Personal income tax for the Chief Representative Officer's (CRO) income.

In the context of Vietnam actively pursuing globalization and extensive integration with the region and beyond, there is a growing influx of foreign workers into Vietnamese and foreign-invested companies. This trend is intensifying the focus on personal income tax ("PIT") matters for foreigners. Notably, this attention is particularly pronounced in cases involving the declaration and finalization of personal income tax for the Head of Representative Office (VPDD) of a foreign company in Vietnam. In such instances, experts appointed and assigned to work in Vietnam generate income from diverse sources, covering both domestic and international territories.

In 2022, TPM had the honor of accompanying and providing advisory support to Mr. H, the Chief Representative Officer (CRO) of a Japanese company in Vietnam. He was appointed to work and manage the Representative Office in Vietnam according to the decision of the parent company in Japan. Accordingly, all expenses such as salary, rent, bonuses, and living expenses were covered by the parent company. In 2022, Mr. H stayed in Vietnam for less than 183 days and was determined to be a non-resident individual in Vietnam. However, both the Representative Office in Vietnam and Mr. H are uncertain about whether he is required to pay personal income tax (PIT) in Vietnam because all expenses are directly covered by the parent company in Japan.

TPM's solutions

Drawing on the legal framework of the Personal Income Tax Law and current regulations, coupled with experience handling over 100 global personal income tax finalization cases, TPM's specialists have conducted a comprehensive review and provided the following assessment: if an individual signs a labor contract directly with the foreign parent company and is appointed to work in Vietnam, they must perform tasks to support the activities of the Representative Office (RO). The RO assumes responsibility and risks for the individual's work during their activities, holds rights over the products and services created by the individual, takes responsibility for the means and location of work, and manages the individual's compensation.

Therefore, the Representative Office is considered the actual employer of the mentioned individual. Taxable income for non-resident individuals is income generated from work performed in Vietnam, regardless of the location of payment and receipt of income.


Upon receiving the advisory letter from TPM, Mr. H and the Representative Office have opted to adhere to TPM's professional tax consulting guidance, declaring and remitting personal income tax (PIT) in Vietnam.

In summary, despite Mr. H working in Vietnam and receiving income from a foreign entity, he is still obligated to declare and pay personal income tax in Vietnam.

(However, there is an exception for foreign workers who simultaneously meet the three conditions stipulated in Article 15 of the Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income between Vietnam and Japan. In such cases, they are not required to declare and pay personal income tax in Vietnam but only need to declare and pay taxes in Japan according to Japanese law.

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