Guidance on costs for isolation and prevention of Covid-19 for expat specialists
On 26 November 2020, the General Department of Taxation (“GDT”) issued Official Letter No. 5032 / TCT-CS on Corporate income tax (“CIT”) and Personal income tax ("PIT") treatment for the expenses of Covid 19 epidemic quarantine and prevention for foreign expatriates.
According to the General Department of Taxation’s guidance, the expenses of Covid 19 epidemic quarantine and prevention for foreign expatriates, such as hotel expenses for quarantine, air tickets expense, Covid 19 test expenses, if incurred in compliance with current regulations on corporate income tax (Circular 78/2014/TT-BTC, Circular 96/2015/TT-BTC) and had sufficient invoices, supporting documents and payments, would be included in deductible expenses for CIT purpose.
On the other hand, regarding PIT, the expenses of Covid 19 epidemic quarantine and prevention for foreign expatriates entering Vietnam would be included in the individuals’ taxable income from the employment salaries and wages.
The GDT’s guidance on PIT treatment for the expenses of Covid 19 epidemic quarantine and prevention for foreign expatriates is different from the previous guidance from the local tax department. Accordingly, enterprises need to be cautious in preparation of PIT finalization for foreign expatriates, following the GDT’s guidance.