Job Discussion Forums

[spycatcher reincarnated]

It may be obvious to all already, but the tax department has just confirmed that there is an official investigation in to Education establishments as they believe many schools have been cheating their taxes.

I argue that if they follow this reasoning they should be investigating the whole country!

[SheriffAndy]

I read somewhere that there are only 350,000 taxpayers in a country of 80,000,000 people. Who do you think those are?

[spycatcher reincarnated]

I have heard from a reliable source that the total amount of personal income tax (PIT) collected from foreigners is higher than the total amount of PIT collected from Vietnamese. Also that in a "normal" country PIT accounts for about 30% of all taxes collected, but in Vietnam it only accounts for about 2% at present.

I didn't ask for a clarification, so am not sure if my source meant foreigners or foreign companies.

Because Vietnam will be joining the WTO they are in the process of reducing a lot of import taxes (this should reduce the financial incentives of smuggling) so the government is looking at other ways of filling its coffers. The easy way to get more tax revenue is to focus on foreigners and foreign companies.

The tax department doesn't want all Vietnamese to pay correct PIT because they want to take backhanders from them to increase the incomes of the people in the tax department.

The foreign community is complaining that when they invested in Vietnam there was meant to be a level playing field between foreign and Vietnamese companies, but when it comes to business it definitely isn't the situation at present.

Saying this though, in the field of education, foreign companies do receive substantial tax breaks on corporate income tax which local education companies do not officially receive.

There is a new PIT law that is scheduled to come out in 2007/2008 and in the drafts of this law the tax thresholds for foreigners are planned to be reduced and the tax thresholds for Vietnamese are planned to be increased. IE foreigners will pay more tax and Vietnamese will pay less. In principle I agree that this is the correct thing to do as the present thresholds are quite discriminatory in favor of foreigners.

I would imagine that the thresholds that would be reduced for foreigners would be the higher ones. If this is so it would affect highly paid expats more than teachers.

NB: because of joining the WTO and reducing a lot of import taxes this should obviously mean many imported products will become cheaper or will become available for the first time to us. These should help to bring down the cost of living or at least reduce the increase in the cost of living for us, but will probably have no impact on the official CPI figures.

Hmm.. I didn't start this thread to bore you all with tax and my CPI theories, but may end up doing so.

[lizarddoctor]

Not a bore at all...

I hold tax discussions with you in the highest regard as you seem to be the only one with the complete story here.

The tax is a huge topic here as foreign businesses have to follow it and the schools have found a thousand loop holes to get around it.

Take VATC for expamle...

18 locations in HCMC with only 3 officially connected to the main branch and the rest are 'franchises'. Teachers are made to float to the outer branches to 'help out' for crap pay. But in the end, their paychecks are calculated per school. 3 schools = 24,000,000 VND in tax evasion from the school. Full timers there making 30 million a month are taxed just over a million VND. I wrote a huge letter to the Vietnam News last week but I think it will fall on deaf ears since they only publish bathroom candy for the foreigners. Power to the teachers for making the best of the illegal system VATC has in place, but for the crap they pulled on the part time teachers a month ago, they will never get any support from me.

Good schools here pay the tax liability of their foreign staff members and give a receipt to prove it. VATC writes down the taxes they take away on the back of an envelope.

The Vietnamese businesses need to be held accountable before the Government can expect any positive results.

[spycatcher reincarnated]

I said I would post the calculations for working out PIT for foreigners sometime ago, but have yet to do so. Here they are:

Net salary to Gross salary (if you are paid net this will let you know what your total salary is):

=ROUND(IF(D7>87800000,(D7-27800000)/(1-50%),IF(D7>63800000,(D7-15800000)/(1-40%),IF(D7>42800000,(D7-7800000)/(1-30%),IF(D7>18800000,(D7-2800000)/(1-20%),IF(D7>8000000,(D7-800000)/(1-10%),D7))))),0)

Where D7 is one's Net salary

Gross salary to Net salary (if you are paid gross this will let you know what your net is):

=$D13-ROUND(IF($D13>80000000,$D13*40%-15800000,IF($D13>50000000,$D13*30%-7800000,IF($D13>20000000,$D13*20%-2800000,IF($D13>8000000,$D13*10%-800000,0)))),0)

Where D13 is one's Gross salary

NB: the above are for calculating the normal tax rates and won't help with the 10% tax or the 25% tax rules.

Lizarddoctor wrote: