[ingodirectors] Update from PACCOM on PIT Exemption - 18 July 2017

Tue Jul 18 16:55:19 ICT 2017

Dear INGO directors,

Please find enclosed the latest update on PIT exemption issue from Mr.
Phan Anh Son, PACCOM Director General. The letter is encouraging and
we may be able to discuss it further in a meeting sometime during the
second half of August.

Warm regards,

Marko
---------
Marko Lovrekovic, Managing Co-Director
VUFO-NGO Resource Centre
Trung Tu Diplomatic Compound
6 Dang Van Ngu, Dong Da, Hanoi
Building E3, Room 201, 2nd floor
Mobile: +84 904 191 871
Phone: +84 24 3832 8570
Email: director at ngocentre.org.vn
Web: http://www.ngocentre.org.vn

On 6 June 2017 at 21:58, Marko Lovrekovic <director at ngocentre.org.vn> wrote:
> Dear INGO directors:
> Please find enclosed a letter from Mr. Phan Anh Son, PACCOM Director
> General, with the latest update on PIT exemption issue.
> The letter is self-explanatory and I will keep you informed of any
> other new developments as they happen.
> Warm regards,
> Marko

> On 26 May 2017 at 12:42, Marko Lovrekovic <director at ngocentre.org.vn> wrote:
>> Dear INGO directors:
>> Last week I met PACCOM senior leadership to discuss the issue of PIT
>> exemption. I informed them that many of you received a letter from
>> Hanoi Tax Department, challenging the Article 1.4 in your agreements
>> with VUFO and requesting retroactive payments of Personal Income Tax
>> (PIT) for INGO foreign staff.
>> I told PACCOM leaders that our INGO community needs their support in
>> resolving this crisis. We need an advocate at the highest level (Prime
>> Minister, Government's Office, Ministry of Finance, Foreign Affairs
>> and Tax Department). If the crisis does not get resolved, some INGOs
>> will have to pull out funding from provinces to pay for PIT bill; and
>> some may need to close their missions. INGO funds for projects will
>> get reduced by 25% to 30%. Several INGO headquarters expressed deep
>> concerns and requested clarifications from the highest level.
>> The crisis with PIT exemption was triggered by the following key
>> changes in INGO agreements:
>> - Agreements are now signed with VUFO (previously it was COMINGO)
>> - Article 1.4 says "facilitate exemption" (previously it was "granted")
>> - Article 1.7 says PACCOM is our "focal point" (previously it was VUFO)
>> I requested clarification why some of you (chief representatives) lost
>> the PIT exemption privilege; why was COMINGO replaced by VUFO in
>> formal agreement; who is the official "governing body" authorised to
>> grant exemption; what does "facilitation of PIT exemption" mean; is
>> Tax Department ignoring international treaties signed between Vietnam
>> and some governments (such as the US Government, June 2005)?
>> PACCOM did not have answers to these questions but they will schedule
>> meetings with high-level officials at the Ministry of Finance and Tax
>> Department (this week). Following these meetings PACCOM will organise
>> a meeting with INGO directors to provide feedback.
>> PACCOM Director General said that they are taking the issue seriously,
>> but it may take some time because it is a policy-level issue. In the
>> meantime, INGOs should wait and do nothing. INGOs should contact
>> PACCOM directly and share any new information which can contribute to
>> resolving of the PIT exemption crisis.
>> I will keep you informed of further developments.
>> Warm regards,
>> Marko

