HOW DO FOREIGNERS BECOME RESIDENT INDIVIDUALS IN VIETNAM?

Legal situation:

I am a US citizen and I want to live in Vietnam for a long time. I would like to know about the conditions for residing in Vietnam. Is the scope of tax determination different between resident and non-resident individuals?

FDVN’s opinions:

Thank you for concerning FDVN’s legal services. Regarding your consulting requests, after studying the relevant legal documents, FDVN Law Firm would like to give you the following advice:

According to Clause 1 Article 1 of Circular No. 111/2013/TT-BTC, conditions of resident individuals are specified as follows:

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

a) He/she has been present in Vietnam for at least 183 days in a calendar year or for 12 consecutive months from the first day of his/her presence in Vietnam (the date of arrival and date of departure are considered 01 days). 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 will be considered a day of residence.

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

b) He/she has a regular residence in Vietnam in one of the following cases:

     b.1) He/she has a regular residence according to regulations of law on the residence:

b.1.1) For Vietnamese citizens: a place where that person regularly, stably, and indefinitely lives and has been registered as a permanent residence as prescribed by regulations of law on residence.

b.1.2) For foreigners: the permanent residence wrote in the permanent residence card or the temporary residence when applying for the temporary residence card issued by a competent authority affiliated to the Ministry of Public Security.

b.2) He/she rents a house in Vietnam according to regulations of law on housing under a contract that has a term of at least 183 days in the tax year. To be specific:

b.2.1) A person who has no regular residence defined in Point b.1 Clause 1 of this Article will be considered a resident if he/she has a total house lease period of at least 183 days in the tax year under various lease contracts, even if he/she rents houses in different locations.

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

If the person has a regular residence in Vietnam according to this Clause but his/her actual presence in Vietnam is shorter than 183 days in the tax year and he/she fails to prove his or her residence in any country, that person will be considered a resident of Vietnam.”

Thus, an individual, regardless of origin, nationality, only needs to meet the above conditions to be a resident of Vietnam in accordance with the law.

2. The scope of tax determination of resident individuals and non-resident individuals

The scope of determination of a taxpayer's taxable income is specified in Article 1 of Circular No. 111/2013/TT-BTC, as amended in Article 2 of Circular 119/2014/TT-BTC as follows:

• Taxable income earned by a resident is the income earned within and beyond Vietnam’s territory regardless of the place where income is paid;

Any individual who is a citizen of a country or territory that has entered into an agreement on double taxation and prevention of tax avoidance with Vietnam, and also a resident in Vietnam shall calculate personal income tax from the month that individual arrives at Vietnam (if the individual goes to Vietnam for the first time) to the month in which the labor contract expires and the individual leaves Vietnam without following procedures for consular certification to avoid double taxation according to the double taxation agreement between the two countries.

• The taxable income of a non-resident is income earned in Vietnam, regardless of the place where income is paid and received.

Above is FDVN Law Firm's opinion for your consulting requests based on studying the relevant legal provisions. Hopefully, FDVN's advice would be helpful to you.

Ngo Thi My Tram – FDVN Law Firm