes from business, wages is the assessable income and tax rate, in particular:

1 Assessable income equals taxable income minus (-) the following deductions: a) Personal deductions

b) Insurance premiums and payment to the voluntary pension fund

c) Charitable, humanitarian, and study encouragement contributions (hereinafter referred to as charitable donations)

4 Converting tax-exclusive incomes into assessable income

If the wages paid to the worker as guided are exclusive of tax, they must be converted into assessable income in accordance with Appendix No 02/PL-TNCN of Circular 111/2013/TT-BTC dated 15/11/2013 of Ministry of Finance In particular:

a) The income converted into assessable income is the actual income plus (+) benefits paid by the employer on behalf of the worker (if any) minus (-) the deductions If the amounts paid on behalf of the workers include the house rent, the house rent shall be included in the converted income, but shall not exceed 15% of the total taxable income incurred at the work place (not including house rent)

Formula for calculating converted income:

Converted income = Actual

income +

Amounts paid

on the worker’s behalf

- Deductions

Where:

- Actual income is the tax-exclusive wages the worker receives every month

- The amounts paid on the worker's behalf, the benefits in cash or in kind paid to the worker by the employer

- Deductions include personal deductions, insurance premiums, contributions to the voluntary pension fund, and charitable donations

5 The basis for calculating accrued insurance premiums and accrued contributions to the voluntary pension fund is the accrued premiums for life insurance and other optional insurance, accrued contribution to the voluntary pension fund that is paid or made by the employer on behalf of the worker, and the withholding rate of 10% Before providing insurance money and pension for the person, the insurer and the voluntary pension fund shall withhold 10% tax on the accrued insurance premiums and accrued contribution to the voluntary pension fund that is paid or made by the employer on behalf of the worker from July 01, 2013

The insurer and the voluntary pension fund shall separately monitor the premiums for life insurance and other optional insurance, accrued contribution to the voluntary pension fund that are paid or made by the employer on behalf of the worker as the basis for calculating personal income tax

All of basic for calculating tax was detailed in Appendix 2

Basis for calculating tax on incomes from capital investment

The tax rate on the income from capital investment is 5% according to the whole income tax table

Basis for calculating tax on incomes from capital transfer

The person that transfers securities shall apply the tax rate of 20% if he has obtained tax registration and a tax code when settling tax, and able to calculate the assessable income from each type of securities

The person that transfers securities shall provisionally pay a 0.1% tax on the securities transfer price at a time, including the case in which the 20% tax rate applies

The rate of personal income tax on the income from transferring contributed capital is 20% according to the whole income tax table

Basis for calculating tax on incomes from real estate transfer

The rate of tax on real estate transfer is 25% of the assessable income

Where the taxpayer fails to determine the cost price or fails to provide documents to determine the cost price or purchase price or rent, and legal documents for determining relevant expenses as the basis for calculating the assessable income, the tax rate of 2% of the transfer price of sale price or sublease price shall apply

Basis for calculating tax on incomes from royalties

The rate of personal income tax on the income from royalties is 5% according to the

whole income tax table

Basis for calculating tax on incomes from franchising

The rate of personal income tax on the income from franchising is 5% according to the whole income tax table

Basis for calculating tax on incomes from winning prizes

The assessable income from a prize is the excess over 10 million VND of the prize the

taxpayer receives, regardless of the number of payments being made

Basis for calculating tax on incomes from inheritance and gifts

The rate of personal income tax on the income from inheritance and gifts is 10% according to the whole income tax table

2.1.1.8.Basis for calculating tax incurred by non-residents (Appendix 3) All

detailed about basic for calculating tax with non-resisdents in Appendix 3

Incomes from business

The rate of personal income tax on incomes from business earned by a non-resident equals the revenue from business multiplied by (x) the tax rate

The rates of personal income tax on incomes from business earned by non-residents in each field and industry:

a) 1% for goods sale

b) 5% for service provision

c) 2% for production, construction, construction, and other businesses

Incomes from wages

The rate of personal income tax on incomes from wages earned by a non-resident equals the taxable income from wages multiplied by (x) 20% tax

Incomes from capital investment

The personal income tax on the income from capital transfer earned by a non-resident equals the total amount of money the non-resident receives from the transfer of capital invested in organizations and individuals in Vietnam multiplied by (x) 0.1% tax, whether the transfer is made in Vietnam or overseas

The total amount of money the non-resident receives from the transfer of capital invested in organizations and individuals in Vietnam is the capital transfer price without any deductions, including the cost price

Incomes from real estate transfer

The personal income tax on the income from real estate transfer earned by a resident equals the transfer price multiplied by (x) 2% tax

non-The aforesaid transfer price is the total amount the non-resident receives from the real

estate transfer without any deductions, including the cost price

Incomes from royalties and franchise

The tax on incomes from royalties earned by a non-resident equals excess over 10 million VND of income from each contract to transfer the subjects of intellectual property rights, technology transfers in Vietnam multiplied by 5% tax

