Vietnamese
Circular No. 95/2026/TT-BTC, guiding the implementation of Tax Agreements and the prevention of tax evasion and avoidance, was promulgated on July 1, 2026.
Under Clause 1, Article 34 of Circular No. 95/2026/TT-BTC, where an individual who is a resident of a Contracting Party derives income from dependent personal services exercised in Vietnam, Vietnam has the right to impose personal income tax (PIT) on such income.
However, Clause 2, Article 34 of Circular No. 95/2026/TT-BTC provides that remuneration derived from employment exercised in Vietnam shall be taxable only in the Contracting Party of which the individual is a resident, and shall be exempt from PIT in Vietnam if all three of the following conditions are simultaneously satisfied:
- The individual is present in Vietnam for less than 183 days during any 12-month period commencing or ending in the tax year;
- The employer is not a resident of Vietnam, and the remuneration is not borne by a resident of Vietnam;
- The remuneration is not borne by a permanent establishment that the employer has in Vietnam.
Accordingly, this provision does not apply to all foreigners working in Vietnam. It applies only to individuals who are residents of a country or territory that has concluded a Tax Agreement with Vietnam and who satisfy all of the above conditions. If any one of the three conditions is not met, Vietnam has the right to tax the salary or wages derived from employment exercised in Vietnam.
In addition, under Clause 3, Article 34 of Circular No. 95/2026/TT-BTC, in determining the real employer, the tax authority shall consider factors such as: which person is entitled to the products and services created by the employee; who bears the responsibility and risks relating to the work performed by the employee; who gives instructions to the employee; who controls and has responsibility for the place at which the work is performed; who provides the tools and materials necessary for the work; who pays the employee’s remuneration; and who determines the number and qualifications of the employees.