>> On 17 May 2017 at 13:14, Marko Lovrekovic <director at ngocentre.org.vn> wrote:
>>> Dear INGO directors:
>>> Following the mini-survey on PIT exemption from last week, I would
>>> like to thank those of you who quickly responded. I received 33
>>> replies from you. Ten (10) INGOs confirmed receiving a letter from
>>> Hanoi Tax Department (HTD), although the number is likely much higher
>>> — HTD said they sent it to 30-40 INGOs. In the letter HTD asked INGOs
>>> to deduct, declare and pay PIT for foreign staff which is currently
>>> working / has worked in Vietnam. In some cases, the letter listed
>>> names of all expatriate staff that have worked between 2009 and 2017.
>>> The majority of INGOs who responded are registered as Representative
>>> Office (14) or Project Office (14). Only five (5) respondents are
>>> registered as Operations. There are 72 expatriates working / have
>>> worked for these 33 organisations. Majority (23) of INGOs have signed
>>> MoU which includes Article 1.4. granting the exemption from PIT on
>>> salaries and allowances. Most of them (20) have already submitted
>>> lists of expatriates to HTD, but only 2 received approval. Two (2)
>>> INGOs received negative responses, while others are still waiting.
>>> I will meet PACCOM senior leadership this Friday to share my findings
>>> and to discuss the course of action. PACCOM committed to organise a
>>> meeting with INGO Steering Committee and other INGO representatives
>>> later next week. Now, I just wanted to provide an update, as well as
>>> share some relevant documents. Most of you are familiar with it, but
>>> there may be some country directors who have not yet seen it. Here is
>>> an overview of the attachments with key articles noted for your
>>> reference:
>>> - sample of the recent HTD letter notifying INGO on non-eligibility
>>> for PIT exemption
>>> - Decree 12: Article 23 — Personal income tax on expatriate staff
>>> - Law on Personal Income Tax: Article 4 — Income which is tax exempt (point 14)
>>> - Letter from the Ministry of Finance 13231/BTC-TCT, 18 September 2009
>>> - Sample of MoU between COMINGO and INGOs — articles 1.4 and 1.7
>>> - my old letter to HTD on behalf of INGOs, December 2009
>>> - HTD response to my letter, January 2010
>>>  (the last two attachments are 8 years old, but some questions are
>>> very relevant)
>>> There are some other relevant legal documents, such as bilateral
>>> agreements between Vietnam and your governments; Decree 93; Labour
>>> Code; etc. I can share it upon request. There are more detailed
>>> circulars guiding the implementation of Decree 12 and 93; various
>>> amendments, letters, decisions and other documents related to the
>>> above-listed legislation. I just wanted to share the most relevant
>>> papers. Let me know if you need original documents in Vietnamese.
>>> I will keep you informed of further developments, following my meeting
>>> with PACCOM.
>>> Warm regards,
>>> Marko

>>> On 11 May 2017 at 17:47, Marko Lovrekovic <director at ngocentre.org.vn> wrote:
>>>> Dear INGO directors:
>>>> Some of you have received letters from the Hanoi Tax Department
>>>> recently, in which they asked for payments of Personal Income Tax
>>>> (PIT) for your foreign staff. A few of you have been asked to pay PIT
>>>> for your foreign staff retroactively, as far back as 2013. Hanoi Tax
>>>> Department claims that some foreign staff does not meet sufficient
>>>> conditions for PIT exemption and/or that some INGOs have no provisions
>>>> on PIT exemption in their partnership agreements signed with VUFO, on
>>>> behalf of COMINGO.
>>>> If such claims proved valid, this may have significant consequences
>>>> and implications on our work. I would like to propose a meeting with
>>>> the VUFO-NGO Resource Centre Steering Committee, PACCOM senior
>>>> leadership and selected INGO directors affected with the
>>>> above-mentioned request. Before we schedule a meeting, I would like to
>>>> collect some basic information in order to get a 'bigger perspective'
>>>> on the current status of this issue within the INGO community.
>>>> I have prepared 8 simple questions, mostly with 'yes' or 'no' answer.
>>>> It should not take more than 3 minutes of your time; and it would help
>>>> me greatly to prepare a follow up. Kindly note that the questions are
>>>> intended for INGOs which employ foreign nationals, including those
>>>> with dual citizenship. Click here:
>>>> https://goo.gl/forms/iEdMupdyRxPnjC6o2
>>>> Thank you in advance for your prompt responses. I will keep you
>>>> informed about further developments.
>>>> Marko
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