Incomes from prizes, inheritance, and gifts

The personal income tax on incomes from prizes, inheritance, or gifts earned by a

non-resident equals the assessable income multiplied by (x) the 10% tax

2.1.1.9.Tax declaration and tax settlement

The payer of taxable incomes and the person that earns taxable incomes shall declare tax and settle tax in accordance with the procedure provided in guiding documents on tax administration

2.1.1.10 Responsibilities of Vietnamese organizations that sign service contracts with foreign contractors that do not operate in Vietnam

When an organization established and operated within Vietnam’s law (hereinafter referred to as Vietnamese party) signs a contract to purchase services of a foreign contractors that signs labor contracts with foreign workers in Vietnam, the Vietnam party shall notify the foreign contractor of the obligations to pay personal income tax incurred by the foreign workers, the obligations to provide information about the foreign workers, including their names, nationalities, passport numbers, working duration, positions, and incomes for the Vietnam party The Vietnam party shall provide such information for the tax authority at least 07 days before the foreign worker starts to work in Vietnam

2.1.2.Tax administration of foreigners in Vietnam

The Law on Tax Administration, passed by the XI National Assembly, takes effect as from July 1, 2007, has legislated the above-mentioned contents on tax administration, with tax administration covering all the principles, The State management regimes and measures on taxation must be organized by tax offices at all levels to ensure that tax, charge and fee revenues and expenditures are concentrated in a timely and sufficient manner into the State budget, Contribute and promote the effect of managing and regulating the macro economy, gradually implementing equality and social justice The contents of the management of personal income tax of agencies and organizations with foreigners working and foreigners have income in Vietnam propaganda support

on the PIT law; To manage the tax declaration, tax payment and urge the recovery of arrears; Inspectors inspect the compliance of tax law

The tax collection control system has been set up to manage the collection of taxes across the country for all types of taxpayers in general and foreigners in Vietnam in particular under the Law on Tax Administration, as follows:

2.2 Organization of the tax administration

2.2.1 General Department of Taxation

The General Department of Taxation is an organization attached to the Ministry of Finance and is responsible to the Minister of Finance for performing the function of State management over domestic revenues, including taxes, charges, fees and charges Other state budget (hereafter collectively referred to as tax); To organize tax administration in accordance with the provisions of law The General Department of Taxation has the legal person status, may open accounts at the State Treasury and use the national emblem seal

The General Department of Taxation is centrally and unifiedly organized into a vertical system from the central to local levels, in administrative units, into 3 levels of the General Department of Taxation, 64 tax departments in provinces and 672 sub-departments District tax is tied to the administrative unit, under the concurrent leadership of the General Department of Taxation and local government committees The organizational structure of the General Department of Taxation is as follows:

At the central level is the General Department of Taxation, the organizational structure includes:

The assisting apparatus of the General Director: functional departments, tasks and responsibilities to advise and assist the General Director of Taxation in performing the function of State management in the fields of taxes, charges, fees and other levies of

Non-business units attached to: Tax College; Tax Magazine

Locally, there are Tax Departments and Tax Departments, the organizational structure includes:

The provincial / municipal Tax Departments (collectively called the provincial Tax Departments), which are directly attached to the General Department of Taxation; District Tax Offices in districts, towns and provincial cities (referred collectively to as district-level Tax Departments) shall be attached to provincial-level Tax Departments Provincial Tax Departments, district-level Tax Departments have the legal person status, their own seals and may open accounts at the State Treasury according to the provisions of law

The functions, tasks, powers and organizational structure of the units under the General Department of Taxation shall comply with the decentralization of management by the Minister of Finance The General Director shall be the head of the General Department of Taxation The Minister of Finance and the law on all activities

of the General Department of Taxation Deputy General Directors are responsible to the Director General and to the law for their assigned work

The tax office currently manages more than 500,000 enterprises (mostly small and medium enterprises), nearly 1.7 million household businesses, millions of personal income taxpayers and about 15 million individual and private households Pay land use tax and some organizations and individuals pay fees and charges (Source: General Department of Taxation-2010)

2.2.2 Division of Hanoi Tax

Division of Hanoi Tax was established by Decision No 314 / TC-QD dated 21/8/1990

of the Ministry of Finance pursuant to Resolution No 15/2008 / NQ-QH12 dated May

29, 2008 of the National Assembly, The third meeting on the adjustment of administrative boundaries of Hanoi and a number of related provinces, the Ministry of Finance issued Decision No 1640 / QD-BTC dated 28 July 2008 on the establishment

of Tax Department of Ho Chi Minh City under the General Department The tax is