On December 27th, 2018, General Department of Tax issued the Official Letter No.5361/TCT-DNNCN. Where by, incase foreign workers are sent by foreign companies to work in Vietnam, then the relationship between those labors and Vietnamese companies shall not be subject to the Vietnamese Labor Code. The amount of money paid by the foreign company to the employee when terminating labor contract for the reason of being appointed to the executive board is a pension when he quits his job, not a severance allowance according to the labor law in Vietnam.
– In case the above-mentioned allowance amount is a severance allowance in accordance with the national labor law in which the company paying income is located and does not exceed the level of the national labor law, then this allowance shall not be calculated into personal income tax from the salaries and wages of the employees.
– In case the above-mentioned allowance amount is the severance allowance prescribed by the national labor law in which the company paying income is located and exceeds the country’s regulations on severance allowances, the excess shall be subject to personal income tax from salaries and wages of employees.
– In case the above-mentioned allowance amount is not a severance allowance according to the regulations of country that company paying income is located, it shall be subject to personal income tax from wages.
