In this article
A double tax treaty (DTA – hiệp định tránh đánh thuế hai lần) helps expats avoid paying tax in two places on the same salary, but the benefit does not apply automatically. The expat must fall within the right case, have complete documents and follow the prescribed procedure. This article summarizes how to read the employment income article and the document set that the accounting services team at ACCA Consulting Vietnam typically prepares together with FDI companies.
1. What is a double tax treaty?
It is a bilateral agreement between Vietnam and another country or territory that allocates which country may tax each type of income. Vietnam has signed treaties with many countries; the list and text of each treaty are published on the tax authority's portal. Where a treaty and domestic tax law differ, the general principle is that the treaty prevails.
For an expat, the first question is always in which country the expat is tax resident in the tax year. If they are considered resident in both countries at the same time, the treaty contains tie-breaker rules (permanent home, centre of vital interests, nationality...). See also how to determine PIT residence.
2. The articles commonly used for employment income
Most treaties contain an article on income from dependent personal services (usually Article 15 in the OECD model; the article number may differ in each treaty). This article usually allows the country where the work is performed to tax the income, unless all the exemption conditions are met at the same time. You need to read the specific treaty text, because the day count may be based on the calendar year, the fiscal year or a 12-month period.
| Article | Applies when | Points to check |
|---|---|---|
| Dependent personal services | The expat is a salaried employee | Days of presence; who pays the salary; whether the cost is borne by a permanent establishment in Vietnam |
| Directors' fees | The expat is a member of the board of directors or members' council | Usually allows the country where the company is resident to tax |
| Teachers and researchers | The expat comes to teach or do research | Only in some treaties, with time limits |
| Elimination of double taxation | The expat has paid tax in both countries | Credit or exemption method; limit on the amount creditable |
3. Exemption or credit for tax already paid
A treaty can help an expat in two ways. Exemption in Vietnam: when the expat is not resident in Vietnam and meets the conditions of the dependent personal services article. Credit for tax paid abroad: when the expat is a tax resident of Vietnam with income already taxed in another country; the creditable amount usually cannot exceed the Vietnamese tax calculated on that income.
Illustrative assumptions: the expat is resident in Vietnam, Vietnamese tax on the salary is VND 20 million and VND 15 million has been paid abroad. The figures do not reflect actual tax schedules.
View as table
| Double taxation | Treaty credit | |
|---|---|---|
| Tax paid abroad | 15 tr | 15 tr |
| Tax payable in Vietnam | 20 tr | 5 tr |
| Expat's total tax | 35 tr | 20 tr |
4. Document checklist for treaty relief
The exact documents and forms follow current tax administration regulations. The list below covers the documents that are almost always required; companies should gather them in advance so they are not caught off guard.
- A notification of tax exemption or reduction under the treaty using the current form.
- A certificate of residence issued by the tax authority of the country of residence, stating the tax year, consular-legalized if required.
- A copy of the employment contract or the assignment letter for work in Vietnam.
- Confirmation from the paying entity of the period of work and the salary amount.
- A log of days present in Vietnam (cross-checked against the entry and exit stamps in the passport).
- Proof of tax paid abroad, if a credit is claimed.
- A power of attorney if the company or a service provider files on the expat's behalf.
5. The process during the year
- Before arriving in Vietnam
Determine the country of residence and read the employment income article of the relevant treaty.
- First month of work
Agree who pays the salary and whether there is a recharge; start tracking days of presence.
- During the year
Obtain the certificate of residence in the country of residence; keep proof of tax paid abroad.
- At finalization
Submit the exemption or credit file together with the PIT finalization; the deadline for individuals finalizing themselves is 30 April of the following year.
FAQ
Who issues the certificate of residence?
The tax authority of the country in which the expat is resident, stating the tax period. Consular legalization requirements should be checked against the regulations in force at the time of filing.
Can an expat who is resident in Vietnam be exempt under a treaty?
Normally a resident expat is taxed in Vietnam on worldwide income. In that case the treaty mainly allows a credit for tax paid abroad, rather than a full exemption.
Can the company file the treaty application on the expat's behalf?
Yes, with a power of attorney and a complete file. The company should agree with the expat on who is responsible for preparing documents at the start of the year.
Check your expat's eligibility for treaty relief
Send the passport, contract and salary payment details, and ACCA Consulting Vietnam will identify the applicable article and the list of documents still needed.
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